As Filed with the Securities and Exchange Commission on April 11, 2014
1933 Act File No. 333-148624
1940 Act File No. 811-22167
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
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REGISTRATION STATEMENT Under THE SECURITIES ACT OF 1933
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Pre-Effective Amendment No.
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Post-Effective Amendment No. 58
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REGISTRATION STATEMENT Under THE INVESTMENT COMPANY ACT OF 1940
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Amendment No. 60
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Allianz Funds Multi-Strategy Trust
(Exact Name of Registrant as Specified in Charter)
1633 Broadway, New York, NY 10019
(Address of principal executive offices) (Zip code)
(888) 852-3922
(Registrant’s telephone number, including area code)
Julian F. Sluyters
c/o Allianz Global Investors Fund Management LLC
1633 Broadway
New York, NY 10019
Name and address of agent for service:
Copies to:
Thomas J. Fuccillo, Esq.
c/o Allianz Global Investors Fund Management LLC
1633 Broadway
New York, NY 10019
David C. Sullivan, Esq.
Ropes & Gray LLP
Prudential Tower
800 Boylston Street
Boston, MA 02199
Approximate date of Proposed Public offering
: As soon as practicable after the effective date of
this Registration statement.
It is proposed that this filing will become effective (check appropriate box):
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Immediately upon filing pursuant to paragraph (b)
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On [date] pursuant to paragraph (b)
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60 days after filing pursuant to paragraph (a)(1)
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On [date] pursuant to paragraph (a)(1)
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75 days after filing pursuant to paragraph (a)(2)
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On [date] pursuant to paragraph (a)(2) of Rule 485
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If appropriate, check the following box:
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This post-effective amendment designates a new effective date for
a previously filed post-effective amendment.
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This Post-Effective Amendment is being filed to register Class A, Class C, Institutional Class and
Class P shares of AllianzGI Emerging Markets Debt Fund (the “Fund”), a new series of Allianz Funds
Multi-Strategy Trust (the “Trust”). This Post-Effective Amendment No. 58 relates only to the Fund
and does not supersede or amend disclosure in the Trust’s registration statement relating to any
other series of the Trust.
Pursuant to the provisions of Rule 24f-2 under the Investment Company Act of 1940, Registrant
declares that an indefinite number of its shares of common stock are being registered under the
Securities Act of 1933 by this registration statement.
[ ],
2014
Share
Classes Class A Class C Institutional Class P
Allianz
Multi-Strategy Funds Prospectus
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AllianzGI Emerging Markets Debt Fund
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Class A
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[ ]
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Class C
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[ ]
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Institutional Class
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[ ]
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Class P
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[ ]
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As with other
mutual funds, the U.S. Securities and Exchange Commission
and the U.S. Commodity Futures Trading Commission have not
approved or disapproved these securities or determined if this
Prospectus is truthful or complete. Any representation to the
contrary is a criminal offense.
Allianz
Multi-Strategy Funds Prospectus
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The Prospectus explains what you should know about the AllianzGI
Emerging Markets Debt Fund (the “Fund”) of Allianz
Funds Multi-Strategy Trust (the “Trust”) before you
invest. Please read it carefully.
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Table of Contents
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Fund Summary
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1
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5
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8
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15
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16
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17
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19
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26
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35
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36
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37
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39
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52
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AllianzGI Emerging
Markets Debt Fund [**TO BE UPDATED BY AMENDMENT**]
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Investment
Objective
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The Fund seeks long-term capital appreciation and current income.
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Fees
and Expenses
of the Fund
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The tables below describe the fees and expenses that you may pay
if you buy and hold shares of the Fund. You may qualify for
sales charge discounts if you and your family invest, or agree
to invest in the future, at least $50,000 in Class A Shares of
eligible funds that are part of the family of mutual funds
sponsored by Allianz. More information about these and other
discounts is available in the “Classes of Shares”
section beginning on page [ ] of the Fund’s
prospectus or from your financial advisor.
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Shareholder Fees
(fees paid directly from your investment)
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Maximum Sales Charge
(Load) Imposed
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Maximum Contingent
Deferred Sales Charge (CDSC) (Load)
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Share Class
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on Purchases (as a
percentage of offering price)
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(as a percentage of
the lower of original purchase price or
NAV)
(1)
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Class A
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3.75
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%
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1
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%
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Class C
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None
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1
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%
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Institutional
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None
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None
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Class P
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None
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None
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Annual
Fund Operating Expenses (expenses that you pay each year as
a percentage of the value of your investment)
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Total Annual
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Fund Operating
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Distribution
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Total Annual
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Expenses After
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Management
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and/or Service
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Other
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Fund Operating
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Expense
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Expense
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Share Class
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Fees
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(12b-1) Fees
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Expenses
(2)
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Expenses
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Reductions
(3)
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Reductions
(3)
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Class A
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[ ]
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%
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0.25
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%
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[ ]
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%
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[ ]
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%
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[ ]
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%
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[ ]
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%
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Class C
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[ ]
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1.00
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[ ]
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[ ]
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[ ]
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[ ]
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Institutional
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[ ]
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None
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[ ]
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[ ]
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[ ]
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[ ]
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Class P
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[ ]
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None
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[ ]
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[ ]
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[ ]
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[ ]
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(1)
For
Class A shares, the CDSC is imposed only in certain
circumstances where shares are purchased without a front-end
sales charge at the time of purchase. For Class C shares,
the CDSC is imposed only on shares redeemed in the first year.
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(2)
Other
Expenses are based upon estimated amounts for the Fund’s
initial fiscal year ending November 30, 2014 and include
organizational expenses and expenses related to short selling
(including dividend expenses and brokerage fees).
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(3)
Total
Annual Fund Operating Expenses After Expense Reductions
reflect the effect of a contractual agreement by the Manager to
waive, through [ ], its management
fee and/or reimburse the Fund to the extent that Total Annual
Fund Operating Expenses, including payment of
organizational expenses but excluding interest, taxes,
extraordinary expenses, and certain credits and other expenses,
exceed [ ]% for Class A
shares, [ ]% for Class C
shares, [ ]% for Institutional
Class shares and [ ]% for
Class P shares. Under the Expense Limitation Agreement, the
Manager may recoup waived or reimbursed amounts until
[ ], provided total expenses,
including such recoupment, do not exceed the annual expense
limit. The Expense Limitation Agreement is terminable by the
Trust upon 90 days’ prior written notice to the
Manager or at any time by mutual agreement of the parties.
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Examples.
The Examples are intended to help you
compare the cost of investing in shares of the Fund with the
costs of investing in other mutual funds. The Examples assume
that you invest $10,000 in the noted class of shares for the
time periods indicated, your investment has a 5% return each
year, and the Fund’s operating expenses remain the same.
Although your actual costs may be higher or lower, the Examples
show what your costs would be based on these assumptions. The
Examples are based, for the first year, on Total Annual
Fund Operating Expenses After Expense Reductions and, for
all other periods, on Total Annual Fund Operating Expenses.
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Example: Assuming
you redeem your shares at the end of each period
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Example: Assuming
you do not redeem your shares
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Share Class
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1 Year
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3 Years
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1 Year
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3 Years
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Class A
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$
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[ ]
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$
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[ ]
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$
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$
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Class C
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[ ]
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[ ]
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[ ]
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[ ]
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Institutional
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[ ]
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[ ]
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[ ]
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[ ]
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Class P
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[ ]
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[ ]
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[ ]
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[ ]
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Portfolio Turnover.
The Fund pays transaction costs,
such as commissions, when it buys and sells securities (or
“turns over” its portfolio). High levels of portfolio
turnover may indicate higher transaction costs and may result in
higher taxes for you if your Fund shares are held in a taxable
account. These costs, which are not reflected in Total Annual
Fund Operating Expenses or in the Examples above, can
adversely affect the Fund’s investment performance.
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Principal
Investment
Strategies
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The Fund seeks to achieve its investment objective by normally
investing at least 80% of its net assets (plus borrowings made
for investment purposes) in a diversified portfolio of debt
instruments issued by Sovereign, Quasi-Sovereign or Corporate
issuers of emerging market countries. The Fund’s
investments in derivatives and
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AllianzGI
Emerging Markets Debt Fund
(continued)
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other synthetic instruments that have economic characteristics
similar to these investments will be counted toward satisfaction
of the Fund’s 80% investment policy. The instruments in
which the Fund may invest may be denominated in non-U.S.
currencies and the U.S. dollar. The average portfolio duration
for this Fund varies based on the Sub-Adviser’s forecast
for interest rates and, under normal market conditions, varies
from (negative) 4 years to (positive) 8 years.
Duration is a measure used to determine the sensitivity of a
security’s price to changes in interest rates. The longer a
security’s duration, the more sensitive it will be to
changes in interest rates. The Fund may invest in securities of
any credit quality, and the Fund’s average credit quality
can vary as the portfolio managers deem appropriate.
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Sovereigns are governments of emerging market countries.
Quasi-Sovereigns are governmental entities, agencies and other
issuers that are more than 50% owned, directly or indirectly, by
a Sovereign, or whose obligations are guaranteed by a Sovereign.
A Corporate issuer is any issuer other than a Sovereign or a
Quasi-Sovereign that is located in an emerging market country
or, an issuer deriving at least 50% of its revenues or profits
from goods produced or sold, investments made, or services
performed in one or more emerging market countries or that has
at least 50% of its assets in one or more emerging market
countries. Emerging market countries are generally located in
Asia, Africa, the Middle East, Latin America and Eastern Europe.
Countries with emerging market economies are those with
securities markets that are, in the opinion of the Sub-Adviser,
less sophisticated than more developed markets in terms of
participation by investors, analyst coverage, liquidity and
regulation.
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The Fund seeks to achieve its investment objective by normally
investing primarily in interest-bearing securities issued by
Sovereign, Quasi-Sovereign or Corporate issuers of emerging
market countries. The portfolio managers believe they can
maximize emerging market returns from inefficient and often
mispriced investments in Sovereigns, Corporates, local rates,
and foreign exchange rates. The portfolio managers use a
multi-step process in selecting securities to buy and sell that
combines top-down and bottom-up analysis. The portfolio managers
seek opportunities in selected emerging markets that they
believe may benefit from significant positive changes, such as
political and economic trends and reforms, Central Bank
productivity, policy consistency, legislative initiatives,
foreign currency reserves, interest-rate cycles, industrial
production, commodities and manufacturing dependence,
public-sector borrowing, expected bond issues, foreign exchange
vulnerability and foreign ownership. As part of its investment
process, the portfolio managers employ a risk management
strategy. The risk management strategy considers markets,
Sovereigns, duration, credit risk and liquidity risk. The
portfolios managers seek to build a final portfolio of
securities that considers relative value.
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The Fund may invest in debt instruments of all types and
denominated in any currency (including, without limitation, U.S.
Dollars, Euros, Swiss Francs, Japanese Yen, British Pound
Sterling and other major currencies, as well as local currencies
of emerging market countries) whether subordinated or
unsubordinated, secured or unsecured, quoted or unquoted, rated
or unrated, or floating or fixed rate. These may include,
without limitation, bonds, debentures, notes, convertible
securities, commercial paper, loans, participations,
certificates of deposit, asset-backed securities and
mortgage-backed securities. The Fund may also invest a portion
of its assets in money market instruments, including money
market funds denominated in U.S. dollars or other currencies, as
well as other investment companies, if the investment companies
invest principally in the types of investments in which the Fund
may invest directly. Equities and comparable rights may be
acquired in the exercise of subscription, conversion and option
rights on convertible bonds and bonds with warrants, but they
must be sold within six months. Shorting of individual bonds may
also be part of the investment strategy.
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Up to 10% of the Fund’s total assets may be invested in
securities issued by or guaranteed by any single country with a
credit rating below investment grade. A “single
country” shall include a country, its government, a public
or local authority or nationalized industry of that country. Up
to 10% of the Fund’s total assets may also be invested in
preferred shares issued by Corporate issuers of an emerging
market country. Additionally, up to 15% of the Fund’s total
assets may be invested in interest-bearing securities which, at
the time of acquisition, are rated CCC+ by Standard &
Poor’s Ratings Service (“S&P”). These assets
must be sold within six months if their rating is downgraded
below CCC+.
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The Fund may utilize various derivative instruments and related
strategies, including to gain exposure to one or more of the
issuers referred to above or other assets. The Fund may utilize
derivatives of all types and may invest in, without limitation,
call and put options, forward contracts and swap agreements,
credit-linked notes and other related instruments with respect
to individual currencies, bonds, and securities of any kind,
indices and baskets of securities, interest rates and currencies
as part of its principal investment strategies. The Fund may use
derivatives for hedging or efficient portfolio management
purposes, but also may use them to increase the Fund’s
investment exposure beyond that which it could achieve by
investing directly in more conventional securities. The Fund may
invest in currency-related transactions, such as forward
transactions (including
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2
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AllianzGI Emerging Markets Debt Fund
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AllianzGI
Emerging Markets Debt Fund
(continued)
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deliverable and non-deliverable forwards), currency futures
transactions and currency options transactions, and may also
invest directly in foreign currencies, in each case for hedging
or other investment purposes.
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Principal
Risks
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The principal risks of investing in the Fund, which could
adversely affect its net asset value, yield and total return,
are (in alphabetical order after the first [ ] risks):
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Credit and Counterparty Risk:
An issuer or
counterparty may default on obligations.
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Currency Risk:
The values of
non-U.S. securities
may fluctuate with currency exchange rates and exposure to
non-U.S. currencies
may subject the Fund to the risk that those currencies will
decline in value relative to the U.S. dollar.
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Derivatives Risk:
Derivative instruments are
complex, have different characteristics than their underlying
assets and are subject to additional risks, including leverage,
liquidity and valuation.
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Emerging Markets
Risk:
Non-U.S. investment
risk may be particularly high to the extent that the Fund
invests in emerging market securities. These securities may
present market, credit, currency, liquidity, legal, political,
technical and other risks different from, or greater than, the
risks of investing in developed countries.
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Fixed Income Risk:
Fixed income (debt) securities
are subject to greater levels of credit and liquidity risk, may
be speculative and may decline in value due to changes in
interest rates or an issuer’s or counterparty’s
deterioration or default.
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Focused Investment Risk:
Focusing on a limited
number of issuers, sectors, industries or geographic regions
increases risk and volatility.
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High Yield Risk:
High-yield or junk bonds are
subject to greater levels of credit and liquidity risk, may be
speculative and may decline in value due to increases in
interest rates or an issuer’s deterioration or default.
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Interest Rate Risk:
Fixed income securities may
decline in value because of increases in interest rates.
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Issuer Risk:
The Fund will be affected by factors
specific to the issuers of securities and other instruments in
which the Fund invests, including actual or perceived changes in
the financial condition or business prospects of such issuers.
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Leveraging Risk:
Instruments and transactions that
constitute leverage magnify gains or losses and increase
volatility.
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Liquidity Risk:
The lack of an active market for
investments may cause delay in disposition or force a sale below
fair value.
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Management Risk:
The Fund will be affected by the
allocation determinations, investment decisions and techniques
of the Fund’s management.
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Market Risk:
The Fund will be affected by factors
influencing the U.S. or global economies and securities
markets or relevant industries or sectors within them.
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Mortgage-Related and Other Asset-Backed
Risk:
Investing in mortgage- and asset-backed
securities involves interest rate, credit, valuation, extension
and liquidity risks and the risk that payments on the underlying
assets are delayed, prepaid, subordinated or defaulted on.
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Non-U.S. Investment
Risk:
Non-U.S. securities
markets and issuers may be more volatile, smaller, less liquid,
less transparent and subject to less oversight, particularly in
emerging markets.
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Short Selling Risk:
Short selling enhances
leveraging risk and involves counterparty risk and the risk of
unlimited loss.
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Turnover Risk:
High levels of portfolio turnover
increase transaction costs and taxes and may lower investment
performance.
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Variable Distribution Risk:
Periodic distributions
by investments of variable or floating interest rates vary with
fluctuations in market interest rates.
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Please see “Summary of Principal
Risks” in the Fund’s prospectus for a more detailed
description of the Fund’s risks. It is possible to lose
money on an investment in the Fund. An investment in the Fund is
not a deposit of a bank and is not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other government
agency.
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Performance
Information
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Performance information for the Fund will be available after the
Fund completes a full calendar year of operation.
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AllianzGI
Emerging Markets Debt Fund
(continued)
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Management
of
the Fund
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Investment Manager
Allianz Global Investors Fund
Management LLC
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Sub-Adviser
Allianz Global Investors U.S. LLC
(“AllianzGI U.S.”)
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Portfolio Managers
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Greg Saichin, CIO global Emerging Markets Debt and portfolio
manager, has managed the Fund since 2014.
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Zeke Diwan, Senior portfolio manager in the Emerging Markets
Debt team, has managed the Fund since 2014.
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Purchase
and Sale
of Fund Shares
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You may purchase or sell (redeem) shares of the Fund on any
business day through a broker, dealer, or other financial
intermediary, or, for Class A and Class C shares, directly from
the Fund’s distributor by mail (Allianz Global Investors
Distributors LLC, P.O. Box 8050, Boston, MA
02266-8050), or, for Institutional Class and Class P
shares, directly from the Fund’s transfer agent by mail
(Allianz Institutional Funds, P.O. Box 219968, Kansas
City, MO 64121-9968), each as further described in the
Fund’s prospectus and SAI. To avoid delays in a purchase or
redemption, please call 1-800-988-8380 for Class A and Class C
shares and 1-800-498-5413 for Institutional Class and Class P
shares with any questions about the requirements before
submitting a request. Generally, purchase and redemption orders
for Fund shares are processed at the net asset value (NAV) next
calculated after an order is received by the distributor or an
authorized intermediary. NAVs are determined only on days when
the New York Stock Exchange is open for regular trading. For
Class A and Class C shares, the minimum initial investment in
the Fund is $1,000 and the minimum subsequent investment is $50.
For Institutional Class and Class P shares, the minimum initial
investment in the Fund is $1 million, though minimums may be
modified for certain financial intermediaries that aggregate
trades on behalf of investors.
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Tax
Information
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The Fund’s distributions are generally taxable to you as
ordinary income or capital gains, unless you are investing
through a tax-deferred arrangement, such as a 401(k) plan or an
individual retirement account.
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Payments
to Broker-
Dealers and Other
Financial
Intermediaries
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If you purchase shares of the Fund through a broker-dealer or
other financial intermediary (such as a bank), the Fund, its
distributor, its investment manager or their affiliates may pay
the intermediary for the sale of Fund shares and related
services. These payments may create a conflict of interest by
influencing the broker-dealer or intermediary and your
salesperson to recommend the Fund over another investment. Ask
your salesperson or visit your financial intermediary’s Web
site for more information.
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4
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AllianzGI Emerging Markets Debt Fund
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Principal
Investments and Strategies of the Fund
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This section, together with the next section entitled
“Summary of Principal Risks,” provides more detailed
information regarding the Fund’s investment objective,
principal investments and strategies and principal risks.
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The Fund may be subject to
capitalization criteria and percentage investment limitations,
as noted in its Fund Summary above and in the description
below. See “Characteristics and Risks of Securities and
Investment Techniques—Capitalization Criteria, Percentage
Investment Limitations and Alternative Means of Gaining
Exposure” for more information about these limitations.
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It is possible to lose money on an
investment in the Fund.
The fact that the Fund may have
had good performance in the past is no assurance that the value
of the Fund’s investments will not decline in the future or
appreciate at a slower rate.
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AllianzGI Emerging
Markets Debt Fund
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Principal
Investments and
Strategies
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Investment Objective
Seeks long-term capital appreciation and current income
Fund Category
Fixed Income Securities
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Fund Focus
Diversified portfolio of debt and debt-related instruments
issued by Sovereign, Quasi-Sovereign or Corporate issuers of
emerging market countries
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Credit Quality
No limitation
Dividend Frequency
Quarterly
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The Fund seeks to achieve its investment objective by normally
investing at least 80% of its net assets (plus borrowings made
for investment purposes) in a diversified portfolio of debt
instruments issued by Sovereign, Quasi-Sovereign or Corporate
issuers of emerging market countries. The Fund’s
investments in derivatives and other synthetic instruments that
have economic characteristics similar to these investments will
be counted toward satisfaction of the Fund’s 80% investment
policy. The instruments in which the Fund may invest may be
denominated in
non-U.S. currencies
and the U.S. dollar. The average portfolio duration for
this Fund varies based on the
Sub-Adviser’s
forecast for interest rates and, under normal market conditions,
varies from (negative) 4 years to (positive) 8 years.
Duration is a measure used to determine the sensitivity of a
security’s price to changes in interest rates. The longer a
security’s duration, the more sensitive it will be to
changes in interest rates. The Fund may invest in securities of
any credit quality, and the Fund’s average credit quality
can vary as the portfolio managers deem appropriate.
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Sovereigns are governments of emerging
market countries. Quasi-Sovereigns are governmental entities,
agencies and other issuers that are more than 50% owned,
directly or indirectly, by a Sovereign, or whose obligations are
guaranteed by a Sovereign. A Corporate issuer is any issuer
other than a Sovereign or a Quasi-Sovereign that is located in
an emerging market country or, an issuer deriving at least 50%
of its revenues or profits from goods produced or sold,
investments made, or services performed in one or more emerging
market countries or that has at least 50% of its assets in one
or more emerging market countries. Emerging market countries are
generally located in Asia, Africa, the Middle East, Latin
America and Eastern Europe. Countries with emerging market
economies are those with securities markets that are, in the
opinion of the
Sub-Adviser,
less sophisticated than more developed markets in terms of
participation by investors, analyst coverage, liquidity and
regulation.
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The Fund seeks to achieve its investment
objective by normally investing primarily in interest-bearing
securities issued by Sovereign, Quasi-Sovereign or Corporate
issuers of emerging market countries. The portfolio managers
believe they can maximize emerging market returns from
inefficient and often mispriced investments in Sovereigns,
Corporates, local rates, and foreign exchange rates. The
portfolio managers use a multi-step process in selecting
securities to buy and sell that combines top-down and
bottom-up
analysis. The portfolio managers seek opportunities in selected
emerging markets that they believe may benefit from significant
positive changes, such as political and economic trends and
reforms, Central Bank productivity, policy consistency,
legislative initiatives, foreign currency reserves,
interest-rate cycles, industrial production, commodities and
manufacturing dependence, public-sector borrowing, expected bond
issues, foreign exchange vulnerability and foreign ownership. As
part of its investment process, the portfolio managers employ a
risk management strategy. The risk management strategy considers
markets, Sovereigns, duration, credit risk and liquidity risk.
The portfolios managers seek to build a final portfolio of
securities that considers relative value.
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The Fund may invest in debt instruments
of all types and denominated in any currency (including, without
limitation, U.S. Dollars, Euros, Swiss Francs, Japanese
Yen, British Pound Sterling and other major currencies, as well
as local currencies of emerging market countries) whether
subordinated or unsubordinated, secured or unsecured, quoted or
unquoted, rated or unrated, or floating or fixed rate. These may
include, without limitation, bonds, debentures, notes,
convertible securities, commercial paper, loans, participations,
certificates of deposit, asset-backed securities and
mortgage-backed securities. The Fund may also invest a portion
of its assets in money market instruments, including money
market funds denominated in U.S. dollars or other
currencies, as well as other investment companies, if the
investment companies invest principally in the types of
investments in which the Fund may invest directly. Equities and
comparable rights may be acquired in the exercise of
subscription, conversion and option rights on convertible bonds
and bonds with warrants, but they must be sold within six
months. Shorting of individual bonds may also be part of the
investment strategy.
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Up to 10% of the Fund’s total
assets may be invested in securities issued by or guaranteed by
any single country with a credit rating below investment grade.
A “single country” shall include a country, its
government, a public or local authority or nationalized industry
of that country. Up to 10% of the Fund’s total assets may
also be invested in preferred shares issued by Corporate issuers
of an emerging market country. Additionally, up to 15% of the
Fund’s total assets may be invested in interest-bearing
securities which, at the time of acquisition, are
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6
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AllianzGI Emerging Markets Debt Fund
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AllianzGI
Emerging Markets Debt Fund
(continued)
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rated CCC+ by Standard & Poor’s Ratings Service
(“S&P”). These assets must be sold within six
months if their rating is downgraded below CCC+.
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The Fund may utilize various derivative
instruments and related strategies, including to gain exposure
to one or more of the issuers referred to above or other assets.
The Fund may utilize derivatives of all types and may invest in,
without limitation, call and put options, forward contracts and
swap agreements, credit-linked notes and other related
instruments with respect to individual currencies, bonds, and
securities of any kind, indices and baskets of securities,
interest rates and currencies as part of its principal
investment strategies. The Fund may use derivatives for hedging
or efficient portfolio management purposes, but also may use
them to increase the Fund’s investment exposure beyond that
which it could achieve by investing directly in more
conventional securities. The Fund may invest in currency-related
transactions, such as forward transactions (including
deliverable and non-deliverable forwards), currency futures
transactions and currency options transactions, and may also
invest directly in foreign currencies, in each case for hedging
or other investment purposes.
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In response to adverse market, economic,
political or other conditions, the Fund may deviate from its
principal strategies by making temporary investments of some or
all of its assets in cash or cash equivalents. The Fund may be
less likely to achieve its investment objective when it does so.
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Principal
Risks
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Among the principal risks of investing in the Fund, which could
adversely affect its net asset value, yield and total return,
are (in alphabetical order after the first [ ] risks):
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• Credit and Counterparty Risk
• Currency Risk
• Derivatives Risk
• Emerging Markets Risk
• Fixed Income Risk
• Focused Investment Risk
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• High Yield Risk
• Interest Rate Risk
• Issuer Risk
• Leveraging Risk
• Liquidity Risk
• Management Risk
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• Market Risk
• Mortgage-Related and Other Asset-Backed Risk
• Non-U.S. Investment Risk
• Short Selling Risk
• Turnover Risk
• Variable Distribution Risk
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Please see “Summary of Principal Risks” following this
section for a description of these and other risks of investing
in the Fund.
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Summary of Principal
Risks
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The value of your investment in the Fund changes with the values
of the Fund’s investments. Many factors can affect those
values. The factors that are most likely to have a material
effect on the Fund’s portfolio as a whole are called
“principal risks.” The principal risks of the Fund are
summarized in the Fund Summary and are described in more
detail in this section. The Fund may be subject to additional
risks other than those described below because the types of
investments made by the Fund can change over time. Securities
and investment techniques appearing in
bold type
below
are described in greater detail under “Characteristics and
Risks of Securities and Investment Techniques.” That
section and “Investment Objectives and Policies” in
the Statement of Additional Information also include more
information about the Fund, its investments and the related
risks. There is no guarantee that the Fund will be able to
achieve its investment objective. It is possible to lose money
by investing in the Fund.
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Credit
and
Counterparty Risk
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The Fund could lose money if the issuer or guarantor of a
fixed income security
(including a security purchased
with securities lending cash collateral) is unable or unwilling,
or is perceived (whether by market participants, ratings
agencies, pricing services or otherwise) as unable or unwilling,
to make timely principal and/or interest payments, or to
otherwise honor its obligations. Securities are subject to
varying degrees of credit risk, which are often reflected in
their
credit ratings
and, if the Fund holds a fixed
income security, it is subject to the risk that the
security’s credit rating will be downgraded. Securities
issued by the U.S. Treasury historically have presented minimal
credit risk. However, recent events have led to a downgrade in
the long-term U.S. credit rating by at least one major rating
agency and have introduced greater uncertainty about the ability
of the U.S. to repay its obligations. A further credit rating
downgrade or a U.S. credit default could decrease the value and
increase the volatility of the Fund’s investments, to the
extent that the Fund has exposure to securities issued by the
U.S. Treasury. Credit risk is particularly pronounced for below
investment grade securities (also known as “high
yield” or “junk” bonds.) See “High Yield
Risk.”
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Counterparty Risk.
The Fund
is also subject to the risk that a counterparty to a
derivatives
contract,
repurchase agreement, a loan of
portfolio securities
or an unsettled transaction may be
unable or unwilling to make timely settlement payments or
otherwise honor its obligations to the Fund. If a counterparty
fails to meet its contractual obligations, goes bankrupt, or
otherwise experiences a business interruption, the Fund could
miss investment opportunities or otherwise hold investments it
would prefer to sell, resulting in losses for the Fund.
Counterparty risk may be pronounced during unusually adverse
market conditions and may be particularly acute in environments
in which financial services firms are exposed to systemic risks
of the type evidenced by the 2008 insolvency of Lehman Brothers
and subsequent market disruptions.
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Currency
Risk
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The Fund may invest directly in
foreign (non-U.S.)
currencies
, or in securities that trade in, or receive
revenues in, foreign currencies, or in
derivatives
that
provide exposure to foreign currencies, and 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 may fluctuate significantly over short
periods of time for a number of reasons, including changes in
interest rates, intervention (or the failure to intervene) by
U.S. or non-U.S. governments, central banks or supranational
entities such as the International Monetary Fund, or by the
imposition of currency controls or other political developments
in the United States or abroad. As a result, the Fund’s
exposure to foreign currencies, including investments in foreign
currency-denominated securities, may reduce the returns of the
Fund. The local emerging market currencies in which the Fund may
be invested from time to time may experience substantially
greater volatility against the U.S. dollar than the major
convertible currencies of developed countries.
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Derivatives
Risk
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Derivatives
are financial contracts whose value depends
on, or is derived from, the value of an underlying asset,
reference rate or index. The derivatives that may be used by the
Fund are discussed in more detail under “Characteristics
and Risks of Securities and Investment
Techniques—Derivatives” in this Prospectus and
described in more detail under “Investment Objectives and
Policies” in the Statement of Additional Information. The
Fund may (but is not required to) use derivatives as part of a
strategy designed to reduce exposure to other risks, such as
risks associated with changes in interest rates or currency
risk. The Fund may also use derivatives for leverage, which
increases opportunities for gain but also involves greater risk
of loss due to leveraging risk, and to gain exposure to issuers,
indices, sectors, currencies and/or geographic regions. The
Fund’s use of derivative instruments involves risks
different from, or possibly greater than, the risks associated
with investing directly in securities and other traditional
investments. Investing in a derivative instrument could cause
the Fund to lose more than the principal amount invested, and
the use of certain derivatives may subject the Fund to the
potential for unlimited loss. Derivatives are subject to a
number of risks described elsewhere in this section, such as
liquidity risk, market risk, credit and counterparty risk and
management risk. To the extent the Fund writes
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8
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AllianzGI Emerging Markets Debt Fund
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call options on individual securities that it does not hold in
its portfolio (i.e., “naked” call options), it is
subject to the risk that a liquid market for the underlying
security may not exist at the time an option is exercised or
when the Fund otherwise seeks to close out an option position.
Naked call options have speculative characteristics and the
potential for unlimited loss. Derivatives also involve the risk
of mispricing or improper valuation, the risk of ambiguous
documentation, and the risk that changes in the value of the
derivative may not correlate perfectly with the underlying
asset, rate or index. In addition, the Fund’s use of
derivatives may increase or accelerate the amount of taxes
payable by shareholders. Also, suitable derivative transactions
may not be available in all circumstances and there can be no
assurance that the Fund will engage in these transactions to
reduce exposure to other risks when that would be beneficial or
that, if used, such strategies will be successful. Finally,
federal legislation has been recently enacted in the U.S. that
provides for new clearing, margin, reporting and registration
requirements for participants in the derivatives market.
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Under recently adopted rules and
regulations, transactions in some types of swaps (including
interest rate swaps and credit default swaps on North American
and European indices) are required to be centrally cleared. In a
cleared derivatives transaction, the Fund’s counterparty is
a clearing house, rather than a bank or broker. Since the Fund
is not a member of clearing houses and only members of a
clearing house can participate directly in the clearing house,
the Fund will hold cleared derivatives through accounts at
clearing members. In cleared derivatives transactions, the Fund
will make payments (including margin payments) to and receive
payments from a clearing house through its accounts at clearing
members. Clearing members guarantee performance of their
clients’ obligations to the clearing house.
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Centrally cleared derivative
arrangements may be less favorable to mutual funds than
bilateral arrangements. For example, the Fund may be required to
provide greater amounts of margin for cleared derivatives
transactions than for bilateral derivatives transactions. Also,
in contrast to bilateral derivatives transactions, following a
period of notice to the Fund, a clearing member generally can
require termination of existing cleared derivatives transactions
at any time or increases in margin requirements above the margin
that the clearing member required at the beginning of a
transaction. Clearing houses also have broad rights to increase
margin requirements for existing transactions or to terminate
transactions at any time.
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These and other new rules and
regulations could, among other things, further restrict the
Fund’s ability to engage in, or increase the cost to the
Fund of, derivatives transactions, for example, by making some
types of derivatives no longer available to the Fund, increasing
margin or capital requirements, or otherwise limiting liquidity
or increasing transaction costs. These regulations are new and
evolving, so their potential impact on the Fund and the
financial system are not yet known.
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Emerging
Markets
Risk
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The Fund may invest in
non-U.S.
securities and/or
currencies, and may experience more rapid and extreme changes in
value than a fund that invests exclusively in securities of U.S.
issuers or securities that trade exclusively in U.S. markets.
See “Non-U.S. Investment Risk” below. Non-U.S.
investment risk may be particularly high to the extent that the
Fund invests in
emerging market securities
, that is,
securities of issuers tied economically to countries with
developing economies. These securities may present market,
credit, currency, liquidity, legal, political, technical and
other risks different from, or greater than, the risks of
investing in developed countries.
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Certain emerging market countries may
impose restrictions on foreign investment and repatriation of
investment income and capital. In addition, foreign investors,
including the Fund, may be required to register the proceeds of
sales, and future economic or political crises could lead to
price controls, forced mergers, nationalization or the creation
of government monopolies. The currencies of emerging market
countries may experience significant declines against the U.S.
dollar, and devaluation may occur subsequent to investments in
these currencies by the Fund. See “Currency Risk.”
Inflation and rapid fluctuations in inflation rates have had,
and may continue to have, negative effects on the economies and
securities markets of certain emerging market countries.
Emerging market securities may trade in more limited volume than
comparable securities in developed foreign markets.
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Emerging market securities may have
different clearance and settlement procedures, which may be
unable to keep pace with the volume of securities transactions
or otherwise make it difficult to engage in such transactions.
Settlement problems may cause the Fund to miss attractive
investment opportunities, hold a portion of its assets in cash
pending investment, or be delayed in disposing of a portfolio
security, all of which would negatively affect the Fund’s
performance.
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In addition, the risks associated with
investing in a narrowly-defined geographic area (discussed below
under “Non-U.S. Investment Risk” and “Focused
Investment Risk”) are generally more pronounced with
respect to investments in emerging market countries. For
example, to the extent the Fund invests in companies
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incorporated or doing significant business in China, which may
be considered an emerging market, the risks associated with
China-related investments may be more pronounced for the Fund.
The Fund may also be subject to Emerging Markets Risk if it
invests in
derivatives
or other securities or instruments
whose value or returns are related to the value or returns of
emerging market securities.
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Fixed
Income Risk
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To the extent the Fund invests in fixed income instruments, it
is subject to interest rate risk. Changes in the market values
of fixed income instruments are largely a function of changes in
the current level of interest rates. The value of the
Fund’s investments in fixed income instruments will
typically change as the level of interest rates fluctuate.
During periods of declining interest rates, the value of fixed
income instruments generally rise. Conversely, during periods of
rising interest rates, the value of fixed income instruments
generally decline.
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“Duration” is one measure of
the expected life of a fixed income instrument that is used to
determine the sensitivity of a security’s price to changes
in interest rates. Securities with longer durations tend to be
more sensitive to changes in interest rates, usually making them
more volatile than securities with shorter durations.
Inflation-indexed securities, including Treasury Inflation
Protected Securities (TIPs), decline in value when interest
rates rise. In certain interest rate environments, such as when
real interest rates are rising faster than nominal interest
rates, inflation-indexed securities may experience greater
losses than other fixed income instruments with similar
durations. A nominal interest rate can be described as the sum
of a real interest rate and an expected inflation rate. Also,
some portfolios (e.g., portfolios with mortgage-backed and other
prepayable securities) have changing durations and may have
increasing durations precisely when that is least advantageous
(i.e., when interest rates are rising).
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The Fund may invest in securities that
are particularly sensitive to fluctuations in prevailing
interest rates and have relatively high levels of interest rate
risk. These include various mortgage-related securities (e.g.,
the interest-only or “IO” class of a stripped
mortgage-backed security) and “zero coupon” securities
(fixed income instruments, including certain U.S. Government
securities, that do not make periodic interest payments and are
purchased at a discount from their value at maturity).
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The Fund may invest in securities issued
by U.S. Government agencies or government enterprises. Although
some of these securities may be guaranteed as to the payment of
principal or interest by the relevant enterprise or agency,
others may not be guaranteed, and therefore may be riskier than
securities guaranteed by the U.S. Treasury.
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Focused
Investment
Risk
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Focusing Fund investments in a small number of issuers,
industries, foreign currencies or regions increases risk. Funds
that are “non-diversified” because they may invest a
significant portion of their assets in a relatively small number
of issuers may have more risk because changes in the value of a
single security or the impact of a single economic, political or
regulatory occurrence may have a greater adverse impact on the
fund’s net asset value. Diversified Funds, such as the
Fund, that invest in a relatively small number of issuers are
subject to similar risks. In addition, the Fund may be subject
to increased risk to the extent it focuses its investments in
securities denominated in a particular foreign currency or in a
narrowly defined geographic area, for example, regional economic
risks relating to weather emergencies and natural disasters.
Similarly, to the extent the Fund focuses its investments in a
certain type of issuer, it is particularly vulnerable to events
affecting such type of issuer. Also, the Fund may have greater
risk to the extent it invests a substantial portion of its
assets in a group of related industries (or
“sectors”). The industries comprising any particular
sector and investments in a particular foreign currency or in a
narrowly defined geographic area outside the United States may
share common characteristics, are often subject to similar
business risks and regulatory burdens, and react similarly to
economic, market, political or other developments. Furthermore,
certain issuers, industries and regions may be adversely
affected by the impacts of climate change on the demand for and
the development of goods and services and related production
costs, and the impacts of legislation, regulation and
international accords related to climate change, as well as any
indirect consequences of regulation or business trends driven by
climate change.
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High
Yield Risk
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The Fund may invest in
high yield securities
and
unrated securities
of similar credit quality (sometimes
referred to as “high yield securities” or “junk
bonds”) and may be subject to greater levels of credit and
liquidity risk than a fund that does not invest in such
securities. These 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 these securities and reduce the Fund’s ability
to sell these securities (liquidity risk). If the issuer of a
security is in default with respect to interest or principal
payments, the Fund may lose its entire investment. Because of
the risks involved in investing in high yield securities, an
investment in the Fund that invests in such securities should be
considered speculative. The debt instruments of many non-U.S.
governments, including their agencies, sub-divisions and
instrumentalities, are below investment grade, and are therefore
considered high yield instruments.
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10
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AllianzGI Emerging Markets Debt Fund
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Interest
Rate Risk
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Interest rate risk is the risk that
fixed income securities
will decline in value because of increases in interest
rates. As nominal interest rates rise, the value of certain
fixed income securities held by the Fund is likely to decrease.
A nominal interest rate can be described as the sum of a real
interest rate and an expected inflation rate. Fixed income
securities with longer durations tend to be more sensitive to
changes in interest rates, usually making them more volatile
than securities with shorter durations. The values of equity and
other non-fixed income securities may also decline due to
fluctuations in interest rates.
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Variable and floating rate
securities
generally are less sensitive to interest rate
changes but may decline in value if their interest rates do not
rise as much, or as quickly, as interest rates in general.
Conversely, floating rate securities will not generally increase
in value if interest rates decline. Inverse floating rate
securities may decrease in value if interest rates increase.
Inverse floating rate securities may also exhibit greater price
volatility than a fixed rate obligation with similar credit
quality. When the Fund holds variable or floating rate
securities, a decrease (or, in the case of inverse floating rate
securities, an increase) in market interest rates will adversely
affect the income received from such securities and the net
asset value of the Fund’s shares.
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Issuer
Risk
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The value of a security may decline for a number of reasons that
directly relate to the issuer, such as management performance,
financial leverage and reduced demand for the issuer’s
goods or services as well as the historical and prospective
earnings of the issuer and the value of its assets.
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Leveraging
Risk
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Leverage, including borrowing, will cause the value of the
Fund’s shares to be more volatile than if the Fund did not
use leverage. This is because leverage tends to exaggerate the
effect of any increase or decrease in the value of the
Fund’s portfolio securities. The Fund may engage in
transactions or purchase instruments that give rise to forms of
leverage. Such transactions and instruments may include, among
others, the use of
reverse repurchase agreements and other
borrowings
, the investment of collateral from
loans of
portfolio securities
, or the use of
when-issued,
delayed-delivery or forward commitment transactions
. The use
of
derivatives
and
short sales
may also involve
leverage. The use of leverage may cause the Fund to liquidate
portfolio positions when it would not be advantageous to do so
in order to satisfy its obligations or to meet segregation
requirements. Certain types of leveraging transactions, such as
short sales that are not “against the box,” could
theoretically be subject to unlimited losses in cases where the
Fund, for any reason, is unable to close out the transaction. In
addition, to the extent the Fund borrows money, interest costs
on such borrowings may not be recovered by any appreciation of
the securities purchased with the borrowed amounts and could
exceed the Fund’s investment returns, resulting in greater
losses.
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Liquidity
Risk
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Liquidity risk exists when particular investments are difficult
to purchase or sell, possibly preventing the Fund from
purchasing or selling such
illiquid securities
at an
advantageous time or price, or possibly requiring the Fund to
dispose of other investments at unfavorable times or prices in
order to satisfy its obligations. To the extent that the Fund
has principal investment strategies that involve securities of
companies with smaller market capitalizations
, non-U.S.
securities, Rule 144A securities, derivatives or securities with
substantial market and/or credit risk, it will tend to have
greater exposure to liquidity risk. Additionally, the market for
certain investments may become illiquid under adverse market or
economic conditions independent of any specific adverse changes
in the conditions of a particular issuer. In such cases, the
Fund, due to limitations on investments in illiquid securities
and the difficulty in purchasing and selling such securities or
instruments, may be unable to achieve its desired level of
exposure to a certain issuer or sector.
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Management
Risk
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The Fund is subject to management risk because it is an actively
managed investment portfolio. The Manager, the Sub-Adviser and
the individual portfolio managers will apply investment
techniques and risk analyses in making investment decisions for
the Fund, but there can be no guarantee that these will produce
the desired results.
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To the extent the portfolio managers
employ quantitative models, whether proprietary or maintained by
third parties, there can be no assurance that such models will
behave as expected in all market conditions, including due to
deviations between expected and actual relationships among
variables. In addition, the computer programming used to
construct, or the data employed by, quantitative models may
contain errors, which may cause losses for the Fund or reduce
performance. In the event third-party models become increasingly
costly or unavailable, the portfolio managers may be forced to
rely on proprietary models or to reduce or discontinue their use
of quantitative models.
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The Fund is also subject to the risk
that deficiencies in the operational systems or controls of the
Manager or another service provider will cause losses for the
Fund or hinder Fund operations. For example, trading delays or
errors (both human and systemic) could prevent the Fund from
purchasing a security expected to appreciate in value.
Additionally, legislative, regulatory, or tax developments may
affect the investment techniques available to
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Allianz Global Fund Management and each individual portfolio
manager in connection with managing the Fund and may also
adversely affect the ability of the Fund to achieve its
investment objective.
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Market
Risk
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The market price of securities owned by the Fund may go up or
down, sometimes rapidly or unpredictably. To the extent the Fund
invests substantially in
common stocks and/or other equity
securities
, a principal risk of investing in the Fund is
that the investments in its portfolio will decline in value due
to factors affecting securities markets generally or particular
industries or sectors represented in those markets. The values
of securities may decline due to general market conditions that
are not specifically related to a particular company, such as
real or perceived adverse economic conditions, changes in the
general outlook for corporate earnings, changes in interest or
currency rates, adverse changes to credit markets or adverse
investor sentiment generally. They may also decline due to
factors that disproportionately affect a particular industry,
group of related industries or sector, such as labor shortages
or increased production costs and competitive conditions within
an industry or sector. The market price of
fixed income
securities
, as well as equity securities and other types of
investments, may decline due to changes in interest rates or
other factors affecting the applicable markets generally. Equity
securities generally have greater price volatility than fixed
income securities, although under certain market conditions
fixed income securities may have comparable or greater price
volatility. During a general downturn in securities markets,
multiple asset classes may decline in value simultaneously.
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The Fund is subject to the risk that
geopolitical and other events will disrupt securities markets,
adversely affect global economies and markets and thereby
decrease the value of the Fund’s investments. The wars in
Iraq and Afghanistan have had a substantial effect on the
economies and securities markets of the U.S. and other
countries. Terrorism in the U.S. and around the world has had a
similar global impact and has increased geopolitical risk. The
terrorist attacks on September 11, 2001 resulted in the closure
of some U.S. securities markets for four days, and similar
attacks are possible in the future. Securities markets may be
susceptible to market manipulation (e.g., the potential
manipulation of the London Interbank Offered Rate (LIBOR)) or
other fraudulent trade practices, which could disrupt the
orderly functioning of these markets or adversely affect the
value of investments traded in these markets, including
investments of the Fund. While the U.S. government has honored
its credit obligations continuously for the last 200 years,
it remains possible that the U.S. could default on its
obligations. While it is impossible to predict the consequences
of such an unprecedented event, it is likely that a default by
the U.S. would be highly disruptive to the U.S. and global
securities markets and could significantly impair the value of
the Fund’s investments. Similarly, political events within
the U.S. at times have resulted, and may in the future result,
in a shutdown of government services, which could negatively
affect the U.S. economy, decrease the value of many Fund
investments, and increase uncertainty in or impair the operation
of the U.S. or other securities markets. The uncertainty
surrounding the sovereign debt of a significant number of
European Union countries, as well as the continued existence of
the European Union itself, have disrupted and may continue to
disrupt markets in the U.S. and around the world. If one or more
countries leave the European Union or the European Union
dissolves, the world’s securities markets likely will be
significantly disrupted. Substantial government interventions
(e.g., currency controls) also could negatively impact the Fund.
War, terrorism, economic uncertainty, and related geopolitical
events have led, and in the future may lead, to increased
short-term market volatility and may have adverse long-term
effects on U.S. and world economies and markets generally.
Likewise, natural and environmental disasters, such as the
earthquake and tsunami in Japan in early 2011, and systemic
market dislocations of the kind surrounding the insolvency of
Lehman Brothers in 2008, if repeated, would be highly disruptive
to economies and markets, adversely affecting individual
companies and industries, securities markets, interest rates,
credit ratings, inflation, investor sentiment, and other factors
affecting the value of the Fund’s investments. During such
market disruptions, the Fund’s exposure to the risks
described elsewhere in this “Summary of Principal
Risks” section will likely increase. Market disruptions,
including sudden government interventions, can also prevent the
Fund from implementing its investment programs for a period of
time and achieving its investment objective. For example, a
market disruption may adversely affect the orderly functioning
of the securities markets and may cause the Fund’s
derivatives counterparties to discontinue offering derivatives
on some underlying commodities, securities, reference rates, or
indices, or to offer them on a more limited basis. To the extent
the Fund has focused its investments in the stock index of a
particular region, adverse geopolitical and other events could
have a disproportionate impact on the Fund.
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Mortgage-Related
and
Other Asset-Backed
Risk
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The Fund may invest in a variety of mortgage-related and other
asset-backed securities, which are subject to certain additional
risks. Generally, rising interest rates tend to extend the
duration of fixed-rate mortgage-related securities, making them
more sensitive to changes in interest rates. As a result, in a
period of rising interest rates, to the extent the Fund holds
mortgage-related securities, it may exhibit additional
volatility. This is known as extension risk. In addition,
adjustable and fixed-rate mortgage-related securities may
involve special risks
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12
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AllianzGI Emerging Markets Debt Fund
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relating to unanticipated rates of prepayment on the mortgages
underlying the securities. This is known as prepayment risk.
When interest rates decline, borrowers may pay off their
mortgages sooner than expected. This can reduce the returns of
the Fund because the Fund may have to reinvest that money at the
lower prevailing interest rates. The Fund’s investments in
other asset-backed securities are subject to risks similar to
those associated with mortgage-related securities, as well as
additional risks associated with the nature of the assets and
the servicing of those assets.
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The market for mortgage-backed and other
asset-backed securities has recently experienced high volatility
and a lack of liquidity. As a result, the value of many of these
securities has significantly declined. There can be no assurance
that these markets will become more liquid or less volatile, and
it is possible that the value of these securities could decline
further.
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Non-U.S.
Investment Risk
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To the extent that the Fund invests in
non-U.S.
securities
, it may experience more rapid and extreme changes
in value than funds that invest exclusively in securities of
U.S. issuers or securities that trade exclusively in U.S.
markets. The securities markets of many non-U.S. countries are
relatively small, with a limited number of companies
representing a small number of industries. Additionally, issuers
of non-U.S. securities are often not subject to the same degree
of regulation as U.S. issuers. Reporting, accounting and
auditing standards of non-U.S. countries differ, in some cases
significantly, from U.S. standards. Also, nationalization,
expropriation or confiscatory taxation, currency blockage,
market disruption, political changes, security suspensions or
diplomatic developments could adversely affect the Fund’s
investments in a non-U.S. country. In the event of
nationalization, expropriation or other confiscation, the Fund
could lose its entire investment in non-U.S. securities. To the
extent that the Fund invests a significant portion of its assets
in a particular currency or geographic area, the Fund will
generally have more exposure to regional economic risks,
including weather emergencies and natural disasters. For
example, because the Fund may invest more than 25% of its assets
in particular countries, the Fund may be subject to increased
risks due to political, economic, social or regulatory events in
those countries. Adverse developments in certain regions can
also adversely affect securities of other countries whose
economies appear to be unrelated. In addition, the Fund’s
investments in non-U.S. securities may be subject to withholding
and other taxes imposed by countries outside the U.S., which
could reduce the return on an investment in the Fund.
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Short
Selling Risk
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Short sales may be used by the Fund for investment and risk
management purposes, including when the Sub-Adviser anticipates
that the market price of securities will decline or will
underperform relative to other securities held in the
Fund’s portfolio, or as part of an overall portfolio
strategy to minimize the effects of market volatility (i.e., a
“market neutral” strategy). Short sales are
transactions in which the Fund sells a security or other
instrument (such as an option forward, futures or other
derivative contract) that it does not own. Short exposure with
respect to securities or market segments may also be achieved
through the use of derivatives, such as futures on indices or
swaps on individual securities. When the Fund engages in a short
sale on a security, it must borrow the security sold short and
deliver it to the counterparty. The Fund will ordinarily have to
pay a fee or premium to borrow particular securities and be
obligated to repay the lender of the security any dividends or
interest that accrue on the security during the period of the
loan. The amount of any gain from a short sale will be
decreased, and the amount of any loss increased, by the amount
of the premium, dividends, interest or expenses the Fund pays in
connection with the short sale. Short sales expose the Fund to
the risk that it will be required to cover its short position at
a time when the securities have appreciated in value, thus
resulting in a loss to the Fund. The Fund may, to the extent
permitted by law, engage in short sales where it does not own or
have the right to acquire the security (or basket of securities)
sold short at no additional cost. The Fund’s loss on a
short sale could theoretically be unlimited in a case where the
Fund is unable, for whatever reason, to close out its short
position. The use by the Fund of short sales in combination with
long positions in its portfolio in an attempt to improve
performance may not be successful and may result in greater
losses or lower positive returns than if the Fund held only long
positions. It is possible that the Fund’s long equity
positions will decline in value at the same time that the value
of the securities underlying its short positions increase,
thereby increasing potential losses to the Fund. If the Fund is
required to return a borrowed security at a time when other
short sellers are also required to return the same security, a
“short squeeze” can occur, and the Fund may be forced
to purchase the security at a disadvantageous price. In
addition, the Fund’s short selling strategies may limit its
ability to fully benefit from increases in the equity markets.
Short selling also involves a form of financial leverage that
may exaggerate any losses realized by the Fund that utilizes
short sales. See “Leveraging Risk.” Also, there is the
risk that the counterparty to a short sale may fail to honor its
contractual terms, causing a loss to the Fund. See “Credit
and Counterparty Risk.” To the extent the Fund seeks to
obtain some or all of its short exposure by using derivative
instruments instead of engaging directly in short
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sales on individual securities, it will be subject to many of
the foregoing risks, as well as to those described under
“Derivatives Risk” above.
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Turnover
Risk
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A change in the securities held by the Fund is known as
“
portfolio turnover
.” Higher portfolio turnover
involves correspondingly greater expenses to the Fund, including
brokerage commissions or dealer mark-ups and other transaction
costs on the sale of securities and reinvestments in other
securities. Such sales may also result in realization of taxable
capital gains, including short-term capital gains (which are
taxed as ordinary income when distributed to individual
shareholders), and may adversely impact the Fund’s
after-tax returns. The trading costs and tax effects associated
with portfolio turnover may adversely affect the Fund’s
performance.
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Variable
Distribution
Risk
|
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Because securities held by the Fund may have variable or
floating interest rates, the amounts of the Fund’s periodic
distributions to shareholders may vary with fluctuations in
market interest rates. Generally, when market interest rates
fall, the amount of the distributions to shareholders will
likewise decrease. Because of the nature of distributions
received by the underlying stock funds, it is expected that the
Fund, to the extent it make distributions, will make them in
varying amounts.
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Additional
Risks
of Investing in the
Fund
|
|
In addition to the risks described above, the Fund is newly
formed and therefore has limited or no history for investors to
evaluate. Also, it is possible that this newer Fund may invest
in securities offered in initial public offerings and other
types of transactions (such as private placements) which,
because of the Fund’s size, have a disproportionate impact
on the Fund’s performance results. The Fund would not
necessarily have achieved the same performance results if its
aggregate net assets had been greater.
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14
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AllianzGI Emerging Markets Debt Fund
|
Portfolio Holdings
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A description of the Trust’s policies and procedures with
respect to the disclosure of the Fund’s portfolio holdings,
together with additional information about portfolio holdings
disclosure, is available in the Trust’s Statement of
Additional Information. In addition, the Manager will post the
Fund’s portfolio holdings information on the Fund’s
website at us.allianzgi.com. The Fund’s website will
contain the Fund’s complete schedule of portfolio holdings
as of the relevant month end. The information will be posted
approximately five (5) business days after the relevant
month’s end, and such information will remain accessible on
the website until the Trust files its
Form N-CSR
or
Form N-Q
with the Securities and Exchange Commission (SEC) for the period
that includes the date as of which the website information is
current. The Trust’s policies with respect to the
disclosure of portfolio holdings are subject to change without
notice.
|
Prior Related
Performance Information [**TO BE UPDATED BY AMENDMENT**]
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The Fund was recently organized and has little performance
record of its own. The following table sets forth historical
performance information for the institutional accounts managed
by AllianzGI U.S. that have substantially similar
investment objectives, policies, strategies, risks and
investment restrictions as the Fund.
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The composite data is provided to
illustrate the past performance of AllianzGI U.S. and its
predecessor advisers and affiliates in managing substantially
similar accounts as measured against specified market indices
and does not represent the performance of the Fund. The accounts
in the composite are separate and distinct from the Fund; their
performance is not intended as a substitute for the Fund’s
performance and should not be considered a prediction of the
future performance of the Fund or of AllianzGI U.S.
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The composite’s performance data
shown below was calculated in accordance with recognized
industry standards, consistently applied to all time periods.
All returns presented were calculated on a total return basis
and include all dividends and interest, accrued income and
realized and unrealized gains and losses. All returns reflect
the deduction of brokerage commissions and execution costs paid
by the institutional private accounts, without provision for
federal or state income taxes. “Net of Fees” figures
also reflect the deduction of investment advisory fees.
Custodial fees, if any, were not included in the calculation.
The composite includes all actual discretionary institutional
accounts managed by AllianzGI U.S., its predecessor advisers and
affiliates for at least one full month that have investment
objectives, policies, strategies and risks substantially similar
to those of the Fund. The composite may include both tax-exempt
and taxable accounts and all reinvestment of earnings.
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Securities transactions are accounted
for on trade date and accrual accounting is utilized. Cash and
equivalents are included in performance returns. Monthly returns
of the composite combine the individual accounts’ returns
(calculated on a time-weighted rate of return basis that is
revalued daily) by asset-weighting each account’s asset
value as of the beginning of the month. Annual returns are
calculated by geometrically linking (
i.e.
, calculating
the product of) the monthly returns. Investors should be aware
that the performance information shown below was calculated
differently than the methodology mandated by the SEC for
registered investment companies.
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The institutional accounts that are
included in the composite may be subject to lower expenses than
the Fund and are not subject to the diversification
requirements, specific tax restrictions and investment
limitations imposed on the Fund by the Investment Company Act of
1940 or Subchapter M of the Internal Revenue Code. Consequently,
the performance results for the composite may have been less
favorable had they been subject to the same expenses as the Fund
or had the composite been regulated as an investment company
under the federal securities laws.
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The results presented below may not
necessarily equate with the return experienced by any particular
investor as a result of the timing of investments and
redemptions. In addition, the effect of taxes on any investor
will depend on such person’s tax status, and the results
have not been reduced to reflect any income tax that may have
been payable.
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The table below shows the annual total
returns for the composite, and a broad-based securities market
index for periods ended December 31.
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AllianzGI
U.S.’s Prior
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Performance of
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Similar
Accounts
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[Composite]
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[Composite]
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Relating
to the
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Year
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(Net of
Fees)
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(Gross of
Fees)
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[Index]
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AllianzGI Emerging
Markets Debt Fund
|
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[ ]
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[ ]
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[ ]
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[ ]
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16
|
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AllianzGI Emerging Markets Debt Fund
|
Management of the
Fund [**TO BE UPDATED BY AMENDMENT**]
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Investment
Manager
|
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Allianz Global Investors Fund Management LLC (“Allianz
Global Fund Management” or the “Manager”)
serves as the investment manager for the Fund. In this capacity,
the Manager provides investment advisory and certain
administrative services to the Fund, as described under
“Management of the Fund.” Subject to the supervision
of the Trust’s Board of Trustees, Allianz Global Fund
Management is responsible for managing, either directly or
through others selected by it, the investment activities of the
Fund and the Fund’s business affairs and other
administrative matters.
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The Manager is located at 1633 Broadway,
New York, New York 10019. Organized in 2000, the Manager
provides investment management and advisory services to open-end
mutual funds and closed-end funds. The Manager is a wholly-owned
indirect subsidiary of Allianz Asset Management of America L.P.
(“Allianz”) and of Allianz SE, a publicly-traded
European insurance and financial services company. As of
[ ], the Manager had approximately
$[ ] in assets under
management.
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The Manager has retained an investment
management firm (the “Sub-Adviser”) to manage the
Fund’s investments. See “Sub-Adviser” below. The
Manager may retain affiliates to provide various administrative
and other services required by the Fund.
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Management
Fees
|
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The Fund pays a monthly management fee to the Manager in return
for managing, either directly or through others selected by it,
the investment activities of the Fund and the Fund’s
business affairs and other administrative matters. In addition
to the fees of the Manager, the Fund pays all other costs and
expenses of its operations, including, without limitation,
compensation of its Trustees (other than those affiliated with
the Manager), custodial expenses, shareholder servicing
expenses, transfer agency expenses, sub-transfer agency
expenses, dividend disbursing expenses, legal fees, expenses of
an independent registered public accounting firm, expenses of
preparing, printing and distributing proxy statements and
reports to governmental agencies, and taxes, if any.
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The Manager (and not the Fund) pays a
portion of the management fees it receives to the Sub-Adviser in
return for its services.
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The Fund is newly formed, and as a
result, management fees paid to Allianz Global Fund Management
during the most recently completed fiscal year are not
available. For the current fiscal year, the Fund will pay
monthly management fees to the Manager at the following annual
rates (stated as a percentage of the average daily net assets of
the Fund):
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Allianz
Multi-Strategy Fund Management Fees
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Management
Fees
|
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AllianzGI Emerging Markets Debt Fund
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[ ]
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%
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A discussion regarding the basis for the
Board of Trustees’ initial approval of the investment
management agreement between Allianz Global Fund Management
and the Fund and the sub-advisory agreement between Allianz
Global Fund Management and the Sub-Adviser with respect to
the Fund will be available in the annual report to shareholders
for the fiscal year ending November 30, 2014.
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Expense
Limitation Arrangements
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Expense Limitation Arrangements.
For the Fund, the
Manager has contractually agreed to expense limitation
arrangements as specified under “Fees and Expenses of the
Fund” in the Fund Summary of the Fund. Specifically,
the Manager will waive its Management Fee or reimburse the Fund
until the date indicated to the extent that Total Annual
Fund Operating Expenses including the payment of
organizational expenses, but excluding interest, tax and
extraordinary expenses, and certain credits and other expenses,
exceed the amount specified for each share class of the Fund as
a percentage of average net assets. Under the Expense Limitation
Agreement, the Manager may recoup waived or reimbursed amounts
for three years, provided total expenses, including such
recoupment, do not exceed the annual expense limit. The Expense
Limitation Agreement is terminable by the Trust upon
90 days’ prior written notice to the Manager or at any
time by mutual agreement of the parties.
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Sub-Adviser
|
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The Sub-Adviser has full investment discretion and makes all
determinations with respect to the investment of the Fund’s
assets, subject to the general supervision of the Manager and
the Board of Trustees. The following provides summary
information about the Sub-Adviser, including the Fund it manages.
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Sub-Adviser*
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Allianz
Multi-Strategy Fund(s)
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Allianz Global Investors U.S. LLC (“AllianzGI
U.S.”)
600 West Broadway
San Diego, CA 92101
555 Mission Street, Suite 1700
San Francisco, CA 94105
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AllianzGI Emerging Markets Debt Fund
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* The
Sub-Adviser is affiliated with the Manager.
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The following provides additional
information about the Sub-Adviser and the individual portfolio
managers who are jointly and primarily responsible for managing
the Fund’s investments. The Statement of Additional
Information provides additional information about the portfolio
managers’ compensation, other accounts managed by the
portfolio managers and the portfolio managers’ ownership of
securities of the Fund they manage.
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AllianzGI
U.S.
|
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AllianzGI U.S. is registered as an investment adviser with
the SEC and is organized as a Delaware limited liability
company. Its principal place of business is located at
600 West Broadway, San Diego, California 92101.
AllianzGI U.S. also has offices located at 1633 Broadway,
New York, New York 10019, and 555 Mission Street,
San Francisco, California 94105.
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AllianzGI U.S. provides investment
management services across a broad class of assets including
equity, fixed income, futures and options, convertibles and
other securities and derivative instruments. AllianzGI
U.S.’s primary business is to provide discretionary
advisory services to institutional clients through its separate
account management services. In addition, AllianzGI
U.S. provides discretionary investment advisory services to
a variety of commingled funds (including SEC registered open-end
investment companies, SEC registered closed-end investment
companies and other commingled funds that are not registered
with the SEC), which may be sponsored or established by
AllianzGI U.S., its affiliates or by unaffiliated third parties.
AllianzGI U.S. also participates as a non-discretionary
investment adviser providing investment models to unaffiliated
third parties. As of [ ], AllianzGI
U.S. had assets under management of
$[ ].
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The individuals at AllianzGI
U.S. listed below are jointly and primarily responsible for
the day-to-day management of the Fund. Employees of AllianzGI
U.S. affiliates outside the US participate in the
management of the Fund as “associated persons” of
AllianzGI U.S. under the firm’s compliance oversight,
in accordance with SEC guidance as to such arrangements.
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Portfolio
|
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Allianz
Fund
|
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Managers
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Since
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Recent
Professional Experience
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AllianzGI Emerging Markets Debt Fund
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Greg Saichin
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2014
(Inception)
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[ ]
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Zeke Diwan
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2014
(Inception)
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[ ]
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Manager/Sub-Adviser
Relationship
|
|
Shareholders of the Fund have granted approval to the Manager to
enter into new or amended sub-advisory agreements with one or
more sub-advisers with respect to the Fund without obtaining
shareholder approval of such agreements, subject to the
conditions of an exemptive order that has been granted by the
SEC (the “Exemptive Order”) with respect to certain
other open-end funds within the Allianz family of funds. One of
the conditions of the Exemptive Order requires the Board of
Trustees to approve any such agreement. Currently the Exemptive
Order does not apply to the Trust. In addition, the Exemptive
Order currently does not apply to sub-advisory agreements with
affiliates of the Manager without shareholder approval, unless
those affiliates are wholly-owned by Allianz.
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Distributor
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|
The Trust’s distributor is Allianz Global Investors
Distributors LLC (“AGID” or the
“Distributor”), an indirect subsidiary of Allianz,
Allianz Global Fund Management’s parent company. The
Distributor, located at 1633 Broadway, New York, New York 10019,
is a broker-dealer registered with the SEC.
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18
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AllianzGI Emerging Markets Debt Fund
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Classes of
Shares—Class A, Class C, Institutional Class and
Class P Shares
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The Trust offers investors Class A, Class C,
Institutional Class and Class P shares of the Fund in this
Prospectus. Each class of shares is subject to different types
and levels of sales charges (if applicable) and other fees than
the other classes and bears a different level of expenses.
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Before purchasing shares of the Fund
directly, an investor should inquire about the other classes of
shares offered by the Trust and particular series of the Trust,
some of which are offered in different prospectuses. As
described within the applicable prospectus, each class of shares
has particular investment eligibility criteria and is subject to
different types and levels of charges, fees and expenses than
the other classes. An investor who owns Class A or
Class C shares may call the Distributor at
1-800-988-8380
and an investor who owns Institutional Class or Class P
shares may call the Distributor at
1-800-498-5413.
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Subject to eligibility, the class of
shares that is best for you depends upon a number of factors,
including the amount and the intended length of your investment.
Some of the share classes are generally subject to a higher
level of operating expenses than other share classes due to the
additional service
and/or
distribution fees paid by such shares as described below. The
share classes that are not subject to these expenses, or that
are subject to lower expenses, will generally pay higher
dividends and have a more favorable investment return.
Individual investors can generally invest in Class A and
Class C shares. Only certain investors may purchase
Institutional Class and Class P shares. The following
summarizes key information about each class to help you make
your investment decision, including the various expenses
associated with each class and the payments made to financial
intermediaries for distribution and other services. More
extensive information about the Trust’s multi-class
arrangements is included in the Statement of Additional
Information, which can be obtained free of charge from the
Distributor.
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Class A
Shares
|
|
• Class A shares are generally
available for purchase by all investors, subject to the
satisfaction of investment minimums described below under
“How to Buy and Sell Shares-Investment Minimums &
Account Size.”
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• You pay an initial sales charge of up to
5.50% when you buy Class A shares. The sales charge is
deducted from your investment so that not all of your purchase
payment is invested.
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• You may be eligible for a reduction or a
complete waiver of the initial sales charge under a number of
circumstances. For example, you normally pay no sales charge if
you purchase $1,000,000 or more of Class A shares. Please
see the Statement of Additional Information for details.
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• Class A shares are subject to lower
12b-1
fees
than Class C shares. Therefore, Class A shareholders
generally pay lower annual expenses and receive higher dividends
than Class C shareholders, but pay initial sales charges
that do not apply to Class C shares.
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• You normally pay no contingent deferred
sales charge (“CDSC”) when you redeem Class A
shares, although you may pay a 1% CDSC if you purchase
$1,000,000 or more of Class A shares (and therefore pay no
initial sales charge) and then redeem the shares during the
first 18 months after your initial purchase. The
Class A CDSC is waived for certain categories of investors
and does not apply if you are otherwise eligible to purchase
Class A shares without an initial sales charge. Please see
the Statement of Additional Information for details.
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• Class A shares do not convert into
any other class of shares.
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Class C
Shares
|
|
• Class C shares are generally
available for purchase by all investors, subject to the
satisfaction of investment minimums described below under
“How to Buy and Sell Shares—Investment
Minimums & Account Size.”
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• You do not pay an initial sales charge
when you buy Class C shares. The full amount of your
purchase payment is invested initially.
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• You normally pay a CDSC of 1% if you
redeem Class C shares during the first year after your
initial purchase. The Class C CDSC is waived for certain
categories of investors.
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• Class C shares are subject to
higher
12b-1
fees than Class A shares. Therefore, Class C
shareholders normally pay higher annual expenses and receive
lower dividends than Class A shareholders.
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• Class C shares do not convert into
any other class of shares.
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Class A
and Class C Shares
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Some or all of the payments described below with respect to
Class A and Class C shares are paid or
“reallowed” to financial intermediaries. See the
Statement of Additional Information for details. Additional
information about the sales charges and other expenses
associated with each share Class is provided below.
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Institutional
Class and Class P Shares
|
|
The Fund does not charge any sales charges (loads) or other fees
in connection with purchases, sales (redemptions) or exchanges
of Institutional Class and Class P shares of the Fund
offered in this Prospectus.
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Institutional Class shares are offered
primarily for direct investment by investors such as pension and
profit sharing plans, employee benefit trusts, endowments,
foundations, corporations and high net worth individuals.
Institutional Class shares may also be offered through certain
financial intermediaries that charge their customers transaction
or other fees with respect to their customers’ investments
in the Fund.
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Class P shares are offered
primarily through certain asset allocation, wrap fee and other
similar programs offered by broker-dealers and other
intermediaries, and the Fund pays service fees to these entities
for services they provide to Class P shareholders.
Class P shares may also be offered for direct investment by
other investors such as pension and profit sharing plans,
employee benefit trusts and plan alliances, endowments,
foundations, corporations and high net worth individuals.
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With respect to Institutional Class
shares, pension and profit-sharing plans, employee benefit
trusts and employee benefit plan alliances and “wrap
account” programs established with broker-dealers or
financial intermediaries may purchase shares of either class
only if the plan or program for which the shares are being
acquired will maintain an omnibus or pooled account for the Fund.
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Initial
Sales Charges—
Class A Shares
|
|
This section includes important information about sales charge
reduction programs available to investors in Class A shares
of the Fund and describes information or records you may need to
provide to the Distributor or your financial intermediary in
order to be eligible for sales charge reduction programs.
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Unless you are eligible for a waiver,
the public offering price you pay when you buy Class A
shares of the Fund is the net asset value (“NAV”) of
the shares plus an initial sales charge. The initial sales
charge varies depending upon the size of your purchase, as set
forth below. Investors who purchase $1,000,000 or more of the
Fund’s Class A shares (and thus pay no initial sales
charge) may be subject to a CDSC of 1% if they redeem such
shares during the first 18 months after their purchase. See
“CDSCs on Class A Shares” below.
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|
AllianzGI Emerging Markets Debt Fund
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Sales Charge
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Sales Charge
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as % of Net
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as % of Public
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Amount of
Purchase
|
|
Amount
Invested
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|
Offering
Price
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$0–$99,999
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3.90
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%
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3.75
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%
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$100,000–$249,999
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3.36
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%
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3.25
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%
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$250,000–$499,999
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2.30
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%
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2.25
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%
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$500,000–$999,999
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1.78
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%
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1.75
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%
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$1,000,000 +
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0.00
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%
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|
0.00
|
%
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Investors in the Fund may reduce or
eliminate sales charges applicable to purchases of Class A
shares through utilization of the Combined Purchase Privilege,
the Cumulative Quantity Discount (Right of Accumulation), a
Letter of Intent or the Reinstatement Privilege. These programs,
which apply to purchases of the Fund and one or more series of
the Trust or Allianz Funds that offer Class A shares
(together, “Eligible Funds”), are summarized below and
are described in greater detail in the Statement of Additional
Information.
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Right of Accumulation and Combined
Purchase Privilege (Breakpoints).
A Qualifying Investor
(as defined below) may qualify for a reduced sales charge on
Class A shares (the “Combined Purchase
Privilege”) by combining concurrent purchases of the
Class A shares of one or more Eligible Funds into a single
purchase. In addition, a Qualifying Investor may qualify for a
reduced sale charge on Class A shares (the “Right of
Accumulation” or “Cumulative Quantity Discount”)
by combining the purchase of Class A shares of an Eligible
Fund with the current aggregate net asset value of all
Class A, B, and C shares of any Eligible Fund held by
accounts for the benefit of such Qualifying Investor for
purposes of determining the applicable front-end sales charge.
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The term “Qualifying Investor”
refers to:
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|
(i) an
individual, such individual’s spouse, such
individual’s children under the age of 21 years, or
such individual’s siblings (each a “family
member”) (including family trust* accounts established by
such a family member)
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20
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|
AllianzGI Emerging Markets Debt Fund
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or
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(ii) a
trustee or other fiduciary for a single trust (except family
trusts* noted above), estate or fiduciary account although more
than one beneficiary may be involved
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or
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|
(iii) an
employee benefit plan of a single employer
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|
* For
the purpose of determining whether a purchase would qualify for
a reduced sales charge under the Combined Purchase Privilege or
Right of Accumulation, a “family trust” is one in
which a family member(s) described in section (i) above
is/are a beneficiary/ies and such person(s)
and/or
another family member is the trustee.
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For example, the following illustrates the operation of the
Right of Accumulation:
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•
Example:
If a shareholder
owned Class A shares of the AllianzGI Emerging Markets Debt
Fund with a current net asset value of $10,000, Class B
shares of the AllianzGI Global Allocation Fund with a current
net asset value of $5,000 and Class C shares of the
AllianzGI NFJ Global Dividend Value Fund with a current net
asset value of $10,000 and he wished to purchase Class A
shares of the AllianzGI China Equity Fund with a purchase price
of $30,000 (including sales charge), the sales charge for the
$30,000 purchase would be at the 4.50% rate applicable to a
single $55,000 purchase of shares of the AllianzGI China Equity
Fund, rather than the 5.50% rate that would otherwise apply to a
$30,000 purchase. The discount will be applied only to the
current purchase (
i.e.
, the $30,000 purchase), not to any
previous transaction.
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|
Please see the Statement of Additional
Information for details and for restrictions applicable to
shares held by certain employer-sponsored benefit programs.
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|
Letter of Intent.
An
investor may also obtain a reduced sales charge on purchases of
Class A shares by means of a written Letter of Intent,
which expresses an intent to invest not less than $50,000 within
a period of 13 months in Class A shares of any
Eligible Fund(s). The maximum intended investment allowable in a
Letter of Intent is $1,000,000. Each purchase of shares under a
Letter of Intent will be made at the public offering price or
prices applicable at the time of such purchase to a Single
Purchase of the dollar amount indicated in the Letter. A Letter
of Intent is not a binding obligation to purchase the full
amount indicated. Shares purchased with the first 5% of the
amount indicated in the Letter will be held in escrow (while
remaining registered in your name) to secure payment of the
higher sales charges applicable to the shares actually purchased
in the event the full intended amount is not purchased.
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|
Reinstatement Privilege.
A
Class A shareholder who has caused any or all of his shares
to be redeemed may reinvest all or any portion of the redemption
proceeds in Class A shares of any Eligible Fund at NAV
without any sales charge, provided that such investment is made
within 120 calendar days after the redemption or repurchase
date. The limitations and restrictions of this program are
described in the Statement of Additional Information.
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|
Method of Valuation of
Accounts.
To determine whether a shareholder qualifies
for a reduction in sales charges on a purchase of Class A
shares of Eligible Funds, the offering price of the shares is
used for purchases relying on the Combined Purchase Privilege or
a Letter of Intent and the amount of the total current purchase
(including any sales load) plus the NAV (at the close of
business on the day of the current purchase) of shares
previously acquired is used for the Cumulative Quantity Discount.
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|
Sales at Net Asset Value.
In
addition to the programs summarized above, the Fund may sell its
Class A shares at NAV without an initial sales charge to
certain types of accounts or account holders, including, but not
limited to: Trustees of the Fund; current and former (provided
that an account is opened during the time of employment)
employees of the Manager, Sub-Adviser and Distributor; employees
of participating brokers; certain trustees or other fiduciaries
purchasing shares for retirement plans; participants investing
in certain “wrap accounts” and investors who purchase
shares through a participating broker who has waived all or a
portion of the payments it normally would receive from the
Distributor at the time of purchase. In addition, Class A
shares of the Fund issued pursuant to the automatic reinvestment
of income dividends or capital gains distributions are issued at
net asset value and are not subject to any sales charges.
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|
Required Shareholder Information and
Records.
In order for investors in Class A shares
of the Fund to take advantage of sales charge reductions, an
investor or his or her financial intermediary must notify the
Distributor that the investor qualifies for such a reduction. If
the Distributor is not notified that the investor is eligible
for these reductions, the Distributor will be unable to ensure
that the reduction is applied to the investor’s account.
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|
An investor may have to provide certain
information or records to his or her financial intermediary or
the Distributor to verify the investor’s eligibility for
breakpoint privileges or other sales charge waivers. An investor
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|
may be asked to provide information or records, including
account statements, regarding shares of the Fund or other
Eligible Funds held in:
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|
• all of the
investor’s accounts held directly with the Trust or through
a financial intermediary;
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|
• any account of
the investor at another financial intermediary; and
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|
• accounts of
related parties of the investor, such as members of the same
family or household, at any financial intermediary.
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|
The Trust makes available free of
charge, on the Fund’s Web site at us.allianzgi.com,
information regarding eliminations of and reductions in sales
charges associated with Eligible Funds.
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|
Initial
Sales Charges—
Other Share Classes
|
|
As discussed above, only Class A shares of the Fund are
subject to an initial sales charge.
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|
|
|
|
|
Contingent
Deferred Sales Charges (CDSCs)—Class C Shares
|
|
Unless you are eligible for a waiver, if you sell (redeem) your
Class C shares within the time periods specified below, you
will pay a CDSC according to the following schedules. For
investors investing in Class C shares of the Fund through a
financial intermediary, it is the responsibility of the
financial intermediary to ensure that the investor is credited
with the proper holding period for the shares redeemed.
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|
|
|
|
|
Class
C Shares
|
|
Years Since
Purchase
|
|
Percentage
Contingent
|
|
|
|
|
|
Payment was
Made
|
|
Deferred Sales
Charge
|
|
|
|
|
|
|
|
|
|
First
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
Thereafter
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
CDSCs
on Class A
Shares
|
|
Unless a waiver applies, investors who purchase $1,000,000 or
more of Class A shares (and, thus, pay no initial sales
charge) will be subject to a 1% CDSC if the shares are redeemed
within 18 months of their purchase. The Class A CDSC
does not apply if you are otherwise eligible to purchase
Class A shares without an initial sales charge or if you
are eligible for a waiver of the CDSC. See “Reductions and
Waivers of Initial Sales Charges and CDSCs” below.
|
|
|
|
|
How
CDSCs are
Calculated
|
|
Shares acquired through the reinvestment of dividends or capital
gains distributions will be redeemed first and will not be
subject to any CDSC. For the redemption of all other shares, the
CDSC will be based on either your original purchase price or the
then current NAV of the shares being sold, whichever is lower.
To illustrate this point, consider shares purchased at an NAV
per share of $10. If the Fund’s NAV per share at the time
of redemption is $12, the CDSC will apply to the purchase price
of $10. If the NAV per share at the time of redemption is $8,
the CDSC will apply to the $8 current NAV per share. CDSCs will
be deducted from the proceeds of your redemption, not from
amounts remaining in your account. In determining whether a CDSC
is payable, it is assumed that the shareholder will redeem first
the lot of shares that will incur the lowest CDSC.
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|
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|
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|
For example, the following illustrates the operation of the
Class C CDSC:
|
|
|
|
|
|
• Assume that an individual opens an
account and makes a purchase payment of $10,000 for 1,000
Class C shares of the Fund (at $10 per share) and that six
months later the value of the investor’s account for that
Fund has grown through investment performance to $11,000 ($11
per share). If the investor should redeem $2,200
(200 shares), a CDSC would be applied against $2,000 of the
redemption (the purchase price of the shares redeemed, because
the purchase price is lower than the current net asset value of
such shares ($2,200)). At the rate of 1%, the Class C CDSC
would be $20.
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|
|
|
|
Reductions
and
Waivers of Initial
Sales Charges and
CDSCs
|
|
The initial sales charges on Class A shares and the CDSCs
on Class A and Class C shares may be reduced or waived
under certain purchase arrangements and for certain categories
of investors. Please see the Statement of Additional Information
for details. The Statement of Additional Information is
available free of charge from the Distributor.
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|
|
|
|
|
Distribution
and Servicing (12b-1) Plans, Service Fees, and Arrangements with
Service Agents
|
|
•
Distribution and Servicing (12b-1)
Plans—Class A and Class C shares.
With
respect to Class A and Class C shares, the Fund pays
fees to the Distributor on an ongoing basis as compensation for
the services the Distributor renders and the expenses it bears
in connection with the sale and distribution of Fund shares
(“distribution fees”) and/or in connection with
personal services rendered to Fund shareholders and the
maintenance of shareholder accounts (“servicing
fees”). These payments are made pursuant to Distribution
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22
|
|
AllianzGI Emerging Markets Debt Fund
|
|
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|
and Servicing Plans (“12b-1 Plans”) adopted by the
Fund pursuant to
Rule 12b-1
under the Investment Company Act of 1940.
|
|
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|
|
|
There is a separate 12b-1 Plan for each
of Class A and Class C shares offered in this
Prospectus. Class A shares pay only servicing fees.
Class C shares pay both distribution and servicing fees.
The following lists the maximum annual rates at which the
distribution and/or servicing fees may be paid under each 12b-1
Plan (calculated as a percentage of the Fund’s average
daily net assets attributable to the particular class of shares):
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|
|
Servicing
|
|
Distribution
|
|
|
|
AllianzGI
Emerging Markets Debt Fund
|
|
Fee
|
|
Fee
|
|
|
|
|
|
Class A
|
|
|
0.25
|
%
|
|
|
|
None
|
|
|
|
|
|
|
|
Class C
|
|
|
0.25
|
%
|
|
|
|
0.75
|
%
|
|
|
|
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|
|
|
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|
|
|
|
Because
12b-1
fees
are paid out of the Fund’s assets on an ongoing basis, over
time these fees will increase the cost of your investment and
may cost you more than other types of sales charges. Therefore,
although Class C shares of the Fund do not pay initial
sales charges, the distribution fees payable on Class C
shares may, over time, cost you more than the initial sales
charge imposed on Class A shares of the Fund.
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|
|
|
|
|
•
Service Fees—Class P
Shares.
The Trust has adopted an Administrative
Services Plan for Class P shares of the Fund. The Plan
allows the Fund to use its Class P assets to pay financial
intermediaries that provide services relating to Class P
shares. The Administrative Services Plan permits payments for
the provision of certain administrative, recordkeeping and other
services to Class P shareholders. The Plan permits the Fund
to make service fee payments at an annual rate of up to 0.10% of
the Fund’s average daily net assets attributable to its
Class P shares. Because these fees are paid out of the
Fund’s Class P assets on an ongoing basis, over time
they will increase the cost of an investment in Class P
shares.
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|
|
|
|
|
•
Arrangements with Service
Agents—Institutional Class and Class P
Shares.
Institutional Class and Class P shares of
the Fund may be offered through certain brokers and financial
intermediaries (“service agents”) that have
established a shareholder servicing relationship with respect to
the Trust on behalf of their customers. Service agents may
impose additional or different conditions than the Trust on
purchases, redemptions or exchanges of Fund shares by their
customers. Service agents may also independently establish and
charge their customers transaction fees, account fees and other
amounts in connection with purchases, sales and redemptions of
Fund shares in addition to any fees charged by the Trust. These
additional fees may vary over time and would increase the cost
of the customer’s investment and lower investment returns.
Each service agent is responsible for transmitting to its
customers a schedule of any such fees and information regarding
any additional or different conditions regarding purchases,
redemptions and exchanges. Shareholders who are customers of
service agents should consult their service agents for
information regarding these fees and conditions. Among the
service agents with whom the Trust may enter into a shareholder
servicing relationship are firms whose business involves or
includes investment consulting, or whose parent or affiliated
companies are in the investment consulting business, that may
recommend that their clients utilize the Manager’s
investment advisory services or invest in the Fund or in other
products sponsored by Allianz and its affiliates.
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|
|
|
|
|
For Class P shares, the Manager may
make arrangements for the Fund to make payments, directly or
through the Manager or its affiliate, for providing certain
sub-transfer agency and related administrative services with
respect to Class P shares of the Fund held through such
service agents, including, without limitation, the following
services: receiving, aggregating and processing purchase,
redemption and exchange orders at the service agent level;
furnishing shareholder sub-accounting; providing and maintaining
elective services with respect to Class P shares such as
check writing and wire transfer services; providing and
maintaining pre-authorized investment plans; communicating
periodically with shareholders; acting as the sole shareholder
of record and nominee for holders of Class P shares;
maintaining accounting records for shareholders; answering
questions and handling correspondence from shareholders about
their accounts; issuing confirmations for transactions by
shareholders; and performing similar account administrative
services. These payments are made to financial intermediaries
selected by the Manager
and/or
its
affiliates. The actual services provided, and the payments made
for such services, may vary from firm to firm. For these
services, the Fund may pay an annual fee of up to 0.10% of the
value of the assets in the relevant accounts. In the event the
Distributor provides similar services to certain Class P
shareholders, it may receive service agent fees under the
Administrative Services Plan for Class P shares. The
Manager
and/or
its
affiliates may make payments to service agents for the services
described in this paragraph on top of the 0.10% that the Fund
may pay to such agents. The aggregate rate of such payments by
the Fund and the Manager
and/or
its
affiliates with regard to Class P shares may vary from
service agent to service agent and, in certain circumstances,
may exceed 0.10% per annum for any individual service agent.
These amounts would be in addition to amounts paid by the Fund
to the Trust’s
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transfer agents or other service providers as well as in
addition to amounts described under “Payments to Financial
Firms” below. The Manager and its affiliates rely primarily
on contractual arrangements with the service agents to verify
whether they are providing the services for which they are
receiving such payments. Although the Manager and its affiliates
do not audit such service agents, they may make periodic
information requests to verify certain information about the
services provided.
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Payments
to Financial Firms
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Some or all of the sales charges, distribution fees and
servicing fees described above are paid or “reallowed”
to the broker, dealer or financial advisor (collectively,
“financial firms”) through which a shareholder
purchases shares. Payments are made to financial firms selected
by the Distributor, Allianz Global Fund Management or their
affiliates (for purposes of this subsection only, collectively,
the “Distributor”). With respect to Class C shares,
the financial firms are also paid at the time of your purchase a
commission equal to 1.00% of your investment in such share
classes. Please see the Statement of Additional Information for
more details. A financial firm is one that, in exchange for
compensation, sells, among other products, mutual fund shares
(including the shares offered in this Prospectus) or provides
services for mutual fund shareholders. Financial firms include
brokers, dealers, insurance companies and banks.
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In addition, the Distributor from time
to time makes additional payments such as cash bonuses or
provides other incentives to selected financial firms as
compensation for services such as, without limitation, providing
the Fund with “shelf space” or a higher profile for
the financial firms’ financial consultants and their
customers, placing the Fund on the financial firms’
preferred or recommended fund list, granting the Distributor
access to the financial firms’ financial consultants,
providing assistance in training and educating the financial
firms’ personnel, and furnishing marketing support and
other specified services. The actual services provided, and the
payments made for such services, vary from firm to firm. These
payments may be significant to the financial firms and may also
take the form of sponsorship of seminars or informational
meetings or payment for attendance by persons associated with
the financial firms at seminars or informational meetings or
payments to financial firms to help offset the cost associated
with processing transactions in Fund shares.
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A number of factors will be considered
in determining the amount of these additional payments to
financial firms. On some occasions, such payments are
conditioned upon levels of sales, including the sale of a
specified minimum dollar amount of the shares of the Fund, all
other series of the Trust, other funds sponsored by the
Distributor
and/or
a
particular class of shares, during a specified period of time.
The Distributor also makes payments to certain participating
financial firms based upon factors such as the amount of assets
a financial firm’s clients have invested in the Fund and
the quality of the financial firm’s relationship with the
Distributor.
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The additional payments described above
are made at the Distributor’s expense. These payments are
made to financial firms selected by the Distributor, generally
to the firms that have sold significant amounts of shares of the
Fund or other Allianz-sponsored funds. The level of payments
made to a financial firm in any given year will vary and, in the
case of most financial firms, will not exceed the sum of
(a) 0.10% of such year’s sales by that financial firm
of shares of the Trust and Allianz Funds, (b) 0.06% of the
assets attributable to that financial firm invested in equity
funds of the Trust and Allianz Funds, and (c) 0.03% of the
assets attributable to that financial firm invested in fixed
income funds of the Trust and Allianz Funds. In certain cases,
the payments described in the preceding sentence are subject to
minimum payment levels. In lieu of payments pursuant to the
foregoing formulae, the Distributor makes payments pursuant to
an alternative formula or of an
agreed-upon
amount that, in the case of most financial firms, will not
exceed the amount that would have been payable pursuant to the
formulae. Notwithstanding the foregoing, the Distributor has
entered, and may continue to enter, into arrangements with a
small number of financial firms that result in payments in
excess of what would have been payable under the formulae
outlined above (“Alternative Arrangements”). The
Distributor may select financial firms for Alternative
Arrangements based on the factors described above, in particular
due to large amounts of assets a financial firm’s clients
have invested in the funds of the Trust and Allianz Funds and
the exclusivity of the financial firm’s partnership with
the Distributor. The level of payments under an Alternative
Arrangement may be calculated based on the assets invested in
the Trust and Allianz Funds by the financial firm’s clients
and/or
the
annual sales by the financial firm of shares of the Trust or
Allianz Funds, or using another methodology. Because financial
firms may be selected for Alternative Arrangements in part
because they have significant client assets invested in the
Trust and Allianz Funds, payments under Alternative Arrangements
represent a significant percentage of the Distributor’s
overall payments to financial firms. Currently, the payments
described in this paragraph are not generally made with respect
to Institutional Class shares.
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In addition to or separate from the
“shelf space” arrangements described above, in some
cases, the Distributor will make payments, at its own expense,
for special events such as a conference or seminar sponsored by
one of the financial firms, which in some cases could represent
a significant dollar amount. In certain instances, these
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24
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AllianzGI Emerging Markets Debt Fund
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special events will be attended by clients of such financial
firms. The Distributor may make such payments upon the request
of a financial firm and not pursuant to any agreement or
commitment by the firm to provide “shelf space” or
related services or in return for any level of sales of shares
of the Trust or Allianz Funds or other products offered by the
Distributor.
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In addition, with respect to
Class A and Class C shares, the Manager may make
arrangements for the Fund to make payments, directly or through
the Manager or its affiliates, to selected financial
intermediaries (such as brokers or third party administrators)
for providing certain sub-transfer agency and related
administrative services to shareholders holding Fund shares in
nominee or street name, including, without limitation, the
following services: maintaining investor accounts at the
financial intermediary level and keeping track of purchases,
redemptions and exchanges by such accounts; processing and
mailing trade confirmations, monthly statements, prospectuses,
annual reports, semi-annual reports, and shareholder notices and
other SEC-required communications; capturing and processing tax
data; issuing and mailing dividend checks to shareholders who
have selected cash distributions; preparing record date
shareholder lists for proxy solicitations; collecting and
posting distributions to shareholder accounts; and establishing
and maintaining systematic withdrawals and automated investment
plans and shareholder account registrations. These payments are
made to financial intermediaries selected by the Manager
and/or
its
affiliates. The actual services provided, and the payments made
for such services, may vary from firm to firm. For these
services, the Fund may pay (i) annual per account charges
that in the aggregate generally range from $0 to $6 per account,
and in some cases up to $12 per account for networking fees for
NSCC-cleared accounts and from $13 to $21 per account for
services to omnibus accounts, or (ii) an annual fee of up
to 0.25%, and in some cases up to 0.35%, of the value of the
assets in the relevant accounts. These amounts would be in
addition to amounts paid by the Fund to the Trust’s
transfer agent or other service providers.
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The payments described above may be
material to financial intermediaries relative to other
compensation paid by the Fund
and/or
the
Distributor, the Manager and their affiliates and may be in
addition to any (i) distribution
and/or
servicing
(12b-1)
fees
and (ii) revenue sharing or “shelf space” fees
described elsewhere herein paid to such financial
intermediaries. Furthermore, the payments described above may
differ depending on the Fund and may vary from amounts paid to
the Trust’s transfer agent for providing similar services
to other accounts. The Distributor and the Manager rely
primarily on contractual arrangements with financial
intermediaries to verify whether such intermediaries are
providing the services for which they are receiving such
payments. Although the Distributor and the Manager do not audit
such financial intermediaries, they may make periodic
information requests to verify certain information about the
services provided.
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If investment advisers, distributors or
affiliates of mutual funds pay bonuses and incentives in
differing amounts, financial firms and their financial
consultants may have financial incentives for recommending a
particular mutual fund over other mutual funds. In addition,
depending on the arrangements in place at any particular time, a
financial firm and its financial consultants may also have a
financial incentive for recommending a particular share class
over other share classes.
You should consult with your
financial advisor or plan administrator and review carefully any
disclosure by the financial firm as to compensation received by
your financial advisor.
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Wholesale representatives of the
Distributor visit brokerage firms on a regular basis to educate
financial advisors about the Fund and to encourage the sale of
Fund shares to their clients. The costs and expenses associated
with these efforts may include travel, lodging, sponsorship at
educational seminars and conferences, entertainment and meals to
the extent permitted by law.
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Although the Fund uses financial firms
that sell Fund shares to effect transactions for the Fund’s
portfolio, the Fund, the Manager and the Sub-Adviser will not
consider the sale of Fund shares as a factor when choosing
financial firms to effect those transactions.
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For further details about payments made
by the Distributor to financial firms, please see the Statement
of Additional Information.
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The Distributor also makes payments for
recordkeeping and other transfer agency services to selected
financial intermediaries that sell Fund shares. Please see
“Management of the Fund” above.
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The following section provides basic information about how to
buy, sell (redeem) and exchange shares of the Fund. More
detailed information about the Trust’s purchase, sale and
exchange arrangements for Fund shares is provided in the
Statement of Additional Information. The Statement of Additional
Information (which is available free of charge by writing the
Distributor or calling
1-800-988-8380)
provides technical information about the basic arrangements
described below and also describes special purchase, sale and
exchange features and programs offered by the Trust, including:
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• Wire transfer
procedures
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• Automatic
purchase, exchange and withdrawal programs
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• Programs that
establish a link from your Fund account to your bank account
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• Special
arrangements for tax-qualified retirement plans
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• Investment
programs that allow you to reduce or eliminate initial sales
charges
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• Categories of
investors that are eligible for waivers or reductions of initial
sales charges and CDSCs
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Acceptance
and
Timing of Purchase
Orders, Redemption
Orders and Share
Price Calculations
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When you buy shares of the Fund, you pay a price equal to the
NAV of the shares, plus any applicable sales charge. When you
sell (redeem) shares, you receive an amount equal to the NAV of
the shares, minus any applicable CDSC or other fee. NAVs are
ordinarily determined at the close of regular trading (normally
4:00 p.m., Eastern time) on the New York Stock Exchange on
each day the New York Stock Exchange is open. See “How
Fund Shares Are Priced” below for details.
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A purchase order received by the Trust
or its designee prior to the close of regular trading on the New
York Stock Exchange (“NYSE”) (normally 4:00 p.m.,
Eastern time), on a day the Trust is open for business, together
with payment made in one of the ways described below, will be
effected at that day’s NAV. An order received after the
close of regular trading on the NYSE will be effected at the NAV
determined on the next business day. However, orders received by
certain financial intermediaries (such as retirement plans and
their service providers, clearing agents, and brokerage firms
trading with the Trust on an omnibus basis) on a business day
prior to the close of regular trading on the NYSE will be
effected at the NAV determined on such business day, provided
that such order is communicated to the Trust or its designee
prior to such time as agreed upon by the Trust and such
intermediary after the close of regular trading on the NYSE on
such business day or on the following business day. The Trust is
“open for business” on each day the NYSE is open for
trading, which excludes the following holidays: New Year’s
Day, Martin Luther King, Jr. Day, Presidents’ Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving
Day and Christmas Day. Purchase orders will be accepted only on
days on which the Trust is open for business. If your purchase
or redemption order is received by the Distributor on a day when
the New York Stock Exchange is closed, it will be processed on
the next succeeding day when the New York Stock Exchange is open
(at the succeeding day’s NAV).
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A redemption request received by the
Trust or its designee prior to the close of regular trading on
the NYSE (normally 4:00 p.m., Eastern time), on a day the
Trust is open for business, is effective on that day. A
redemption request received after that time becomes effective on
the next business day. Redemption requests for Fund shares are
effected at the NAV per share next determined after receipt of a
redemption request by the Trust or its designee. However, orders
received by certain broker-dealers and other financial
intermediaries on a business day prior to the close of regular
trading on the NYSE and communicated to the Trust or its
designee prior to such time as agreed upon by the Trust and
intermediary on the following business day will be effected at
the NAV determined on the prior business day. The request must
properly identify all relevant information such as account
number, redemption amount (in dollars or shares), the Fund name
and the class of shares and must be executed by an authorized
person.
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Orders sent to the Distributor’s
P.O. Box (as described below for each share class) are
not deemed “received” until they arrive at the
Distributor’s facility. This may affect the date on which
they are processed.
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Investors who purchase shares through
specified benefit plans should be aware that plan administrators
may aggregate purchase, redemption and exchange orders for
participants in the plan. Therefore, there may be a delay
between the time you place an order with the plan administrator
and the time the order is forwarded to the Trust’s transfer
agent, Boston Financial Data Services, Inc. (“Transfer
Agent”), for execution.
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The Distributor, in its sole discretion,
may accept or reject any order for purchase of Fund shares. The
sale of shares will be suspended during any period in which the
NYSE is closed for other than weekends or holidays, or if
permitted by the rules of the SEC, when trading on the NYSE is
restricted or during an emergency which makes it impracticable
for the Fund to dispose of its securities or to determine fairly
the value of its net assets, or during any other period as
permitted by the SEC for the protection of investors.
Additionally, redemptions of
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26
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AllianzGI Emerging Markets Debt Fund
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Fund shares may be suspended when trading on the NYSE is
restricted or during an emergency which makes it impracticable
for the Fund to dispose of its securities or to determine fairly
the value of its net assets, or during any other period as
permitted by the SEC for the protection of investors. Under
these and other unusual circumstances, the Trust may suspend
redemptions or postpone payment for more than seven days, as
permitted by law.
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Current net asset values per share for
the Fund are available on the Fund’s website at
us.allianzgi.com.
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Buying
Shares—
Classes A and C
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You can buy Class A or Class C shares of the Fund in
the following ways:
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•
Through your
broker, dealer or other financial intermediary.
Your
broker, dealer or other intermediary may establish higher
minimum investment requirements than the Trust and may also
independently charge you transaction fees and additional amounts
(which may vary) in return for its services, which will reduce
your return. Shares you purchase through your broker, dealer or
other intermediary will normally be held in your account with
that firm.
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•
Directly from
the Trust.
To make direct investments, you must open an
account with the Distributor and send payment for your shares
either by mail or through a variety of other purchase options
and plans offered by the Trust.
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If you wish to invest in Class A or
Class C shares directly by mail, please send a check
payable to the Allianz Family of Funds along with a completed
application form to:
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Allianz
Family of Funds
P.O. Box 8050
Boston, MA
02266-8050
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The Allianz Family of Funds accepts all
purchases by mail subject to collection of checks at full value
and conversion into federal funds. You may make subsequent
purchases by mailing a check to the address above with a letter
describing the investment or with the additional investment
portion of a confirmation statement. Checks for subsequent
purchases should be payable to the Allianz Family of Funds and
should clearly indicate your account number. Please call the
Distributor at
1-800-988-8380
if you have any questions regarding purchases of Class A or
Class C shares by mail.
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The Distributor reserves the right to
require payment by wire or U.S. bank check. The Distributor
generally does not accept payments made by cash,
temporary/starter checks, third-party checks, credit cards,
traveler’s checks, credit card checks, or checks drawn on
non-U.S.
banks even if payment may be effected through a U.S. bank.
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The Statement of Additional Information
describes a number of additional ways you can make direct
investments, including through the Allianz Funds Auto-Invest and
Allianz Funds Fund Link programs. You can obtain the
Statement of Additional Information free of charge from the
Distributor by written request or by calling
1-800-988-8380.
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Investment
Minimums—Class A
and Class C Shares
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The Distributor, in its sole discretion, may accept or reject
any order for purchase of Fund shares. The Trust does not
currently issue share certificates.
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The following investment minimums apply
for purchases of Class A and Class C shares.
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Initial
Investment
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Subsequent
Investments
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$1,000 per Fund
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$50 per Fund
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The minimum initial investment may be
modified for certain financial intermediaries that submit trades
on behalf of underlying investors. The Trust or the Distributor
may lower or waive the minimum investment for certain categories
of investors at their discretion. Please see the Statement of
Additional Information for details.
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Buying
Shares—
Institutional Class
and Class P Shares
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Investors may purchase Institutional Class and Class P
shares of the Fund at the relevant NAV of that class without a
sales charge. The Statement of Additional Information provides
technical information about certain features that are offered
exclusively to investors in Institutional Class shares by the
Trust.
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•
Investment
Minimums.
The minimum initial investment for shares of
the Institutional Class and Class P is $1 million,
except that the minimum initial investment may be modified for
certain financial intermediaries that submit trades on behalf of
underlying investors.
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The Trust or the Distributor may lower
or waive the minimum investment for certain categories of
investors at their discretion. Please see the Statement of
Additional Information for details.
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•
Initial
Investment.
Investors in Class P shares may open
an account by completing and signing a Client Registration
Application and mailing it to Allianz Family of Funds,
c/o BFDS
Midwest, 330 W. 9th Street, Kansas City, MO 64105 or,
for investors in Institutional Class shares, to Allianz Family
of Funds, P.O. Box 219968, Kansas City, MO
64121-9968.
A Client Registration Application may be obtained by calling
1-800-498-5413.
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Except as described below, an investor
may purchase Institutional Class and Class P shares by
wiring federal funds to the Trust’s transfer agent, Boston
Financial Data Services. In order to receive instructions for
wire transfer the investor may telephone the Trust at
1-800-498-5413.
At that time investors should provide the following information:
name of authorized person, shareholder name, shareholder account
number, name of Fund and share class, and amount being wired.
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Additionally, Institutional Class
investors may send a check payable to the Allianz Family of
Funds along with a completed application form to: Allianz Family
of Funds, P.O. Box 219968, Kansas City, MO
64121-9968.
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An investor may purchase shares without
first wiring federal funds if the proceeds of the investment are
derived from an advisory account the investor maintains with the
Manager or one of its affiliates, or from an investment by
broker-dealers, institutional clients or other financial
intermediaries that have established a shareholder servicing
relationship with the Trust on behalf of their customers, or in
other circumstances as may be agreed to by the Manager.
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•
Additional
Investments.
An investor may purchase additional
Institutional Class and Class P shares of the Fund at any
time by calling the Trust and wiring federal funds to the
Transfer Agent as outlined above. Additionally, for
Institutional Class shares, an investor may send a check payable
to the Allianz Family of Funds,
c/o BFDS
at the P.O. Box address noted above.
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•
Other
Purchase Information.
Purchases of the Fund’s
Institutional Class and Class P shares will be made in full
and fractional shares. In the interest of economy and
convenience, certificates for shares will not be issued.
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Other
Purchase Information
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The Trust and the Distributor each reserves the right, in its
sole discretion, to suspend the offering of shares of the Fund
or to reject any purchase order, in whole or in part, when, in
the judgment of management, such suspension or rejection is in
the best interests of the Trust.
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Classes of shares of the Trust may not
be qualified or registered for sale in all states. Investors
should inquire as to whether shares of the Fund are available
for offer and sale in the investor’s state of residence.
Shares of the Trust may not be offered or sold in any state
unless registered or qualified in that jurisdiction or unless an
exemption from registration or qualification is available.
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Subject to the approval of the Trust, an
investor may purchase shares of the Fund with liquid securities
that are eligible for purchase by the Fund (consistent with the
Fund’s investment policies and restrictions) and that have
a value that is readily ascertainable in accordance with the
Trust’s valuation policies. These transactions will be
effected only if the Manager or the Sub-Adviser intends to
retain the security in the Fund as an investment. Assets
purchased by the Fund in such a transaction will be valued in
generally the same manner as they would be valued for purposes
of pricing the Fund’s shares, if such assets were included
in the Fund’s assets at the time of purchase. The Trust
reserves the right to amend or terminate this practice at any
time.
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•
Retirement
Plans.
Institutional Class and Class P shares of
the Fund are available for purchase by retirement and savings
plans, including Keogh plans, 401(k) plans, 403(b) custodial
accounts, and Individual Retirement Accounts. The administrator
of a plan or employee benefits office can provide participants
or employees with detailed information on how to participate in
the plan and how to elect the Fund as an investment option.
Participants in a retirement or savings plan may be permitted to
elect different investment options, alter the amounts
contributed to the plan, or change how contributions are
allocated among investment options in accordance with the
plan’s specific provisions. The plan administrator or
employee benefits office should be consulted for details. For
questions about participant accounts, participants should
contact their employee benefits office, the plan administrator,
or the organization that provides recordkeeping services for the
plan. Investors who purchase shares through retirement plans
should be aware that plan administrators may aggregate purchase
and redemption orders for participants in the plan. Therefore,
there may be a delay between the time the investor places an
order with the plan administrator and the time the order is
forwarded to the Transfer Agent for execution.
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28
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AllianzGI Emerging Markets Debt Fund
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Abusive
Trading Practices
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The Trust encourages shareholders to invest in the Fund as part
of a long-term investment strategy and discourages excessive,
short-term trading and other abusive trading practices,
sometimes referred to as “market timing.” However,
because the Trust will not always be able to detect market
timing or other abusive trading activity, investors should not
assume that the Trust will be able to detect or prevent all
market timing or other trading practices that may disadvantage
the Fund.
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Certain of the Fund’s investment
strategies may make the Fund more susceptible to market timing
activities. For example, since the Fund may invest in
non-U.S.
securities, it may be subject to the risk that an investor may
seek to take advantage of a delay between the change in value of
the Fund’s
non-U.S.
portfolio securities and the determination of the Fund’s
NAV as a result of different closing times of U.S. and
non-U.S.
markets by buying or selling Fund shares at a price that does
not reflect their true value. A similar risk exists for the
Fund’s potential investment in securities of smaller
capitalization companies, securities of issuers located in
emerging markets or any high-yield or other securities that are
thinly traded and more difficult to value.
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To discourage excessive, short-term
trading and other abusive trading practices, the Trust’s
Board of Trustees has adopted policies and procedures reasonably
designed to detect and prevent short-term trading activity that
may be harmful to the Fund and its shareholders. Such activities
may have a detrimental effect on the Fund and its shareholders.
For example, depending upon various factors such as the size of
the Fund and the amount of its assets maintained in cash,
short-term or excessive trading by Fund shareholders may
interfere with the efficient management of the Fund’s
portfolio, increase transaction costs and taxes, and may harm
the performance of the Fund and its shareholders.
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The Trust seeks to deter and prevent
abusive trading practices, and to reduce these risks, through a
combination of methods. To the extent that there is a delay
between a change in the value of a mutual fund’s portfolio
holdings, and the time when that change is reflected in the NAV
of the fund’s shares, that fund is exposed to the risk that
investors may seek to exploit this delay by purchasing or
redeeming shares at net asset values that do not reflect
appropriate fair value prices. The Trust seeks to deter and
prevent this activity, sometimes referred to as “stale
price arbitrage,” by the appropriate use of “fair
value” pricing of the Fund’s portfolio securities. See
“How Fund Shares Are Priced” below for more
information.
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The Trust also seeks to monitor
shareholder account activities in order to detect and prevent
excessive and disruptive trading practices. The Trust and the
Manager each reserves the right to restrict or refuse any
purchase or exchange transaction if, in the judgment of the
Trust or of the Manager, the transaction may adversely affect
the interests of the Fund or its shareholders. Among other
things, the Trust and its service providers may monitor for any
patterns of frequent purchases and sales that appear to be made
in response to short-term fluctuations in share price. Notice of
any restrictions or rejections of transactions may vary
according to the particular circumstances.
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Although the Trust and its service
providers seek to use these methods to detect and prevent
abusive trading activities, and although the Trust will
consistently apply such methods, there can be no assurances that
such activities can be detected, mitigated or eliminated. By
their nature, omnibus accounts, in which purchases and sales of
Fund shares by multiple investors are aggregated for submission
to the Fund on a net basis, conceal the identity of the
individual shareholders from the Fund because the broker,
retirement plan administrator, fee-based program sponsor or
other financial intermediary maintains the record of the
Fund’s underlying beneficial owners. This makes it more
difficult for the Trust and its service providers to identify
short-term transactions in the Fund. Although the Trust and its
service providers may seek to review trading activity at the
omnibus account level in order to identify abusive trading
practices with respect to the Fund, there can be no assurance of
success in this regard.
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Minimum
Account
Size
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Due to the relatively high cost to the Fund of maintaining small
accounts, you are asked to maintain an account balance in the
Fund of at least the minimum investment necessary to open the
particular type of account.
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•
Class A
and Class C.
If your balance for the Fund remains
below the minimum for three months or longer, the Manager has
the right (except in the case of employer-sponsored retirement
accounts) to redeem your remaining shares and close that Fund
account after giving you 60 days to increase your balance.
Your Fund account will not be liquidated if the reduction in
size is due solely to a decline in market value of your Fund
shares or if the aggregate value of all your accounts with the
Trust and Allianz Funds exceeds $50,000.
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•
Institutional
Class and Class P.
The Trust reserves the right to
redeem Institutional Class and Class P shares in any
account for their then-current value (which will be promptly
paid to the investor) if at any time, due to redemption by the
investor, the shares in the account do not have a value of at
least $100,000. A
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shareholder will receive advance notice of a mandatory
redemption and will be given at least 30 days to bring the
value of its account up to at least $100,000.
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Notwithstanding the foregoing, due to
the relatively high cost of maintaining small accounts, the
Trust reserves the right to redeem shares in any account and
without any prior notice for their then-current value (which
will be promptly paid to the investor) if at any time, and for
any reason, including solely due to declines in NAV, the shares
in the account do not have a value of at least $20.
Additionally, the Manager and the Distributor each reserves the
right to assess an annual fee of $15 for any accounts with
balances that fall below $1,000, subject to the
Distributor’s right to make exemptions on a case by case
basis. For more information, see “Additional Information
about Purchases, Exchanges and Redemptions of Class A,
Class B, Class C, Class R, Class R6 and
Institutional Class Shares” in the Statement of
Additional Information.
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Exchanging
Shares
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Except as provided below and/or in the Fund’s or applicable
series’ prospectus(es), you may exchange Class A,
Class C, Institutional Class and Class P shares of the
Fund for the same Class of shares of another series of the Trust
or Allianz Funds that offers the same Class of shares.
Shareholders interested in such an exchange may request a
prospectus for these other series by contacting the Trust.
Shares are exchanged on the basis of their respective NAVs
(without a sales charge) next calculated after your exchange
order is received by the Trust or its designee. Currently, the
Trust does not charge any exchange fees. Your financial service
firm may impose various fees and charges, investment minimums
and other requirements with respect to exchanges.
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For Class A and Class C
shares, exchanges are subject to the $1,000 minimum initial
purchase requirements for the Fund, except with respect to
tax-qualified programs and exchanges effected through the
Allianz Funds Auto-Exchange plan.
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In the case of Institutional Class and
Class P shares, an exchange may be made by following the
redemption procedure described below under “Redemptions by
Mail” or, if the investor has elected the telephone
redemption option, by calling the Trust at
1-800-498-5413.
With respect to Institutional Class and Class P shares, an
investor may exchange shares only with respect to Fund or other
eligible series that are registered in the investor’s state
of residence or where an exemption from registration is
available.
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In certain circumstances, shares of one
Class of the Fund may also be exchanged directly for shares of
another Class of the Fund, as described in the Statement of
Additional Information. If you maintain your account with the
Distributor, you may exchange shares by completing a written
exchange request and sending it to Allianz Funds,
P.O. Box 8050, Boston, MA
02266-8050.
You can get an exchange form by calling the Distributor at
1-800-988-8380.
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An exchange is generally a taxable event
which will generate capital gains or losses, and special rules
may apply in computing tax basis when determining gain or loss.
See “Tax Consequences” in this Prospectus and
“Taxation” in the Statement of Additional Information.
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The Trust and the Manager each reserves
the right to refuse exchange purchases (or purchase and
redemption and/or redemption and purchase transactions) if, in
the judgment of the Trust or the Manager, the transaction would
adversely affect the Fund and its shareholders. In particular, a
pattern of transactions characteristic of “market
timing” strategies may be deemed by the Manager to be
detrimental to the Trust or a particular Fund. See “Abusive
Trading Practices” above. Although the Trust has no current
intention of terminating or modifying the exchange privilege, it
reserves the right to do so at any time. Except as otherwise
permitted by the SEC, the Trust will give you 60 days’
advance notice if it exercises its right to terminate or
materially modify the exchange privilege. Because the Fund will
not always be able to detect market timing activity, investors
should not assume that the Fund will be able to detect or
prevent all market timing or other trading practices that may
disadvantage the Fund. For example, it is more difficult for the
Fund to monitor trades that are placed by omnibus or other
nominee accounts because the broker, retirement plan
administrator, fee-based program sponsor or other financial
intermediary maintains the record of the Fund’s underlying
beneficial owners.
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The Statement of Additional Information
provides more detailed information about the exchange privilege,
including the procedures you must follow and additional exchange
options.
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Selling
Shares—
Class A and C
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You can sell (redeem) Class A or Class C shares of the
Fund in the following ways:
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•
Through your
broker, dealer or other financial intermediary.
Your
broker, dealer or other intermediary may independently charge
you transaction fees and additional amounts in return for its
services, which will reduce your return.
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30
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AllianzGI Emerging Markets Debt Fund
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•
Directly from
the Trust by Written Request.
To redeem Class A or
Class C shares directly from the Trust by written request
(whether or not the shares are represented by certificates), you
must send the following items to the Trust’s Transfer
Agent, Boston Financial Data Services, Inc.,
P.O. Box 8050, Boston, MA
02266-8050:
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(1) a
written request for redemption signed by all registered owners
exactly as the account is registered on the Transfer
Agent’s records, including fiduciary titles, if any, and
specifying the account number and the dollar amount or number of
shares to be redeemed;
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(2) for
certain redemptions described below, a guarantee of all
signatures on the written request or on the share certificate or
accompanying stock power, if required, as described under
“Signature Validation” below;
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(3) any
share certificates issued for any of the shares to be redeemed
(see “Certificated Shares” below); and
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(4) any
additional documents which may be required by the Transfer Agent
for redemption by corporations, partnerships or other
organizations, executors, administrators, trustees, custodians
or guardians, or if the redemption is requested by anyone other
than the shareholder(s) of record. Transfers of shares are
subject to the same requirements.
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A signature validation is not required
for redemptions requested by and payable to all shareholders of
record for the account, and to be sent to the address of record
for that account. To avoid delay in redemption or transfer, if
you have any questions about these requirements you should
contact the Transfer Agent in writing or call
1-800-988-8380
before submitting a request to redeem Class A or
Class C shares. Written redemption or transfer requests
will not be honored until all required documents in the proper
form have been received by the Transfer Agent. You can not
redeem your shares by written request if they are held in broker
“street name” accounts—you must redeem through
your broker.
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If the proceeds of your redemption
(i) are to be paid to a person other than the record owner,
(ii)are to be sent to an address other than the address of the
account on the Transfer Agent’s records, and/or (iii)are to
be paid to a corporation, partnership, trust or fiduciary, the
signature(s) on the redemption request and on the certificates,
if any, or stock power must be guaranteed as described under
“Signature Validation” below. The Distributor may,
however, waive the signature validation requirement for
redemptions up to $2,500 by a trustee of a qualified retirement
plan, the administrator for which has an agreement with the
Distributor.
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The Statement of Additional Information
describes a number of additional ways you can redeem your
shares, including:
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• Telephone
requests to the Transfer Agent
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• Expedited wire
transfers
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• Automatic
Withdrawal Plan
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• Allianz Funds
Fund Link
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Unless you specifically elect otherwise,
your initial account application permits you to redeem shares by
telephone subject to certain requirements. To be eligible for
expedited wire transfer, Automatic Withdrawal Plan, and
Fund Link privileges, you must specifically elect the
particular option on your account application and satisfy
certain other requirements. The Statement of Additional
Information describes each of these options and provides
additional information about selling shares. You can obtain the
Statement of Additional Information free of charge from the
Distributor by written request or by calling
1-800-988-8380.
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Other than an applicable CDSC, you will
not pay any special fees or charges to the Trust or the
Distributor when you sell your shares. However, if you sell your
shares through your broker, dealer or other financial
intermediary, that firm may charge you a commission or other fee
for processing your redemption request.
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Timing
of
Redemption
Payments—Class A
and Class C Shares
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For Class A and Class C shares, redemption proceeds
will normally be mailed to the redeeming shareholder within
seven calendar days or, in the case of wire transfer or
Fund Link redemptions, sent to the designated bank account
within one business day. Fund Link redemptions may be
received by the bank on the second or third business day. In
cases where shares have recently been purchased by personal
check, redemption proceeds may be withheld until the check has
been collected, which may take up to 15 days. To avoid such
withholding, investors should purchase shares by certified or
bank check or by wire transfer.
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Selling
Shares—
Institutional Class, and Class P, Shares—Redemptions
of Shares Held Directly with the Trust
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•
Redemptions
by Mail.
An investor may redeem (sell) shares held
directly with the Trust by submitting a written request to
Allianz Institutional Funds, P.O. Box 219968, Kansas
City, MO
64121-9968
(regular mail) or Boston Financial Data Services, Inc.,
330 W. 9th Street, Kansas City, MO 64105 (express,
certified or registered mail). The redemption request should
state the Fund from which the shares are to be redeemed, the
class of shares, the number or dollar amount of the shares to be
redeemed and the account number. The request must be signed
exactly as the names of the registered owners appear on the
Trust’s account records, and the request must be signed by
the minimum number of persons designated on the Client
Registration Application that are required to effect a
redemption.
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•
Redemptions
by Telephone or Other Means.
An investor who elects
this option on the Client Registration Application (or
subsequently in writing) may request redemptions of shares by
calling the Trust at
1-800-498-5413,
by sending a facsimile to 1-816-218-1594, by sending an
e-mail
to
allianzfunds@bfdsmidwest.com or by other means of wire
communication. Investors should state the Fund and class from
which the shares are to be redeemed, the number or dollar amount
of the shares to be redeemed, the account number and the
signature (which may be an electronic signature sent as an
attachment consisting of a PDF file, for example) of an
authorized signatory. Redemption requests of an amount of
$10 million or more may be initiated by telephone or
e-mail,
but
must be confirmed in writing by an authorized party prior to
processing.
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In electing a telephone redemption, the
investor authorizes Allianz Global Fund Management and the
Transfer Agent to act on telephone instructions from any person
representing himself to be the investor, and reasonably believed
by Allianz Global Fund Management or the Transfer Agent to
be genuine. Neither the Trust nor the Transfer Agent may be
liable for any loss, cost or expense for acting on instructions
(whether in writing or by telephone) believed by the party
receiving such instructions to be genuine and in accordance with
the procedures described in this Prospectus. Shareholders should
realize that by electing the telephone or wire or
e-mail
redemption option, they may be giving up a measure of security
that they might have if they were to redeem their shares in
writing. Furthermore, interruptions in service may mean that a
shareholder will be unable to effect a redemption by telephone
or
e-mail
when desired. The Transfer Agent also provides written
confirmation of transactions initiated by telephone as a
procedure designed to confirm that telephone instructions are
genuine (written confirmation is also provided for redemption
requests received in writing or via
e-mail).
All
telephone transactions are recorded, and Allianz Global
Fund Management or the Transfer Agent may request certain
information in order to verify that the person giving
instructions is authorized to do so. The Trust or Transfer Agent
may be liable for any losses due to unauthorized or fraudulent
telephone transactions if it fails to employ reasonable
procedures to confirm that instructions communicated by
telephone are genuine. All redemptions, whether initiated by
letter or telephone, will be processed in a timely manner, and
proceeds will be forwarded by wire in accordance with the
redemption policies of the Trust detailed below. See “Other
Redemption Information.”
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Shareholders may decline telephone
exchange or redemption privileges after an account is opened by
instructing the Transfer Agent in writing at least seven
business days prior to the date the instruction is to be
effective. Shareholders may experience delays (which may be
considerable) in exercising telephone redemption privileges
during periods of market volatility. During periods of volatile
economic or market conditions, shareholders may wish to consider
transmitting redemption orders by facsimile or overnight courier.
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Defined contribution plan participants
may request redemptions by contacting the employee benefits
office, the plan administrator or the organization that provides
recordkeeping services for the plan.
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Other
Redemption Information.
Redemption proceeds will
ordinarily be wired to the investor’s bank address of
record within three business days after the redemption request,
but may take up to seven calendar days. Redemption proceeds will
be sent by wire only to the bank name designated on the Client
Registration Application. The Trust may suspend the right of
redemption or postpone the payment date at times when the New
York Stock Exchange is closed, or during certain other periods
as permitted under the federal securities laws.
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32
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AllianzGI Emerging Markets Debt Fund
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Selling
Shares—
Institutional Class, and Class P Shares—Redemptions of
Shares Held Through Intermediaries or Financial Service Firms
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You can sell (redeem) shares through your financial service firm
on any day the New York Stock Exchange is open. You do not pay
any fees or other charges to the Trust or the Distributor when
you sell your shares, although your financial service firm may
charge you for its services in processing your redemption
request. Please contact your firm for details. If you are the
holder of record of your shares, you may contact the Distributor
at
1-800-498-5413
for Institutional Class and Class P shares for information
regarding how to sell your shares directly to the Trust.
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Your financial service firm is obligated
to transmit your redemption orders to the Distributor promptly
and is responsible for ensuring that your redemption request is
in proper form. Your financial service firm will be responsible
for furnishing all necessary documentation to the Distributor or
the Trust’s transfer agent and may charge you for its
services. Redemption proceeds will be forwarded to your
financial service firm as promptly as possible and in any event
within seven days after the redemption request is received by
the Distributor in good order.
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Redemption Fees
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The Trust does not charge any redemption fees on the redemption
or exchange of Fund shares.
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Other
Redemption Information
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For shareholder protection, a request to change information
contained in an account registration (for example, a request to
change the bank designated to receive wire redemption proceeds)
must be received in writing, signed by the minimum number of
persons designated on the completed application that are
required to effect a redemption, and accompanied by a signature
validation from any eligible guarantor institution, as
determined in accordance with the Trust’s procedures, as
more fully described below. A signature validation cannot be
provided by a notary public. In addition, corporations, trusts,
and other institutional organizations are required to furnish
evidence of the authority of the persons designated on the
completed application to effect transactions for the
organization.
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Retirement plan sponsors, participant
recordkeeping organizations and other financial intermediaries
may also impose their own restrictions, limitations or fees in
connection with transactions in the Fund’s shares, which
may be stricter than those described in this section. You should
contact your plan sponsor, recordkeeper or financial
intermediary for more information on any additional
restrictions, limitations or fees are imposed in connection with
transactions in Fund shares.
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In addition, for taxable shareholders, a
redemption is generally a taxable event that will generate
capital gain or loss. See “Tax Consequences” in this
Prospectus and “Taxation” in the Statement of
Additional Information.
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Redemptions
in Kind
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The Trust has agreed to redeem shares of the Fund solely in cash
up to the lesser of $250,000 or 1% of the Fund’s net assets
during any
90-day
period for any one shareholder. In consideration of the best
interests of the remaining shareholders, the Trust may pay any
redemption proceeds exceeding this amount in whole or in part by
a distribution in kind of securities held by the Fund in lieu of
cash. If your shares are redeemed in kind, you should expect to
incur transaction costs upon the disposition of the securities
received in the distribution.
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Cost
Basis Reporting
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When you redeem, sell or exchange Fund shares, the Fund or, if
you purchase your shares through a broker, dealer or other
financial intermediary, your financial intermediary generally is
required to report to you and the IRS on an IRS
Form 1099-B
cost-basis information with respect to those shares, as well as
information about whether any gain or loss on your redemption or
exchange is short- or long-term and whether any loss is
disallowed under the “wash sale” rules. Such reporting
generally is not required for shares held in a retirement or
other tax-advantaged account. Cost basis is typically the price
you pay for your shares (including reinvested dividends), with
adjustments for certain commissions, wash-sales, organizational
actions, and other items, including any returns of capital paid
to you by the Fund in respect of your shares. Cost basis is used
to determine your net gains and losses on any shares you redeem
or exchange in a taxable account.
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The Fund or your financial intermediary,
as applicable, will permit you to select from a list of
alternative cost basis reporting methods to determine your cost
basis in Fund shares. If you do not select a particular cost
basis reporting method, the Fund or financial intermediary will
apply its default cost basis reporting method to your shares. If
you hold your shares directly in a Fund account, the Fund’s
default method (or the method you have selected by notifying the
Fund) will apply; if you hold your shares in an account with a
financial intermediary, the intermediary’s default method
(or the method you have selected by notifying the intermediary)
will apply. Please consult the Fund’s Web site at
us.allianzgi.com, or your financial intermediary, as applicable,
for more information on the available methods for cost basis
reporting and how to select or change a particular method. You
should consult your tax advisor concerning the application of
these rules to your investment in the Fund, and to determine
which available cost basis method is best for you.
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Certificated
Shares
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The Trust currently does not, and has no intention to, issue
share certificates. Should it do so in the future, and if you
are redeeming shares for which certificates have been issued,
the certificates must be mailed to or deposited with the Trust,
duly endorsed or accompanied by a duly endorsed stock power or
by a written request for redemption. Signatures must be
guaranteed as described under “Signature Validation”
below. The Trust may request further documentation from
institutions or fiduciary accounts, such as corporations,
custodians (
e.g
., under the Uniform Gifts to Minors Act),
executors, administrators, trustees or guardians. Your
redemption request and stock power must be signed exactly as the
account is registered, including indication of any special
capacity of the registered owner.
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Signature
Validation
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When a signature validation is called for, a
“Medallion” signature validation or a Signature
Validation Program (SVP) stamp will be required. A Medallion
signature validation or an SVP stamp may be obtained from a
domestic bank or trust company, broker, dealer, clearing agency,
savings association or other financial institution which is
participating in a Medallion program or SVP recognized by the
Securities Transfer Association. The three recognized Medallion
programs are the Securities Transfer Agents Medallion Program,
Stock Exchanges Medallion Program and New York Stock Exchange,
Inc. Medallion Signature Program. Signature validations from
financial institutions which are not participating in one of
these programs will not be accepted. Please note that financial
institutions participating in a recognized Medallion program may
still be ineligible to provide a signature validation for
transactions of greater than a specified dollar amount. The
Trust may change the signature validation requirements from time
to time upon notice to shareholders, which may be given by means
of a new or supplemented prospectus.
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Signature validation cannot be provided
by a notary public. In addition, corporations, trusts, and other
institutional organizations are required to furnish evidence of
the authority of the persons designated on the Client
Registration Application to effect transactions for the
organization.
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Verification
of
Identity
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To help the government fight the funding of terrorism and money
laundering activities, federal law requires all financial
institutions to obtain, verify and record information that
identifies each person that opens a new account, and to
determine whether such person’s name appears on government
lists of known or suspected terrorists and terrorist
organizations. As a result, the Fund must obtain the following
information for each person who opens a new account:
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1. Name.
2. Date of birth (for individuals).
3. Residential or business street address.
4. Social security number, taxpayer identification number,
or other identifying number.
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Federal law prohibits the Fund and other financial
institutions from opening a new account unless they receive the
minimum identifying information listed above.
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Individuals may also be asked for a copy
of their driver’s license, passport or other identifying
document in order to verify their identity. In addition, it may
be necessary to verify an individual’s identity by
cross-referencing the identification information with a consumer
report or other electronic database. Additional information may
be required to open accounts for corporations and other entities.
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After an account is opened, the Fund may
restrict your ability to purchase additional shares until your
identity is verified. The Fund also may close your account and
redeem your shares or take other appropriate action if it is
unable to verify your identity within a reasonable time.
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Shares of the Fund are publicly offered
for sale only in the U.S., its territories and possessions.
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Request
for Multiple
Copies of
Shareholder
Documents
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To reduce expenses, it is intended that only one copy of the
Fund’s prospectus and each annual and semi-annual report
will be mailed to those addresses shared by two or more
accounts. If you wish to receive additional copies of these
documents and your shares are held directly with the Trust, call
the Trust at
1-800-988-8380
for Class A and Class C, and
1-800-498-5413
for Institutional Class and Class P shares. Alternatively,
if your shares are held through a financial institution, please
contact it directly. Within 30 days after receipt of your
request by the Trust or financial institution, as appropriate,
such party will begin sending you individual copies.
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34
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AllianzGI Emerging Markets Debt Fund
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The net asset value per share (“NAV”) of each class of
the Fund’s shares is determined by dividing the total value
of the Fund’s portfolio investments and other assets
attributable to that class, less any liabilities, by the total
number of shares outstanding of that class. Fund shares are
valued as of a particular time (the “Valuation Time”)
on each day (“Business Day”) that the New York Stock
Exchange is open for trading. The Valuation Time is ordinarily
at the close of regular trading on the New York Stock Exchange
(normally 4:00 p.m., Eastern time) (the “NYSE
Close”). In unusual circumstances, the Board of Trustees of
the Fund may determine that the Valuation Time shall be as of
4:00 p.m., Eastern time, notwithstanding an earlier,
unscheduled close or halt of trading on the New York Stock
Exchange.
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For purposes of calculating NAV, the
Fund’s investments for which market quotations are readily
available are valued at market value. Market values for various
types of securities and other instruments are determined on the
basis of closing prices or last sales prices on an exchange or
other market, or based on quotes or other market information
obtained from quotation reporting systems, established market
makers or pricing services. Please see “Net Asset
Value” in the Statement of Additional Information.
Short-term investments by the Fund having a maturity of
60 days or less are generally valued at amortized cost.
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If market quotations are not readily
available (including in cases where available market quotations
are deemed to be unreliable), the Fund’s investments will
be valued as determined in good faith pursuant to policies and
procedures approved by the Board of Trustees (so-called
“fair value pricing”). Fair value pricing may require
subjective determinations about the value of a security or other
asset, and fair values used to determine the Fund’s NAV may
differ from quoted or published prices, or from prices that are
used by others, for the same investments. Also, the use of fair
value pricing may not always result in adjustments to the prices
of securities or other assets held by the Fund.
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The Fund may determine that market
quotations are not readily available due to events relating to a
single issuer (
e.g.
, corporate actions announcements) or
events relating to multiple issuers (
e.g
., governmental
actions or natural disasters). The Fund may determine the fair
value of investments based on information provided by pricing
services and other third-party vendors, which may recommend fair
value prices or adjustments with reference to other securities,
indices or assets. In considering whether fair value pricing is
required and in determining fair values, the Fund may, among
other things, consider significant events (which may be
considered to include changes in the value of
U.S. securities or securities indices) that occur after the
close of the relevant market and before the Valuation Time. The
Fund may utilize modeling tools provided by third-party vendors
to determine fair values of
non-U.S. securities.
The Fund’s use of fair value pricing may help deter
“stale price arbitrage,” as discussed above under
“Abusive Trading Practices.”
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For purposes of calculating NAV, the
Fund normally uses pricing data for domestic equity securities
received shortly after the NYSE Close and do not normally take
into account trading, clearances or settlements that take place
after the NYSE Close. Domestic fixed income and
non-U.S. securities
are normally priced using data reflecting the earlier closing of
the principal markets for those securities, subject to possible
fair value adjustments. Information that becomes known to the
Fund or its agents after NAV has been calculated on a particular
day will not generally be used to retroactively adjust the price
of a security or NAV determined earlier that day.
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Investments initially valued in
currencies other than the U.S. dollar are converted to
U.S. dollars using exchange rates obtained from pricing
services. As a result, NAV of the Fund’s shares may be
affected by changes in the value of currencies in relation to
the U.S. dollar. The value of investments traded in markets
outside the United States or denominated in currencies other
than the U.S. dollar may be affected significantly on a day
that the New York Stock Exchange is closed, and the NAV of the
Fund’s shares may change on days when an investor is not
able to purchase, redeem or exchange shares. The calculation of
the Fund’s NAV may not take place contemporaneously with
the determination of the prices of
non-U.S. securities
used in NAV calculations.
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The Fund distributes substantially all of its net investment
income to shareholders in the form of dividends. You begin
earning dividends on Fund shares the day after the Trust
receives your purchase payment. Dividends paid by the Fund with
respect to each class of shares are calculated in the same
manner and at the same time, but dividends on certain classes of
shares are expected to be lower than dividends on other shares
as a result of the administrative fees, distribution
and/or
servicing fees or other expenses applicable only to certain
classes of shares. The table below shows when the Fund intends
to declare and distribute income dividends to shareholders of
record. To the extent a significant portion of the securities
held by the Fund fluctuate in the rate or frequency with which
it generates dividends and income, or have variable or floating
interest rates, the amounts of the Fund’s income
distributions to shareholders are expected to vary.
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Allianz
Fund
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At Least
Annually
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Quarterly
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Monthly
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AllianzGI Emerging Markets Debt Fund
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•
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In addition, the Fund distributes any
net capital gains (
i.e.
, the excess of net long-term
gains over net short-term losses) it earns from the sale of
portfolio securities to shareholders no less frequently than
annually. Net short-term capital gains may be paid more
frequently. The amounts of the Fund’s distributions to
shareholders may vary from period to period.
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The Fund’s dividend and capital
gain distributions with respect to Class P or Institutional
Class shares will automatically be reinvested in additional
shares of the same class of the Fund at NAV unless the
shareholder elects to have the distributions paid in cash. A
shareholder may elect to have distributions paid in cash on the
Client Registration Application or by submitting a written
request, signed by the appropriate signatories, indicating the
account number, Fund name and wiring instructions.
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For Class A and Class C
shares, you can choose from the following distribution options:
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• Reinvest all
distributions in additional shares of the same class of the Fund
at NAV.
This will be done unless you elect another option.
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• Invest all
distributions in shares of the same class of any other series of
the Trust or series of Allianz Funds that offers that class
shares at NAV. You must have an account existing in the series
selected for investment with the identical registered name. For
Class A and Class C shares, you must elect this option
on your account application or by a telephone request to the
Transfer Agent at
1-800-988-8380.
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• Receive all
distributions in cash (either paid directly to you or credited
to your account with your broker or other financial service
firm). For Class A and Class C shares, you must elect
this option on your account application or by a telephone
request to the Transfer Agent at
1-800-988-8380.
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Your financial service firm may offer
additional distribution reinvestment programs or options. Please
contact your firm for details.
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You do not pay any sales charges or
other fees on the receipt of shares received through the
reinvestment of Fund distributions.
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If you elect to receive Fund
distributions in cash and any such dividend or capital gain
distribution check(s) remain uncashed for more than six months,
the proceeds may be invested in additional Fund shares at the
NAV calculated on the day of such investment. Additionally, if
you elect to receive Fund distributions in cash and the postal
or other delivery service is unable to deliver checks to your
address of record, the Trust’s Transfer Agent will hold the
returned checks for your benefit in a non-interest bearing
account.
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For further information on distribution
options, please contact your broker, plan administrator or other
financial intermediary, or call the Distributor at
1-800-988-8380
for Class A and Class C shares or the Trust at
1-800-498-5413
for Institutional Class and Class P shares.
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36
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AllianzGI Emerging Markets Debt Fund
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This section summarizes some of the important U.S. federal
income tax consequences to U.S. persons of investing in the
Fund. An investment in the Fund may have other tax implications.
You should consult your tax advisor for information concerning
the possible application of federal, state, local, or
non-U.S. tax
laws to you. Please see the Statement of Additional Information
for additional information regarding the tax aspects of
investing in the Fund.
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The Fund intends to elect to be treated
and intends to qualify each year as a regulated investment
company under the Internal Revenue Code. A regulated investment
company is not subject to U.S. federal income tax on income
and gains that are distributed in a timely manner to
shareholders. The Fund’s failure to qualify as a regulated
investment company would result in fund-level taxation, and,
consequently, a reduced return on your investment.
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•
Taxes on
Fund Distributions.
If you are a shareholder
subject to U.S. federal income tax, you will be subject to
tax on Fund distributions in the manner described herein whether
they are paid in cash or reinvested in additional shares of the
Fund. The Fund will provide you with an annual statement showing
you the amount and tax character (
e.g.
, ordinary or
capital of the distributions you received each year.
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For U.S. federal income tax
purposes, Fund distributions will be taxable to you as either
ordinary income or capital gains. Fund dividends consisting of
distributions of investment income are taxable to you as
ordinary income. The treatment of Fund distributions of capital
gains is based on how long the Fund owned (or is deemed to have
owned) the investments that generated those gains, rather than
how long you have owned your shares. Distributions of net
capital gains (that is, the excess of net long-term capital
gains from the sale of investments that the Fund owned for more
than 12 months over net short-term capital losses) that are
properly reported by the Fund as capital gain dividends
(“Capital Gain Dividends”) will be taxable to you as
long-term capital gains includible in net capital gain and taxed
to individuals at reduced rates. Distributions of net short-term
capital gains in excess of net long-term capital losses will be
taxable to you as ordinary income.
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Distributions of investment income
reported by the Fund as derived from “qualified dividend
income” will be taxed to individual shareholders at the
rates applicable to net capital gains, provided holding period
and other requirements are met at both the shareholder and Fund
level.
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A Medicare contribution tax is imposed
on the “net investment income” of individuals, estates
and trusts whose income exceeds certain threshold amounts. Net
investment income generally includes for this purpose dividends
paid by the Fund, including any Capital Gain Dividends, and net
gains recognized on the sale, redemption or exchange of shares
of the Fund. Shareholders are advised to consult their tax
advisors regarding the possible implications of this additional
tax on their investment in the Fund.
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The ultimate tax characterization of the
Fund’s distributions made in a taxable year cannot be
determined finally until after the end of that taxable year. As
a result, there is a possibility that the Fund may make total
distributions during a taxable year in an amount that exceeds
the Fund’s current and accumulated earnings and profits. In
that case, the excess generally would be treated as a return of
capital, which would reduce your tax basis in the applicable
shares, with any amounts exceeding such basis treated as gain
from the sale of such shares. A return of capital is not
taxable, but it reduces your tax basis in your shares, thus
reducing any loss or increasing any gain on a subsequent taxable
disposition of your shares.
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Fund distributions are taxable to you
even if they are paid from income or gains earned by the Fund
prior to your investment and thus were included in the price you
paid for your shares. For example, if you purchase shares on or
just before the record date of the Fund distribution, you will
pay full price for the shares and could receive a portion of
your investment back as a taxable distribution.
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The Fund’s transactions in
derivatives, short sales, or similar or related transactions
could affect the amount, timing and character of distributions
from the Fund, and could increase the amount and accelerate the
timing for payment of taxes payable by shareholders. In
particular, the Fund’s options transactions could cause a
substantial portion of the Fund’s income to consist of net
short-term capital gains, which, when distributed, are treated
and taxable to shareholders as ordinary income.
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Investments through tax-qualified
retirement plans and other tax-advantaged investors are
generally not subject to current federal income tax, although
certain real estate-related income may be subject to special
rules, including potential taxation and reporting requirements.
Shareholders should consult their tax advisers to determine the
precise effect of an investment in the Fund on their particular
tax situation.
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In order to qualify for the special tax
treatment accorded regulated investment companies and their
shareholders, the Fund must, among other things, derive at least
90% of its income from certain specified sources (such income,
“qualifying income”). Income from certain
commodity-linked investments does not constitute qualifying
income to the Fund. The tax treatment of certain other
commodity-linked investments is not certain, in particular with
respect to whether income and gains from such investments
constitute qualifying income. If such income were determined not
to constitute qualifying income and were to cause the
Fund’s nonqualifying income to exceed 10% of the
Fund’s gross income for any year, the Fund would fail the
90% gross income test described above. The Fund could, in some
cases, cure such failure by paying a Fund-level tax. If the Fund
were ineligible to or otherwise did not cure such failure for
any year, its taxable income and gains would be subject to tax
at the fund level, and distributions from earnings and profits
would be taxable to shareholders as ordinary income. The
Fund’s ability to pursue its investment strategy and
achieve its investment objective may be limited by its intention
to qualify as regulated investment company.
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The tax issues relating to these and
other types of investments and transactions are described more
fully under “Taxation” in the Statement of Additional
Information.
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•
Taxes When You Sell (Redeem) or
Exchange Your Shares.
Any gain resulting from the sale
(or redemption) of Fund shares generally will be taxed to you as
capital gain. When you exchange shares of the Fund for shares of
another series, the transaction generally will be treated as a
sale and any gain realized on such transfer will be taxed as
capital gain. See “Cost Basis Reporting” above for a
description of reporting rules relating to certain redemptions
of Fund shares.
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•
A Note on
Non-U.S. Investments.
The
Fund’s investments in
non-U.S. securities
may be subject to withholding and other taxes imposed by
countries outside the U.S. This may reduce the return on
your investment. Tax conventions between certain countries and
the U.S. may reduce or eliminate such taxes. The Fund may
be eligible to elect to pass through to you a deduction or
credit for foreign taxes. The Fund’s investments in
non-U.S. securities
(other than equity securities) or foreign currencies may
increase or accelerate the Fund’s recognition of ordinary
income and may affect the timing or amount of the Fund’s
distributions.
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•
Backup Withholding.
The Fund
generally is required to withhold and remit to the
U.S. Treasury a percentage of the taxable distributions and
redemption proceeds paid to any shareholder (i) who fails
to properly furnish the Fund with a correct taxpayer
identification number, (ii) who has under-reported dividend
or interest income, or (iii) who fails to certify to the
Fund that he, she or it is not subject to such withholding. The
backup withholding rate is 28%.
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38
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AllianzGI Emerging Markets Debt Fund
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Characteristics and
Risks of Securities and Investment Techniques
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This section provides additional information about some of the
principal investments and related risks of the Fund identified
in the Fund Summary and under “Principal Investments
and Strategies of the Fund” and “Summary of Principal
Risks” above. It also describes characteristics and risks
of additional securities and investment techniques that are not
necessarily principal investment strategies but may be used by
the Fund from time to time. Most of these securities and
investment techniques are discretionary, which means that the
portfolio managers can decide whether to use them or not. This
Prospectus does not attempt to disclose all of the various types
of securities and investment techniques that may be used by the
Fund. As with any mutual fund, investors in the Fund must rely
on the professional investment judgment and skill of the
Manager, the Sub-Adviser and the individual portfolio managers.
Please see “Investment Objectives and Policies” in the
Statement of Additional Information for more detailed
information about the securities and investment techniques
described in this section and about other strategies and
techniques that may be used by the Fund.
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Common
Stocks and
Other Equity
Securities
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Common stock represents an ownership interest in a company.
Common stock may take the form of shares in a corporation,
membership interests in a limited liability company, limited
partnership interests, or other forms of ownership interests.
The value of a company’s stock may fall as a result of
factors directly relating to that company, such as decisions
made by its management or lower demand for the company’s
products or services. A stock’s value may also fall because
of factors affecting not just the company, but also companies in
the same industry or in a number of different industries, such
as increases in production costs. The value of a company’s
stock may also be affected by changes in financial markets that
are relatively unrelated to the company or its industry, such as
changes in interest rates or currency exchange rates or adverse
circumstances involving the credit markets. In addition, a
company’s stock generally pays dividends only after the
company invests in its own business and makes required payments
to holders of its bonds, other debt and preferred stock. For
this reason, the value of a company’s stock will usually
react more strongly than its bonds, other debt and preferred
stock to actual or perceived changes in the company’s
financial condition or prospects.
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Stocks of smaller companies may be more
vulnerable to adverse developments than those of larger
companies. Stocks of companies that the portfolio managers
believe are fast-growing may trade at a higher multiple of
current earnings than other stocks. The value of such stocks may
be more sensitive to changes in current or expected earnings
than the values of other stocks. Seeking earnings growth may
result in significant investments in sectors that may be subject
to greater volatility than other sectors of the economy.
Companies that the Fund’s portfolio manager believes are
undergoing positive change and whose stock the portfolio manager
believes is undervalued by the market may have experienced
adverse business developments or may be subject to special risks
that have caused their stocks to be out of favor. If the
Fund’s portfolio manager’s assessment of a
company’s earnings growth or other prospects is wrong, or
if the portfolio manager’s judgment of how other investors
will value the company is wrong, then the price of the
company’s stock may fall or may not approach the value that
the portfolio manager has placed on it.
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Equity securities represent an ownership
interest, or the right to acquire an ownership interest, in an
issuer. Different types of equity securities provide different
voting and dividend rights and priority in the event of the
bankruptcy
and/or
insolvency of the issuer. In addition to common stocks, equity
securities include, without limitation, preferred stocks,
convertible securities and warrants. Equity securities other
than common stocks are subject to many of the same risks as
common stocks, although possibly to different degrees. The Fund
may invest in, and gain exposure to, common stocks and other
equity securities through purchasing depositary receipts, such
as ADRs, EDRs and GDRs, as described under
“Non-U.S. Securities”
below.
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Preferred stock represents an equity
interest in a company that generally entitles the holder to
receive, in preference for the holders of other stocks such as
common stocks, dividends and a fixed share of the proceeds
resulting from a liquidation of the company. Preferred stock may
pay fixed or adjustable rates of return. Preferred stock is
subject to issuer-specified and market risks applicable
generally to equity securities. In addition, a company’s
preferred stock generally pays dividends only after the company
makes required payments to holders of its bonds and other debt.
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Companies
with
Smaller Market
Capitalizations
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Companies that are smaller and less well-known or seasoned than
larger, more widely held companies may offer greater
opportunities for capital appreciation, but may also involve
risks different from, or greater than, risks normally associated
with larger companies. Larger companies generally have greater
financial resources, more extensive research and development,
manufacturing, marketing and service capabilities, and more
stability and greater depth of management and technical
personnel than smaller companies. Smaller companies may have
limited product lines, markets or financial resources or may
depend on a small, inexperienced management group. Securities of
smaller companies may trade less frequently and in lesser volume
than more widely held
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securities and their values may fluctuate more abruptly or
erratically than securities of larger companies. They may also
trade in the over-the-counter market or on a regional exchange,
or may otherwise have limited liquidity. These securities may
therefore be more vulnerable to adverse market developments than
securities of larger companies. Also, there may be less publicly
available information about smaller companies or less market
interest in their securities as compared to larger companies,
and it may take longer for the prices of the securities to
reflect the full value of a company’s earnings potential or
assets. Because securities of smaller companies may have limited
liquidity, the Fund may have difficulty establishing or closing
out its positions in smaller companies at prevailing market
prices. As a result of owning illiquid securities, the Fund is
subject to the additional risk of possibly having to sell
portfolio securities at disadvantageous times and prices if
redemptions require the Fund to liquidate its securities
positions. Companies with medium-sized market capitalizations
also have substantial exposure to these risks. Furthermore, as
companies’ market capitalizations fall due to declining
markets or other circumstances, such companies will have
increased exposure to these risks.
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Initial
Public
Offerings
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The Fund may purchase securities in initial public offerings
(IPOs). These securities are subject to many of the same risks
of investing in companies with smaller market capitalizations.
Securities issued in IPOs have no trading history, and
information about the companies may be available for very
limited periods. In addition, the prices of securities sold in
IPOs may be highly volatile. At any particular time or from time
to time the Fund may not be able to invest in securities issued
in IPOs, or invest to the extent desired because, for example,
only a small portion (if any) of the securities being offered in
an IPO may be made available to the Fund. In addition, under
certain market conditions a relatively small number of companies
may issue securities in IPOs. Similarly, as the number of funds
to which IPO securities are allocated increases, the number of
securities issued to any one fund, if any, may decrease. The
investment performance of the Fund during periods when it is
unable to invest significantly or at all in IPOs may be lower
than during periods when the Fund is able to do so. In addition,
as the Fund increases in size, the impact of IPOs on the
Fund’s performance will generally decrease.
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Non-U.S. Securities
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The Fund may invest in
non-U.S. securities.
Non-U.S. securities
may include, but are not limited to, securities of companies
that are organized and headquartered outside the U.S.;
non-U.S. equity
securities as designated by commonly-recognized market data
services; U.S. dollar- or
non-U.S. currency-denominated
corporate debt securities of
non-U.S. issuers;
securities of U.S. issuers traded principally in
non-U.S. markets;
non-U.S. bank
obligations; U.S., dollar- or
non-U.S. currency-denominated
obligations of
non-U.S. governments
or their subdivisions, agencies and instrumentalities,
international agencies and supranational entities; and
securities of other investment companies investing primarily in
non-U.S. securities.
When assessing compliance with investment policies that
designate a minimum or maximum level of investment in
“non-U.S. securities”
for the Fund, the Manager or the Sub-Adviser may apply a variety
of factors (either in addition to or in lieu of one or more of
the categories described in the preceding sentence) in order to
determine whether a particular security or instrument should be
treated as U.S. or
non-U.S. For
more information about how the Manager or the Sub-Adviser may
define
non-U.S. securities
for purposes of the Fund’s asset tests and investment
restrictions, see the Fund’s principal investments and
strategies under “Principal Investments and Strategies of
the Fund.” For more information about how the Manager or
Sub-Adviser may determine whether an issuer is located in a
particular country, see “Characteristics and Risks of
Securities and Investment Techniques—Location of
Issuer.”
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The Fund may invest in American
Depositary Receipts (ADRs), European Depositary Receipts (EDRs)
and Global Depositary Receipts (GDRs). ADRs are
dollar-denominated receipts issued generally by domestic banks
and representing the deposit with the bank of a security of a
non-U.S. issuer,
and are publicly traded on exchanges or over-the-counter in the
United States. EDRs are receipts similar to ADRs and are issued
and traded in Europe. GDRs may be offered privately in the
United States and also traded in public or private markets in
other countries. Investing in these instruments exposes the Fund
to credit risk with respect to the issuer of the ADR, EDR or
GDR, in addition to the risks of the underlying investment.
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Investing in
non-U.S. securities
involves special risks and considerations not typically
associated with investing in U.S. securities and
shareholders should consider carefully the substantial risks
involved for a fund that invests in these securities. These
risks include: differences in accounting, auditing and financial
reporting standards; generally higher commission rates on
non-U.S. portfolio
transactions; the possibility of nationalization, expropriation
or confiscatory taxation; adverse changes in investment or
exchange control regulations; market disruption; the possibility
of security suspensions; and political instability. Individual
non-U.S. economies
may differ favorably or unfavorably from the U.S. economy
in such respects as growth of gross domestic product, rate of
inflation, capital reinvestment, resources, self-sufficiency and
balance of payments position. Other countries’ financial
infrastructure or settlement systems may be less developed than
those of the United States. The securities markets, values of
securities, yields and risks associated with
non-U.S. securities
markets may change independently of each other. Also,
non-U.S. securities
and dividends and interest payable on those securities
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40
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AllianzGI Emerging Markets Debt Fund
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could be subject to withholding and other foreign taxes.
Non-U.S. securities
often trade with less frequency and volume than domestic
securities and therefore may exhibit greater price volatility.
Investments in
non-U.S.
securities may also involve higher custodial costs than domestic
investments and additional transaction costs with respect to
foreign currency conversions. Changes in foreign exchange rates
also will affect the value of securities denominated or quoted
in foreign currencies. The currencies of
non-U.S. countries
may experience significant declines against the
U.S. dollar, and devaluation may occur subsequent to
investments in these currencies by the Fund.
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Emerging
Market Securities
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The Fund may invest in securities of issuers tied economically
to countries with developing (or “emerging market”)
economies. Emerging market countries are generally located in
Asia, Africa, the Middle East, Latin America and Eastern Europe.
Countries with emerging market economies are those with
securities markets that are, in the opinion of the Sub-Adviser,
less sophisticated than more developed markets in terms of
participation by investors, analyst coverage, liquidity and
regulation. Series of the Trust with maximum percentage
limitations on investments in emerging market securities
calculate those limitations by defining “emerging market
securities” as securities issued by companies located in
emerging market countries. For more information about how the
Manager or the Sub-Adviser may determine whether an issuer is
“located in” a particular country, see
“Characteristics and Risks of Securities and Investment
Techniques—Location of Issuer.” A series with a policy
to invest a minimum percentage of its net assets in emerging
market securities may use a broader measure, for example, by
investing in securities of companies that are tied economically
to countries with emerging securities markets. For more
information about the Fund’s measure of its minimum
investment policy, see the Fund’s principal investments and
strategies under “Principal Investments and Strategies of
the Fund.”
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Investing in emerging market securities
imposes risks different from, or greater than, risks of
investing in U.S. securities or in developed countries
outside the United States. These risks include: smaller market
capitalization of securities markets, which may suffer periods
of relative illiquidity; significant price volatility;
restrictions on foreign investment; and possible repatriation of
investment income and capital. In addition, foreign investors
may be required to register the proceeds of sales and future
economic or political crises could lead to price controls,
forced mergers, expropriation or confiscatory taxation, seizure,
nationalization or the creation of government monopolies.
Inflation and rapid fluctuations in inflation rates have had,
and may continue to have, negative effects on the economies and
securities markets of certain emerging market countries.
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Additional risks of emerging market
securities may include: greater social, economic and political
uncertainty and instability; more substantial governmental
involvement in the economy; less governmental supervision and
regulation; unavailability of currency or other hedging
techniques; companies that are newly organized
and/or
small; differences in auditing and financial reporting
standards, which may result in unavailability of material
information about issuers; and less developed legal, custodial
and share registration systems. In addition, emerging securities
markets may have different clearance and settlement procedures,
which may be unable to keep pace with the volume of securities
transactions or otherwise make it difficult to engage in such
transactions. Settlement problems may cause the Fund to miss
attractive investment opportunities, hold a portion of its
assets in cash pending investment, or be delayed in disposing of
a portfolio security. Such a delay could result in possible
liability to a purchaser of the security.
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Location
of Issuers
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The Fund’s policies are determined by reference to whether
an issuer is “located in” a particular country or
group of countries. In determining whether an issuer is
“located in” a particular country for those purposes,
the Manager or the Sub-Adviser will consider a number of
factors, including but not limited to: (i)whether the
issuer’s securities are principally traded in the
country’s markets; (ii)where the issuer’s principal
offices or operations are located; (iii)where the issuer is
headquartered or organized; and (iv) the percentage of the
issuer’s revenues derived from goods or services sold or
manufactured in the country. The Manager or the Sub-Adviser may
also consider other factors in making this determination. No
single factor will necessarily be determinative nor must all be
present for the Manager or the Sub-Adviser to determine that an
issuer is in a particular country.
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Foreign
Currencies
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The Fund may invest directly in foreign
(non-U.S.)
currencies or in securities that trade in, or receive revenues
in, foreign currencies, and is subject to currency risk.
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Foreign currency exchange rates may
fluctuate significantly over short periods of time. They
generally are determined by supply and demand and the relative
merits of investments in different countries, actual or
perceived changes in interest rates and other complex factors.
Currency exchange rates also can be affected unpredictably by
intervention (or the failure to intervene) by U.S. or
non-U.S. governments
or central banks, or by currency controls or political
developments. Currencies in which the Fund’s assets are
denominated may be devalued against the U.S. dollar,
resulting in a loss to the Fund.
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Foreign Currency
Transactions.
The Fund may (but is not required to)
enter into forward foreign currency exchange contracts for a
variety of purposes, such as hedging against foreign exchange
risk arising from the Fund’s investment or anticipated
investment in securities denominated in foreign currencies,
gaining leverage and increasing exposure to a foreign currency
or shift exposure from one foreign currency to another. In
addition, the Fund may buy and sell foreign currency futures
contracts and options on foreign currencies and foreign currency
futures. A forward foreign currency exchange contract, which
involves an obligation to purchase or sell a specific currency
at a date and price set at the time of the contract, reduces the
Fund’s exposure to changes in the value of the currency it
will deliver and increases its exposure to changes in the value
of the currency it will receive for the duration of the
contract. Certain foreign currency transactions may also be
settled in cash rather than the actual delivery of the relevant
currency. The effect on the value of the Fund is similar to
selling securities denominated in one currency and purchasing
securities denominated in another currency. The Fund may also
use a basket of currencies to hedge against adverse changes in
the value of another currency or basket of currencies or to
increase the exposure to such currencies. Contracts to sell
foreign currency would limit any potential gain which might be
realized by the Fund if the value of the hedged currency
increases. The Fund may enter into these contracts to hedge
against foreign exchange risk arising from the Fund’s
investment or anticipated investment in securities denominated
in foreign currencies or to increase exposure to a currency or
to shift exposure of currency fluctuations from one currency to
another. Suitable hedging transactions may not be available in
all circumstances and there can be no assurance that the Fund
will engage in such transactions at any given time or from time
to time. Also, any such transactions may not be successful and
may eliminate any chance for the Fund to benefit from favorable
fluctuations in relevant foreign currencies. In addition, to the
extent that it engages in foreign currency transactions, the
Fund will be subject to the additional risk that the relative
value of currencies will be different than anticipated by the
Fund’s portfolio manager(s).
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Derivatives
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Unless otherwise stated in the Fund Summary or under
“Principal Investments and Strategies of the Fund,”
the Fund may, but is not required to, use a number of derivative
instruments. Derivatives may be used for a variety of reasons,
including for risk management, for leverage and to indirectly
gain exposure to other types of investments. For example, the
Fund may use derivative instruments (such as securities swaps)
to indirectly participate in the securities market of a country
from which the Fund would otherwise be precluded for lack of an
established securities custody and safekeeping system or for
other reasons. Generally, derivatives are financial contracts
whose value depends upon, or is derived from, the value of an
underlying asset, reference rate or index, and may relate to,
among other things, stocks, bonds, interest rates, currencies or
currency exchange rates, commodities, and related indexes. The
Sub-Adviser may decide not to employ any of these strategies and
there is no assurance that any derivatives strategy used by the
Fund will succeed. In addition, suitable derivative transactions
may not be available in all circumstances and there can be no
assurance that the Fund will engage in these transactions to
reduce exposure to other risks when that would be beneficial.
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Examples of derivative instruments that
the Fund may buy, sell or otherwise utilize (unless otherwise
stated in the Fund Summary or under “Principal
Investments and Strategies of the Fund”) include, among
others, option contracts, futures contracts, options on futures
contracts, forward contracts, warrants and swap agreements,
including swap agreements with respect to securities indexes.
The Fund may purchase and sell (write) call and put options on
securities, securities indexes and foreign currencies; and may
also purchase and sell futures contracts and options thereon
with respect to securities, securities indexes, interest rates
and foreign currencies. A description of these and other
derivative instruments that the Fund may use are described under
“Investment Objectives and Policies” in the Statement
of Additional Information.
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The Fund’s use of derivative
instruments involves risks different from, or greater than, the
risks associated with investing directly in securities and other
more traditional investments, and the use of certain derivatives
may subject the Fund to the potential for unlimited loss. A
description of various risks associated with particular
derivative instruments is included in “Investment
Objectives and Policies” in the Statement of Additional
Information. The following provides a more general discussion of
important risk factors relating to all derivative instruments
that may be used by the Fund.
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Management Risk.
Derivative
products are highly specialized instruments that require
investment techniques and risk analyses different from those
associated with stocks and bonds. The use of a derivative
requires an understanding not only of the underlying instrument
but also of the derivative itself, without the benefit of
observing the performance of the derivative under all possible
market conditions.
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Credit Risk.
The use of a
derivative instrument involves the risk that a loss may be
sustained as a result of the failure of another party to the
contract (usually referred to as a “counterparty”) to
make required payments
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42
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AllianzGI Emerging Markets Debt Fund
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or otherwise comply with the contract’s terms. To the
extent the Fund has significant exposure to a single or small
group of counterparties, this risk will be particularly
pronounced.
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Liquidity Risk.
Liquidity
risk exists when a particular derivative instrument is difficult
to purchase or sell. If a derivative transaction is particularly
large or if the relevant market is illiquid (as is the case with
many privately negotiated derivatives), it may not be possible
to initiate a transaction or liquidate a position at an
advantageous time or price.
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Leveraging Risk.
Because
many derivatives have a leverage component, adverse changes in
the value or level of the underlying asset, reference rate or
index can result in a loss substantially greater than the amount
invested in the derivative itself. Certain derivatives have the
potential for unlimited loss, regardless of the size of the
initial investment. When the Fund uses derivatives for leverage,
investments in the Fund will tend to be more volatile, resulting
in larger gains or losses in response to market changes. To
limit leverage risk, the Fund will segregate assets determined
to be liquid by the Manager or the Sub-Adviser in accordance
with procedures approved by the Board of Trustees (or, as
permitted by applicable law, enter into certain offsetting
positions) to cover its obligations under derivative
instruments. Leveraging risk may be especially applicable to the
Fund to the extent that it writes uncovered (or
“naked”) options.
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Lack of
Availability.
Because the markets for certain
derivative instruments (including markets located in
non-U.S. countries)
are relatively new and still developing, suitable derivatives
transactions may not be available in all circumstances for risk
management or other purposes. Upon the expiration of a
particular contract, a portfolio manager of the Fund may wish to
retain the Fund’s position in the derivative instrument by
entering into a similar contract, but may be unable to do so if
the counterparty to the original contract is unwilling to enter
into the new contract and no other suitable counterparty can be
found. There is no assurance that the Fund will engage in
derivatives transactions at any time or from time to time. The
Fund’s ability to use derivatives may also be limited by
certain regulatory and tax considerations.
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Market and Other Risks.
Like
most other investments, derivative instruments are subject to
the risk that the market value of the instrument will change in
a way detrimental to the Fund’s interest. If the
Sub-Adviser incorrectly forecasts the values of securities,
currencies or interest rates or other economic factors in using
derivatives for the Fund, the Fund might have been in a better
position if it had not entered into the transaction at all.
While some strategies involving derivative instruments can
reduce the risk of loss, they can also reduce the opportunity
for gain or result in losses by offsetting favorable price
movements in other Fund investments. The Fund may also have to
buy or sell a security at a disadvantageous time or price
because the Fund is legally required to maintain offsetting
positions or asset coverage in connection with certain
derivatives transactions.
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Other risks in using derivatives include
the risk of mispricing or improper valuation of derivatives.
Many derivatives, in particular privately negotiated
derivatives, are complex and often valued subjectively. Improper
valuations can result in increased cash payment requirements to
counterparties or a loss of value to the Fund. Also, the value
of derivatives may not correlate perfectly, or at all, with the
value of the assets, reference rates or indexes they are
designed to closely track. There are significant differences
between the securities and derivatives markets that could result
in an imperfect correlation between these markets, causing a
given transaction not to achieve the intended result. In
addition, the Fund’s use of derivatives may accelerate
and/or
increase the amount of taxes payable by shareholders. Derivative
instruments are also subject to the risk of ambiguous
documentation. A decision as to whether, when and how to use
derivatives involves the exercise of skill and judgment, and
even a well-conceived transaction may be unsuccessful to some
degree because of market behavior or unexpected events. In
addition, derivatives strategies that are successful under
certain market conditions may be less successful or unsuccessful
under other market conditions.
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From time to time, the Fund may use
participatory notes (“P-Notes”) to gain exposure to
issuers in certain countries. P-Notes are a type of
equity-linked derivative that generally are traded
over-the-counter and constitute general unsecured contractual
obligations of the banks or broker-dealers that issue them.
Generally, banks and broker-dealers associated with
non-U.S.-based
brokerage firms buy securities listed on certain foreign
exchanges and then issue P-Notes which are designed to replicate
the performance of certain issuers and markets. The performance
results of P-Notes will not replicate exactly the performance of
the issuers or markets that the notes seek to replicate due to
transaction costs and other expenses. The return on a P-Note
that is linked to a particular underlying security generally is
increased to the extent of any dividends paid in connection with
the underlying security. However, the holder of a P-Note
typically does not receive voting or other rights as it would if
it directly owned the underlying security, and P-Notes present
similar risks to investing directly in the underlying security.
Additionally, P-Notes entail the same risks as other
over-the-counter derivatives. These include the risk that the
counterparty or issuer of the P-Note may not be able to fulfill
its obligations, that the
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holder and counterparty or issuer may disagree as to the meaning
or application of contractual terms, or that the instrument may
not perform as expected. Additionally, while P-Notes may be
listed on an exchange, there is no guarantee that a liquid
market will exist or that the counterparty or issuer of a P-Note
will be willing to repurchase such instrument when the Fund
wishes to sell it.
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Equity-Related
Instruments
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Equity-related instruments are securities and other instruments,
including derivatives such as equity-linked securities, whose
investment results are intended to correspond generally to the
performance of one or more specified equity securities or of a
specified equity index or analogous “basket” of equity
securities. See “Common Stocks and Other Equity
Securities” above. To the extent that the Fund invests in
equity-related instruments whose return corresponds to the
performance of a
non-U.S. securities
index or one or more
non-U.S. equity
securities, investing in such equity-related instruments will
involve risks similar to the risks of investing in
non-U.S. securities.
See
“Non-U.S. Securities”
above. In addition, the Fund bears the risk that the issuer of
an equity-related instrument may default on its obligations
under the instrument. Equity-related instruments are often used
for many of the same purposes as, and share many of the same
risks with, other derivative instruments. See
“Derivatives” above. Equity-related instruments may be
considered illiquid and thus subject to the Fund’s
restrictions on investments in illiquid securities.
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Defensive
Strategies
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In response to unfavorable market and other conditions, the Fund
may deviate from its principal strategies by making temporary
investments of some or all of its assets in high-quality fixed
income securities, cash and cash equivalents. The Fund may not
achieve its investment objective when it does so. The Fund may
maintain a portion of its assets in high-quality fixed income
securities, cash and cash equivalents to pay Fund expenses and
to meet redemption requests.
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Fixed
Income
Securities
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As used in this Prospectus, the term “fixed income
securities” includes, without limitation: securities issued
or guaranteed by the U.S. Government, its agencies or
government-sponsored enterprises (“U.S. Government
Securities”); corporate debt securities of U.S. and
non-U.S. issuers,
including convertible securities and corporate commercial paper;
mortgage-backed and other asset-backed securities;
inflation-indexed bonds issued both by governments and
corporations; structured notes, including hybrid or
“indexed” securities and event-linked bonds; loan
participations and assignments; delayed funding loans and
revolving credit facilities; bank certificates of deposit, fixed
time deposits and bankers’ acceptances; repurchase
agreements and reverse repurchase agreements; debt securities
issued by states or local governments and their agencies,
authorities and other government-sponsored enterprises;
obligations of
non-U.S. governments
or their subdivisions, agencies and government-sponsored
enterprises; and obligations of international agencies or
supranational entities. Securities issued by
U.S. Government agencies or government-sponsored
enterprises may not be guaranteed by the U.S. Treasury.
Investments in U.S. Government securities and other
government securities remain subject to the risks associated
with downside or default. Unless otherwise stated in the
Fund Summary or under “Principal Investments and
Strategies of the Fund,” the Fund may invest in derivatives
based on fixed income securities. The Fund may have significant
investment exposure to fixed income securities through
investments of cash collateral from loans of portfolio
securities.
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Fixed income securities are obligations
of the issuer to make payments of principal
and/or
interest on future dates. Fixed income securities are subject to
the risk of the issuer’s inability to meet principal and
interest payments on the obligation and may also be subject to
price volatility due to factors such as interest rate
sensitivity, market perception of the creditworthiness of the
issuer and general market conditions. As interest rates rise,
the value of fixed income securities can be expected to decline.
Fixed income securities with longer “durations” (a
measure of the expected life of a fixed income security that is
used to determine the sensitivity of a security’s price to
changes in interest rates) tend to be more sensitive to interest
rate movements than those with shorter durations. Similarly, a
fund with a longer average portfolio duration will be more
sensitive to changes in interest rates than a fund with a
shorter average portfolio duration. By way of example, the price
of a bond fund with a duration of five years would be expected
to fall approximately 5% if interest rates rose by one
percentage point and the price of a bond fund with a duration of
three years would be expected to fall approximately 3% if
interest rates rose by one percentage point. The timing of
purchase and sale transactions in debt obligations may result in
capital appreciation or depreciation because the value of debt
obligations varies inversely with prevailing interest rates.
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Senior
and Other
Bank Loans
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The Fund may invest in fixed- and floating-rate loans issued by
banks (including, among others, Senior Loans, delayed funding
loans and revolving credit facilities). Loan interests may take
the form of direct interests acquired during a primary
distribution and may also take the form of assignments of,
novations of or participations in a bank loan acquired in
secondary markets.
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44
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AllianzGI Emerging Markets Debt Fund
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As noted, the Fund may purchase
“assignments” of bank loans from lenders. The
purchaser of an assignment typically succeeds to all the rights
and obligations under the loan agreement with the same rights
and obligations as the assigning lender. Assignments may,
however, be arranged through private negotiations between
potential assignees and potential assignors, and the rights and
obligations acquired by the purchaser of an assignment may
differ from, and be more limited than, those held by the
assigning lender.
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The Fund may also invest in
“participations” in bank loans. Participations by the
Fund in a lender’s portion of a bank loan typically will
result in the Fund having a contractual relationship only with
such lender, not with the borrower. As a result, the Fund may
have the right to receive payments of principal, interest and
any fees to which it is entitled only from the lender selling
the participation and only upon receipt by such lender of such
payments from the borrower. In connection with purchasing
participations, the Fund generally will have no right to enforce
compliance by the borrower with the terms of the loan agreement,
nor any rights with respect to any funds acquired by other
lenders through set-off against the borrower, and the Fund may
not directly benefit from any collateral supporting the loan in
which it has purchased the participation. As a result, the Fund
may assume the credit risk of both the borrower and the lender
selling the participation.
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The Senior Loans in which the Fund may
invest typically pay interest at rates that are re-determined
periodically on the basis of a floating base lending rate (such
as the LIBOR Rate) plus a premium. Although Senior Loans are
typically of below investment grade quality (
i.e.
, high
yield securities), they tend to have more favorable recovery
rates than other types of below investment grade quality debt
obligations. Senior Loans generally (but not always) hold the
most senior position in the capital structure of a borrower and
are often secured with collateral. A Senior Loan is typically
originated, negotiated and structured by a U.S. or foreign
commercial bank, insurance company, finance company or other
financial institution (the “Agent”) for a lending
syndicate of financial institutions (“Lenders”). The
Agent typically administers and enforces the Senior Loan on
behalf of the other Lenders in the syndicate. In addition, an
institution, typically but not always the Agent, holds any
collateral on behalf of the Lenders. A financial
institution’s employment as an Agent might be terminated in
the event that it fails to observe a requisite standard of care
or becomes insolvent. A successor Agent would generally be
appointed to replace the terminated Agent, and assets held by
the Agent under the loan agreement would likely remain available
to holders of such indebtedness. However, if assets held by the
Agent for the benefit of the Fund were determined to be subject
to the claims of the Agent’s general creditors, the Fund
might incur certain costs and delays in realizing payment on a
loan or loan participation and could suffer a loss of principal
and/or
interest. In situations involving other interposed financial
institutions (
e.g.
, an insurance company or government
agency) similar risks may arise.
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Purchasers of Senior Loans and other
forms of direct indebtedness depend primarily upon the
creditworthiness of the corporate or other borrower for payment
of principal and interest. If the Fund does not receive
scheduled interest or principal payments on such indebtedness,
the net asset value, market price
and/or
yield
of the common shares could be adversely affected. Senior Loans
that are fully secured may offer the Fund more protection than
an unsecured loan in the event of non-payment of scheduled
interest or principal. However, there is no assurance that the
liquidation of any collateral from a secured Senior Loan would
satisfy the borrower’s obligation, or that such collateral
could be liquidated. Also, the Fund may invest in Senior Loans
that are unsecured.
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Senior Loans and interests in other bank
loans may not be readily marketable and may be subject to
restrictions on resale. In some cases, negotiations involved in
disposing of indebtedness may require weeks to complete.
Consequently, some indebtedness may be difficult or impossible
to dispose of readily at what the Sub-Adviser believes to be a
fair price.
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Senior Loans usually require, in
addition to scheduled payments of interest and principal, the
prepayment of the Senior Loan from free cash flow. The degree to
which borrowers prepay Senior Loans, whether as a contractual
requirement or at their election, may be affected by general
business conditions, the financial condition of the borrower and
competitive conditions among lenders, among others. As such,
prepayments cannot be predicted with accuracy. Upon a
prepayment, either in part or in full, the actual outstanding
debt on which the Fund derives interest income will be reduced.
However, the Fund may receive both a prepayment penalty fee from
the prepaying borrower and a facility fee upon the purchase of a
new Senior Loan with the proceeds from the prepayment of the
former. The effect of prepayments on the Fund’s performance
may be mitigated by the receipt of prepayment fees and the
Fund’s ability to reinvest prepayments in other Senior
Loans that have similar or identical yields.
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Corporate
Debt
Securities
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Corporate debt securities are subject to the risk of the
issuer’s inability to meet principal and interest payments
on the obligation and may also be subject to price volatility
due to factors such as interest rate sensitivity, market
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perception of the creditworthiness of the issuer and general
market liquidity. When interest rates rise, the value of
corporate debt securities can be expected to decline. Debt
securities with longer maturities or durations tend to be more
sensitive to interest rate movements than those with shorter
maturities.
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High
Yield Securities
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Securities rated lower than Baa by Moody’s Investors
Service, Inc. (“Moody’s”) or lower than BBB by
Standard & Poor’s Rating Services
(“S&P”) or Fitch, Inc. (“Fitch”), or
unrated securities deemed by the Sub-Adviser to be of comparable
quality, are sometimes referred to as “high yield
securities” or “junk bonds.” Investing in these
securities involves special risks in addition to the risks
associated with investments in higher-rated fixed income
securities. While offering a greater potential opportunity for
capital appreciation and higher yields, these securities may be
subject to greater levels of interest rate, credit and liquidity
risk, may entail greater potential price volatility and may be
less liquid than higher-rated securities. These securities may
be regarded as predominantly speculative with respect to the
issuer’s continuing ability to meet principal and interest
payments. They may also be more susceptible to real or perceived
adverse economic and competitive industry conditions than
higher-rated securities. Fixed income securities rated in the
lowest investment grade categories by a rating agency may also
possess speculative characteristics. If securities are in
default with respect to the payment of interest or the repayment
on principal, or present an imminent risk of default with
respect to such payments, the issuer of such securities may fail
to resume principal or interest payments, in which case the Fund
may lose its entire investment.
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Credit
Ratings and
Unrated Securities
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The Fund may invest in securities based on their credit ratings
assigned by rating agencies such as Moody’s, S&P and
Fitch. Moody’s, S&P, Fitch and other rating agencies
are private services that provide ratings of the credit quality
of fixed income securities, including convertible securities. An
Appendix to the Fund’s Statement of Additional Information
describes the various ratings assigned to fixed income
securities by Moody’s, S&P and Fitch. Ratings assigned
by a rating agency are not absolute standards of credit quality
and do not evaluate market risk. Rating agencies may fail to
make timely changes in credit ratings and an issuer’s
current financial condition may be better or worse than a rating
indicates. The Fund will not necessarily sell a security when
its rating is reduced below its rating at the time of purchase.
The Sub-Adviser does not rely solely on credit ratings, and may
develop its own analyses of issuer credit quality.
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The Fund may purchase unrated securities
(which are not rated by a rating agency) if the Sub-Adviser
determines that the security is of comparable quality to a rated
security that the Fund may purchase. Unrated securities may be
less liquid than comparable rated securities and involve the
risk that the Sub-Adviser may not accurately evaluate the
security’s comparative credit rating. Analysis of the
creditworthiness of issuers of high yield securities may be more
complex than for issuers of higher-quality fixed income
securities. In the event the Fund invests a significant portion
of assets in high yield securities
and/or
unrated securities, the Fund’s success in achieving its
investment objective may depend more heavily on the
Sub-Adviser’s creditworthiness analysis than if the Fund
invested exclusively in higher-quality and rated securities.
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Rule 144A
Securities
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Rule 144A securities are securities that have not been
registered for public sale, but that are eligible for purchase
and sale pursuant to Rule 144A under the Securities Act of
1933 (the “Securities Act”). Rule 144A permits certain
qualified institutional buyers, such as the Fund, to trade in
privately placed securities that have not been registered for
sale under the Securities Act. Rule 144A securities may be
deemed illiquid and thus may be subject to the Fund’s
limitation to invest not more than 15% of its net assets in
securities which are illiquid at the time of investment,
although the Fund may determine that certain Rule 144A
securities are liquid in accordance with procedures adopted by
the Board of Trustees. See “Illiquid Securities” below.
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Variable
and Floating
Rate Securities
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Variable- and floating-rate securities provide for a periodic
adjustment in the interest rate paid on the obligations. If the
Fund invests in floating-rate debt instruments
(“floaters”) or engages in credit-spread trades, it
may gain a certain degree of protection against rises in
interest rates, but will participate in any declines in interest
rates as well. This is because variable- and floating-rate
securities generally are less sensitive to interest rate changes
but may decline in value if their interest rates do not rise as
much, or as quickly, as interest rates in general. Conversely,
floating-rate securities will not generally increase in value if
interest rates decline. The Fund may also invest in inverse
floating-rate debt instruments (“inverse floaters”).
An inverse floater may exhibit greater price volatility than a
fixed-rate obligation of similar credit quality. When the Fund
holds variable- or floating-rate securities, a decrease (or, in
the case of inverse floating-rate securities, an increase) in
market interest rates will adversely affect the income received
from such securities and the net asset value of the Fund’s
shares. Certain of the Fund’s investments, including
variable- and floating-rate securities, may require the Fund to
accrue and distribute income not yet received. As a result, in
order to generate cash to make the requisite distributions, the
Fund may be required to sell securities in its portfolio that it
would otherwise have continued to hold.
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46
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|
AllianzGI Emerging Markets Debt Fund
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Convertible
Securities
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|
Convertible securities are generally bonds, debentures, notes,
preferred stocks, “synthetic” convertibles and other
securities or investments that may be converted or exchanged (by
the holder or issuer) into equity securities of the issuer (or
cash or securities of equivalent value). The price of a
convertible security will normally vary in some proportion to
changes in the price of the underlying equity security because
of this conversion or exercise feature. However, the value of a
convertible security may not increase or decrease as rapidly as
the underlying common stock. A convertible security may be
called for redemption or conversion by the issuer after a
particular date and under certain circumstances (including a
specified price) established upon issue. If a convertible
security held by the Fund is called for redemption or
conversion, the Fund could be required to tender it for
redemption, convert it into the underlying common stock or sell
it to a third party. A convertible security will normally also
provide income and is subject to interest rate risk. Convertible
securities may be lower-rated or high-yield securities subject
to greater levels of credit risk, and may also be less liquid
than non-convertible debt securities. While convertible
securities generally offer lower interest or dividend yields
than non-convertible fixed income securities of similar quality,
their value tends to increase as the market value of the
underlying stock increases and to decrease when the value of the
underlying stock decreases. However, a convertible
security’s market value tends to reflect the market price
of the common stock of the issuing company when that stock price
approaches or is greater than the convertible security’s
“conversion price.” The conversion price is defined as
the predetermined price at which the convertible security could
be exchanged for the associated stock. As the market price of
the underlying common stock declines, the price of the
convertible security tends to be influenced more by the yield of
the convertible security. Thus, it may not decline in price to
the same extent as the underlying common stock. Depending upon
the relationship of the conversion price to the market value of
the underlying security, a convertible security may trade more
like an equity security than a debt instrument. Also, the Fund
may be forced to convert a security before it would otherwise
choose, which may decrease the Fund’s return.
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Synthetic Convertible
Securities.
“Synthetic” convertible
securities are selected based on the similarity of their
economic characteristics to those of a traditional convertible
security due to the combination of separate securities that
possess the two principal characteristics of a traditional
convertible security (
i.e.
, an income producing component
and a right to acquire an equity security). The income-producing
component is achieved by investing in non-convertible,
income-producing securities such as bonds, preferred stocks and
money market instruments while the convertible component is
achieved by investing in warrants or options to buy common stock
at a certain exercise price, or options on a stock index.
Synthetic securities may also be created by third parties,
typically investment banks or other financial institutions.
Unlike a traditional convertible security, which is a single
security having a unitary market value, a synthetic convertible
consists of two or more separate securities, each with its own
market value, and has risks associated with derivative
instruments. See “Derivatives.”
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Loans
of Portfolio
Securities
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For the purpose of achieving income, the Fund may lend its
portfolio securities to brokers, dealers and other financial
institutions provided a number of conditions are satisfied,
including that the loan is fully collateralized. The Fund may
(but is not required to) lend portfolio securities representing
up to
331
/
3
%
of its total assets. Collateral received from loans of portfolio
securities can therefore represent a substantial portion of the
Fund’s assets. The Fund does not currently have a program
in place pursuant to which it could lend portfolio securities.
However, it may establish such a program in the future. Please
see “Investment Objectives and Policies—Securities
Loans” in the Statement of Additional Information for
details.
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Short
Sales
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The Fund may make use of short sales for investment and risk
management purposes, including when the Sub-Adviser anticipates
that the market price of securities will decline or will
underperform relative to other securities held in the
Fund’s portfolio. Short sales are transactions in which the
Fund sells a security or other instrument (such as an option,
forward, futures contract or other derivatives contract) that it
does not own. Alternatively or in combination with direct short
sales, the Fund may utilize derivative instruments, such as
futures on indices or swaps on individual securities, in order
to achieve the desired level of short exposure for the
portfolio. When the Fund engages in a short sale on a security,
it must borrow the security sold short and deliver it to the
counterparty. The Fund will ordinarily have to pay a fee or
premium to borrow a security and be obligated to repay the
lender of the security any dividends or interest that accrues on
the security during the period of the loan. The amount of any
gain from a short sale will be reduced, and the amount of any
loss increased, by the amount of the premium, dividends,
interest or expenses the Fund pays in connection with the short
sale. Until a short position is closed out, the net proceeds of
the short sale will be retained by the lending broker to the
extent necessary to meet margin requirements, together with any
additional assets the broker requires as collateral. The Fund is
also required to designate, on its books or the books of its
custodian, liquid assets (less any additional collateral held by
the broker) to cover the short sale obligation, marked-to-market
daily.
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Depending on the arrangements made with the broker or custodian,
the Fund may or may not receive any payments (including
interest) on collateral it has deposited with the broker.
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Short sales expose the Fund to the risk
that it will be required to cover its short position at a time
when the security or other asset has appreciated in value, thus
resulting in losses to the Fund. A short sale is “against
the box” if the Fund holds in its portfolio or has the
right to acquire the security sold short at no additional cost.
The Fund may engage in short sales that are not “against
the box,” which involve additional risks. The Fund’s
loss on a short sale could theoretically be unlimited in a case
where the Fund is unable, for whatever reason, to close out its
short position. The Fund’s use of short sales in
combination with long positions in its portfolio in an attempt
to improve performance may not be successful and may result in
greater losses or lower positive returns than if the Fund held
only long positions. It is possible that the Fund’s long
equity positions will decline in value at the same time that the
value of the securities underlying its short positions increase,
thereby increasing potential losses to the Fund. In addition,
the Fund’s short selling strategies may limit its ability
to fully benefit from increases in the equity markets. Short
selling also involves a form of financial leverage that may
exaggerate any losses realized by Funds that utilize short
sales. See “Summary of Principal Risks—Leveraging
Risk.” Also, there is the risk that the counterparty to a
short sale may fail to honor its contractual terms, causing a
loss to the Fund. See “Summary of Principal
Risks—Credit and Counterparty Risk”. The SEC and other
(including
non-U.S.)
regulatory authorities have imposed, and may in the future
impose, restrictions on short selling, either on a temporary or
permanent basis, which may include placing limitations on
specific companies
and/or
industries with respect to which the Fund may enter into short
positions. Any such restrictions may hinder the Fund in, or
prevent it from, fully implementing its investment strategies,
and may negatively affect performance.
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In certain market and regulatory
environments, the Fund may seek to obtain some or all of its
short exposure by using derivative instruments on indices or
individual securities, instead of engaging directly in short
sales on individual securities. Such environments may include
instances of regulatory restrictions as described above. It may
also include periods when prime brokers or other counterparties
are unable or unwilling to support the Fund’s short-selling
of individual securities on adequate terms. Following recent
economic developments, including significant turbulence in the
credit markets and the financial sector, counterparties that
provide prime brokerage services in support of short selling
have significantly curtailed their prime brokerage relationships
with registered mutual funds. Consequently, the Fund may be
unable to engage in short sales of individual securities on
traditional terms. It may instead seek all of its short exposure
through derivatives. To the extent the Fund achieves short
exposure by using derivative instruments, it will be subject to
many of the foregoing risks, as well as to those described under
“Derivatives” above. See “Investment Objectives
and Policies—Short Sales” in the Statement of
Additional Information for more detail.
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When-Issued,
Delayed Delivery
and Forward
Commitment Transactions
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The Fund may purchase securities which it is eligible to
purchase on a when-issued basis, may purchase and sell such
securities for delayed delivery and may make contracts to
purchase such securities for a fixed price at a future date
beyond normal settlement time (forward commitments). When-issued
transactions, delayed delivery purchases and forward commitments
involve a risk of loss if the value of the securities declines
prior to the settlement date. This risk is in addition to the
risk that the Fund’s other assets will decline in value.
Therefore, these transactions may result in a form of leverage
and increase the Fund’s overall investment exposure.
Typically, no income accrues on securities the Fund has
committed to purchase prior to the time delivery of the
securities is made, although the Fund may earn income on
securities it has segregated to cover these positions.
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Repurchase
Agreements
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The Fund may enter into repurchase agreements, in which the Fund
purchases a security from a bank or broker-dealer that agrees to
repurchase the security at the Fund’s cost plus interest
within a specified time. If the party agreeing to repurchase
should default, the Fund will seek to sell the securities which
it holds. This could involve procedural costs or delays in
addition to a loss on the securities if their value should fall
below their repurchase price. Repurchase agreements maturing in
more than seven days are considered illiquid securities.
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Reverse
Repurchase
Agreements and
Other Borrowings
|
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The Fund may enter into reverse repurchase agreements and dollar
rolls, subject to the Fund’s limitations on borrowings. A
reverse repurchase agreement involves the sale of a security by
the Fund and its agreement to repurchase the instrument at a
specified time and price. A dollar roll is similar except that
the counterparty is not obligated to return the same securities
as those originally sold by the Fund but only securities that
are “substantially identical.” Reverse repurchase
agreements and dollar rolls may be considered forms of borrowing
for some purposes. The Fund will segregate assets determined to
be liquid by the Manager or the Sub-Adviser in accordance with
procedures approved by the Board of Trustees to cover its
obligations under reverse repurchase agreements, dollar rolls
and other borrowings.
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The Fund also may borrow money to the
extent permitted under the 1940 Act, subject to any policies of
the Fund currently described in this Prospectus or in the
Statement of Additional Information.
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48
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|
AllianzGI Emerging Markets Debt Fund
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In addition, to the extent permitted by
and subject to applicable law or SEC exemptive relief, the Fund
may make short-term borrowings from investment companies
(including money market mutual funds) advised or subadvised by
the Manager or its affiliates.
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Reverse repurchase agreements, dollar
rolls and other forms of borrowings will create leveraging risk
for the Fund. See “Summary of Principal
Risks—Leveraging Risk.”
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Illiquid
Securities
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The Fund may invest in illiquid securities so long as not more
than 15% of the value of the Fund’s net assets (taken at
market value at the time of investment) would be invested in
such securities. Certain illiquid securities may require pricing
using fair valuation procedures approved by the Board of
Trustees. The Sub-Adviser may be subject to significant delays
in disposing of illiquid securities held by the Fund, and
transactions in illiquid securities may entail registration
expenses and other transaction costs that are higher than those
for transactions in liquid securities. The term “illiquid
securities” for this purpose means securities that cannot
be disposed of within seven days in the ordinary course of
business at approximately the amount at which the Fund has
valued the securities. Please see “Investment Objectives
and Policies” in the Statement of Additional Information
for a listing of various securities that are generally
considered to be illiquid for these purposes. Restricted
securities,
i.e.
, securities subject to legal or
contractual restrictions on resale, may be illiquid. However,
some restricted securities (such as securities issued pursuant
to Rule 144A under the Securities Act of 1933 and certain
commercial paper) may be treated as liquid, although they may be
less liquid than registered securities traded on established
secondary markets.
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REITs
and Real
Estate-Related
Investments
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The Fund may invest in real estate-related investments, such as
securities of real estate-related companies, real estate
investment trusts (REITs), real estate operating companies
(REOCs) and related instruments and derivatives. REITs are
entities that primarily invest in income-producing real estate
or real estate related loans or interests. REITs are generally
classified as equity REITs, mortgage REITs or a combination of
equity and mortgage REITs. Equity REITs generally invest a
majority of their assets directly in real property and derive
income primarily from the collection of rents. Equity REITs can
also realize capital gains by selling properties that have
appreciated in value. Mortgage REITs generally invest the
majority of their assets in real estate mortgages and derive
income from the collection of interest payments.
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To the extent that the Fund invests in
real estate-related investments, such as securities of real
estate-related companies, REITs, REOCs and related instruments
and derivatives, it will be subject to the risks associated with
owning real estate and with the real estate industry generally.
These include difficulties in valuing and disposing of real
estate, the possibility of declines in the value of real estate,
risks related to general and local economic conditions, the
possibility of adverse changes in the climate for real estate,
environmental liability risks, the risk of increases in property
taxes and operating expenses, possible adverse changes in zoning
laws, the risk of casualty or condemnation losses, limitations
on rents, the possibility of adverse changes in interest rates
and credit markets and the possibility of borrowers paying off
mortgages sooner than expected, which may lead to reinvestment
of assets at lower prevailing interest rates. The value of
investments in the real estate sector also may be affected by
macroeconomic developments, and social economic trends. To the
extent the Fund invests in REITs
and/or
REOCs, it is also subject to the risk that a REIT or REOC will
default on its obligations or go bankrupt. As with any
investment in real estate, the performance of a REIT or REOC
will also depend on factors specific to that instrument, such as
the company’s ability to find tenants for its properties,
to renew leases, to finance property purchases and renovations,
and the skill of the management of such REIT or REOC. To the
extent a REIT or REOC is not diversified, it is subject to the
risk of financing or investing in a single or a limited number
of projects. By investing in REITs
and/or
ROECs
indirectly through the Fund, a shareholder will bear not only
his or her proportionate share of the expenses of the Fund, but
also, indirectly, similar expenses of such REITs and REOCs. The
Fund’s investments in REITs could cause the Fund to
recognize income in excess of cash Received from those
securities and, as a result, the Fund may be required to sell
portfolio securities, including when it is not advantageous to
do so, in order to make required distributions.
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Investment
in Other
Investment
Companies
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The Fund may invest in other investment companies, including
exchange-traded funds (ETFs). Please see “Investment
Objectives and Policies” in the Statement of Additional
Information for more detailed information. As a shareholder of
another investment company, the Fund may indirectly bear service
and other fees which are in addition to the fees the Fund pays
its service providers. To the extent the estimated fees and
expenses of the Fund attributable to investment in other
investment companies, or in companies that rely on certain
exemptions from the definition of that term, exceed 0.01% of the
Fund’s average net assets (without taking into account
expenses from investing cash collateral for securities loans),
those amounts would be reflected in the Fund’s expense
table in the Fund Summary under the heading “Acquired
Fund Fees and Expenses.” Acquired Fund Fees and
Expenses do not include expenses associated with investments in
the securities of unaffiliated
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investment companies unless those companies hold themselves out
to be investment companies. To the extent permitted by and
subject to applicable law or SEC exemptive relief, the Fund may
invest in shares of investment companies (including money market
mutual funds) advised or subadvised by the Manager or its
affiliates.
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Portfolio
Turnover
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The length of time the Fund has held a particular security is
not generally a consideration in investment decisions. A change
in the securities held by the Fund is known as “portfolio
turnover.” The Fund may engage in active and frequent
trading of portfolio securities to achieve its investment
objective and principal investment strategies, particularly
during periods of volatile market movements. The portfolio
turnover rate of the Fund employing a written call option
strategy or similar strategy may increase to the extent that the
Fund is required to sell portfolio securities to satisfy
obligations under such a strategy. Higher portfolio turnover
involves correspondingly greater expenses to the Fund, including
brokerage commissions or dealer
mark-ups
and
other transaction costs on the sale of securities and
reinvestments in other securities. Such sales may also result in
realization of taxable capital gains, including short-term
capital gains (which are taxed as ordinary income when
distributed to individual shareholders) and may adversely impact
the Fund’s after-tax returns. The trading costs and tax
effects associated with portfolio turnover may adversely affect
the Fund’s performance. To the extent that the Fund changes
Sub-Advisers
and/or
investment objectives and policies or engages in reorganization
transactions with other funds, it may experience substantially
increased portfolio turnover due to the differences between the
Fund’s previous and current investment objectives and
policies and portfolio management strategies.
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Changes
in
Investment
Objectives and
Policies
|
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The investment objective of the Fund is not fundamental and may
be changed by the Board of Trustees without shareholder
approval. Unless otherwise stated in the Statement of Additional
Information, all investment policies of the Fund may be changed
by the Board of Trustees without shareholder approval. In
addition, the Fund may be subject to additional restrictions on
its ability to utilize certain investments or investment
techniques described herein or in the Statement of Additional
Information. These additional restrictions may be changed with
the consent of the Board of Trustees but without approval by or
notice to shareholders. The Fund has adopted an 80% investment
policy under Rule
35d-1
under
the Investment Company Act of 1940 (which policy is set forth in
the Statement of Additional Information) and will not change
such policy as it is stated in the Fund’s Fund Summary
unless the Fund provides shareholders with the notice required
by
Rule 35d-1,
as it may be amended or interpreted by the SEC from time to
time. If there is a change in the Fund’s investment
objective or policies, including a change approved by
shareholder vote, shareholders should consider whether the Fund
remains an appropriate investment in light of their then current
financial position and needs.
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New
and
Smaller-Sized
Funds
|
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In addition to the risks described under “Summary of
Principal Risks” above and in this section, to the extent a
fund, such as the Fund, is recently formed, it would have
limited performance history, or even none at all, for investors
to evaluate. Also, it is possible that this newer Fund may
invest in securities offered in initial public offerings and
other types of transactions (such as private placements) which,
because of the Fund’s size, have a disproportionate impact
on the Fund’s performance results. The Fund would not
necessarily have achieved the same performance results if its
aggregate net assets had been greater.
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Capitalization
Criteria, Percentage
Investment
Limitations and
Alternative Means of
Gaining Exposure
|
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Unless otherwise stated, all market capitalization criteria and
percentage limitations on Fund investments listed in this
Prospectus will apply at the time of investment. The Fund would
not violate these limitations unless an excess or deficiency
occurs or exists immediately after and as a result of an
investment. Unless otherwise indicated, references to assets in
the percentage limitations on the Fund’s investments refer
to total assets. Unless otherwise stated, if the Fund is
described as investing in a particular type of security or other
instrument, either generally or subject to a minimum investment
percentage, the Fund may make such investments either directly
or by gaining exposure through indirect means, such as
depositary receipts, derivatives, placement warrants or other
structured products. Such exposure may be achieved through a
combination of multiple instruments or through a combination of
one or more investment instruments and cash or cash equivalents.
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Other
Investments
and Techniques
|
|
The Fund may invest in other types of securities and use a
variety of investment techniques and strategies which are not
described in this Prospectus. These securities and techniques
may subject the Fund to additional risks. The Fund may use
Grassroots
sm
Research in addition to its traditional research activities.
Grassroots
sm
Research is a division of AllianzGI U.S. Research data,
used to generate recommendations, is received from reporters and
field force investigators who work as independent contractors
for broker-dealers. These broker-dealers supply research to
AllianzGI U.S. and certain of its affiliates that is paid
for by commissions generated by orders executed on behalf of
AllianzGI U.S.’s clients, including the Fund. Please see
the Statement of Additional Information for additional
information about the securities and investment techniques
described in this Prospectus and about additional securities and
techniques that may be used by the Fund.
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50
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AllianzGI Emerging Markets Debt Fund
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Certain
Affiliations
|
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Absent an exemption from the SEC or other regulatory relief, the
Fund is generally precluded from effecting certain principal
transactions with brokers that are deemed to be affiliated
persons of the Fund, the Manager or the Sub-Adviser. The
Fund’s ability to purchase securities being underwritten by
an affiliated broker or a syndicate including an affiliated
broker, or to utilize affiliated brokers for agency
transactions, is subject to restrictions. These restrictions
could limit the Fund’s ability to engage in securities
transactions and take advantage of market opportunities.
|
Financial Highlights
The AllianzGI Emerging Markets Debt Fund recently commenced
operations and as a result financial highlights are not
available for this Fund; financial statements for this Fund are
not included in the Trust’s shareholder reports.
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52
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AllianzGI Emerging Markets Debt Fund
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[THIS PAGE INTENTIONALLY LEFT BLANK]
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Allianz Multi-Strategy Funds
|
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INVESTMENT MANAGER
|
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|
|
Allianz Global Investors Fund Management LLC, 1633 Broadway, New
York, NY 10019
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SUB-ADVISER
|
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Allianz Global Investors U.S. LLC
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DISTRIBUTOR
|
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|
Allianz Global Investors Distributors LLC, 1633 Broadway, New
York, NY 10019
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CUSTODIAN
|
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|
State Street Bank & Trust Co., 801 Pennsylvania Avenue,
Kansas City, MO 64105
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TRANSFER AGENT
|
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|
Boston Financial Data Services, Inc., P.O. Box 8050,
Boston, MA 02266-8050
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INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
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[ ]
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LEGAL COUNSEL
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Ropes & Gray LLP, Prudential Tower, 800 Boylston Street,
Boston, MA 02199
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For further
information about the Allianz Multi-Strategy Funds and Allianz
Funds
call 1-800-988-8380
for Class A and Class C shares, and 1-800-498-5413 for
Institutional Class and Class P shares, or visit our Web site at
us.allianzgi.com.
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The Trust’s Statement of Additional Information (“SAI”) includes, and annual and semi-annual reports to shareholders, when they become available, will include, additional information about the Fund. The SAI is incorporated by reference into this Prospectus, which means it is part of this Prospectus for legal purposes. The Fund’s annual report, when it becomes available, will discuss the market conditions and investment strategies that significantly affected the Fund’s performance during its last fiscal year.
You may get free copies of any of these materials, request other information about the Fund, make shareholder inquiries or access our 24 hour automated telephone response system by calling
1-800-988-8380
for Class A and Class C shares, and calling
1-800-498-5413
for Institutional Class and Class P shares, or by writing to:
Allianz Funds
1633 Broadway
New York, NY 10019
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You may review and copy information about the Trust, including its SAI, at the Securities and Exchange Commission’s Public Reference Room in Washington, D.C. You may call the Commission at
1-202-551-8090
for information about the operation of the public reference room. You may also access reports and other information about the Trust on the EDGAR Database on the Commission’s Web site at
www.sec.gov
. You may get copies of this information, with payment of a duplication fee, by electronic request at the following e-mail address: publicinfo@sec.gov, or by writing the Public Reference Section of the Commission, Washington, D.C. 20549-1520. You may need to refer to the Trust’s file number under the Investment Company Act, which is 811-22167.
The Trust makes available its SAI and annual and semi-annual reports, free of charge, on our Web site at us.allianzgi.com. You can also visit our Web site for additional information about the Fund.
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Investment Company
Act File
No. 811-22167
ALLIANZ FUNDS MULTI-STRATEGY TRUST
STATEMENT OF ADDITIONAL INFORMATION
[ ]
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AllianzGI Behavioral Advantage Large Cap Fund
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Institutional Class
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AZFIX
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Class P
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AZFPX
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Class D
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AZFDX
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Class A
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AZFAX
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Class C
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AZFCX
|
AllianzGI Best Styles Global Equity Fund
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Class R6
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AGERX
|
AllianzGI China Equity Fund
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Institutional Class
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ALQIX
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Class P
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ALQPX
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Class D
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ALQDX
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Class A
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ALQAX
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Class C
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ALQCX
|
AllianzGI Convertible Fund
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Institutional Class
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ANNPX
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Class P
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ANCMX
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Administrative Class
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ANNAX
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Class D
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ANZDX
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Class A
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ANZAX
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Class C
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ANZCX
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Class R
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ANZRX
|
AllianzGI Disciplined Equity Fund
|
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Institutional Class
|
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ARDIX
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Class P
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ARDPX
|
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Class D
|
|
ARDDX
|
|
Class A
|
|
ARDAX
|
|
Class C
|
|
ARDCX
|
AllianzGI Dynamic Emerging Multi-Asset Fund
|
|
Institutional Class
|
|
ADYNX
|
|
Class P
|
|
ADYPX
|
|
Class D
|
|
ADYDX
|
|
Class A
|
|
ADYAX
|
|
Class C
|
|
ADYCX
|
AllianzGI Emerging Markets Debt Fund
|
|
Institutional Class
|
|
[ ]
|
|
Class P
|
|
[ ]
|
|
Class A
|
|
[ ]
|
|
Class C
|
|
[ ]
|
AllianzGI Global Allocation Fund
|
|
Institutional Class
|
|
PALLX
|
|
Class P
|
|
AGAPX
|
|
Administrative Class
|
|
AGAMX
|
|
Class D
|
|
AGADX
|
|
Class A
|
|
PALAX
|
|
Class B
|
|
PALBX
|
|
Class C
|
|
PALCX
|
|
Class R
|
|
AGARX
|
AllianzGI Global Fundamental Strategy Fund
|
|
Institutional Class
|
|
AZDIX
|
|
Class P
|
|
AZDPX
|
|
Class D
|
|
AZDDX
|
|
Class A
|
|
AZDAX
|
|
Class C
|
|
AZDCX
|
1
|
|
|
|
AllianzGI Global Growth Allocation Fund
|
|
Institutional Class
|
|
AGAIX
|
|
Class P
|
|
AGSPX
|
|
Administrative Class
|
|
AGFAX
|
|
Class D
|
|
AGSDX
|
|
Class A
|
|
ASGAX
|
|
Class C
|
|
ASACX
|
|
Class R
|
|
ASFRX
|
AllianzGI Global Managed Volatility Fund
|
|
Institutional Class
|
|
AVYIX
|
|
Class P
|
|
AVYPX
|
|
Class D
|
|
AVYDX
|
|
Class A
|
|
AVYAX
|
|
Class C
|
|
AVYCX
|
AllianzGI Global Water Fund
|
|
Institutional Class
|
|
AWTIX
|
|
Class P
|
|
AWTPX
|
|
Class D
|
|
AWTDX
|
|
Class A
|
|
AWTAX
|
|
Class C
|
|
AWTCX
|
AllianzGI High Yield Bond Fund
|
|
Institutional Class
|
|
AYBIX
|
|
Class P
|
|
AYBPX
|
|
Administrative Class
|
|
AYBVX
|
|
Class D
|
|
AYBDX
|
|
Class A
|
|
AYBAX
|
|
Class C
|
|
AYBCX
|
|
Class R
|
|
AYBRX
|
AllianzGI International Small-Cap Fund
|
|
Institutional Class
|
|
ALOIX
|
|
Class P
|
|
ALOPX
|
|
Administrative Class
|
|
ALOVX
|
|
Class D
|
|
ALODX
|
|
Class A
|
|
AOPAX
|
|
Class C
|
|
AOPCX
|
|
Class R
|
|
ALORX
|
AllianzGI Micro Cap Fund
|
|
Class A
|
|
GMCAX
|
|
Institutional Class
|
|
AMCIX
|
|
Class P
|
|
AAMPX
|
AllianzGI Multi-Asset Real Return Fund
|
|
Institutional Class
|
|
ALRNX
|
|
Class P
|
|
ALRPX
|
|
Class D
|
|
ALRDX
|
|
Class A
|
|
ALRAX
|
|
Class C
|
|
ALLCX
|
AllianzGI NFJ Emerging Markets Value Fund
|
|
Institutional Class
|
|
AZMIX
|
|
Class P
|
|
AZMPX
|
|
Class D
|
|
AZMDX
|
|
Class A
|
|
AZMAX
|
|
Class C
|
|
AZMCX
|
AllianzGI NFJ Global Dividend Value Fund
|
|
Institutional Class
|
|
ANUIX
|
|
Class P
|
|
ANUPX
|
|
Class D
|
|
ANUDX
|
|
Class A
|
|
ANUAX
|
|
Class C
|
|
ANUCX
|
AllianzGI NFJ International Small-Cap Value Fund
|
|
Institutional Class
|
|
AJVIX
|
|
Class P
|
|
AJVPX
|
|
Class D
|
|
AJVDX
|
|
Class A
|
|
AJVAX
|
|
Class C
|
|
AJVCX
|
2
|
|
|
|
AllianzGI NFJ International Value II Fund
|
|
Institutional Class
|
|
NFJIX
|
|
Class P
|
|
NFJPX
|
|
Class D
|
|
NFJDX
|
|
Class A
|
|
NFJAX
|
|
Class C
|
|
NFJCX
|
AllianzGI Redwood Fund
|
|
Institutional Class
|
|
ARRIX
|
|
Class P
|
|
ARRPX
|
|
Class D
|
|
ARRDX
|
|
Class A
|
|
ARRAX
|
|
Class C
|
|
ARRCX
|
AllianzGI Retirement 2015 Fund
|
|
Class R6 (formerly Institutional Class)
|
|
AZGIX
|
|
Class P
|
|
AZGPX
|
|
Administrative Class
|
|
AZAMX
|
|
Class D
|
|
AZGDX
|
|
Class A
|
|
AZGAX
|
|
Class C
|
|
AZGCX
|
|
Class R
|
|
AZGRX
|
AllianzGI Retirement 2020 Fund
|
|
Class R6 (formerly Institutional Class)
|
|
AGNIX
|
|
Class P
|
|
AGLPX
|
|
Administrative Class
|
|
AGLMX
|
|
Class D
|
|
AGLDX
|
|
Class A
|
|
AGLAX
|
|
Class C
|
|
ABSCX
|
|
Class R
|
|
AGLRX
|
AllianzGI Retirement 2025 Fund
|
|
Class R6 (formerly Institutional Class)
|
|
GVSIX
|
|
Class P
|
|
GVSPX
|
|
Administrative Class
|
|
GVDAX
|
|
Class A
|
|
GVSAX
|
|
Class R
|
|
GVSRX
|
AllianzGI Retirement 2030 Fund
|
|
Class R6 (formerly Institutional Class)
|
|
ABLIX
|
|
Class P
|
|
ABLPX
|
|
Administrative Class
|
|
ABAMX
|
|
Class D
|
|
ABDIX
|
|
Class A
|
|
ABLAX
|
|
Class C
|
|
ABLCX
|
|
Class R
|
|
ABLRX
|
AllianzGI Retirement 2035 Fund
|
|
Class R6 (formerly Institutional Class)
|
|
GVLIX
|
|
Class P
|
|
GVPAX
|
|
Administrative Class
|
|
GVLAX
|
|
Class A
|
|
GVRAX
|
|
Class R
|
|
GVRRX
|
AllianzGI Retirement 2040 Fund
|
|
Class R6 (formerly Institutional Class)
|
|
AVTIX
|
|
Class P
|
|
AVSPX
|
|
Administrative Class
|
|
AVAMX
|
|
Class D
|
|
AVSDX
|
|
Class A
|
|
AVSAX
|
|
Class C
|
|
AVSCX
|
|
Class R
|
|
AVSRX
|
AllianzGI Retirement 2045 Fund
|
|
Class R6 (formerly Institutional Class)
|
|
GBVIX
|
|
Class P
|
|
GBVPX
|
|
Administrative Class
|
|
GBMAX
|
|
Class A
|
|
GBVAX
|
|
Class R
|
|
GBVRX
|
3
|
|
|
|
AllianzGI Retirement 2050 Fund
|
|
Class R6 (formerly Institutional Class)
|
|
ASNIX
|
|
Class P
|
|
ASNPX
|
|
Administrative Class
|
|
ANAMX
|
|
Class D
|
|
ASNDX
|
|
Class A
|
|
ASNAX
|
|
Class C
|
|
ASNCX
|
|
Class R
|
|
ASNRX
|
AllianzGI Retirement 2055 Fund
|
|
Class R6 (formerly Institutional Class)
|
|
GBLIX
|
|
Class P
|
|
GLIPX
|
|
Administrative Class
|
|
GLRAX
|
|
Class A
|
|
GLIAX
|
|
Class R
|
|
GLLRX
|
AllianzGI Retirement Income Fund
|
|
Class R6 (formerly Institutional Class)
|
|
AVRIX
|
|
Class P
|
|
AGRPX
|
|
Administrative Class
|
|
ARAMX
|
|
Class D
|
|
ARTDX
|
|
Class A
|
|
AGRAX
|
|
Class C
|
|
ARTCX
|
|
Class R
|
|
ASRRX
|
AllianzGI Short Duration High Income Fund
|
|
Institutional Class
|
|
ASHIX
|
|
Class P
|
|
ASHPX
|
|
Class D
|
|
ASHDX
|
|
Class A
|
|
ASHAX
|
|
Class C
|
|
ASHCX
|
AllianzGI Structured Alpha Fund
|
|
Institutional Class
|
|
AZIIX
|
|
Class P
|
|
AZIPX
|
|
Class D
|
|
AZIDX
|
|
Class A
|
|
AZIAX
|
|
Class C
|
|
AZICX
|
AllianzGI Ultra Micro Cap Fund
|
|
Class A
|
|
GUCAX
|
|
Institutional Class
|
|
AUMIX
|
|
Class P
|
|
AAUPX
|
AllianzGI U.S. Equity Hedged Fund
|
|
Institutional Class
|
|
AZUIX
|
|
Class P
|
|
AZUPX
|
|
Class D
|
|
AZUDX
|
|
Class A
|
|
AZUAX
|
|
Class C
|
|
AZUCX
|
AllianzGI U.S.
Small-Cap Growth Fund
(formerly known as, AllianzGI U.S. Emerging Growth Fund)
|
|
Institutional Class
|
|
AEMIX
|
|
Class P
|
|
AEGPX
|
|
Class D
|
|
AEGDX
|
|
Class A
|
|
AEGAX
|
|
Class C
|
|
AEGCX
|
|
Class R
|
|
AEGRX
|
4
ALLIANZ FUNDS MULTI-STRATEGY TRUST
STATEMENT OF ADDITIONAL INFORMATION
[ ]
This Statement of Additional Information is not a prospectus, and should be read in
conjunction with the prospectuses of Allianz Funds Multi-Strategy Trust (the “Trust”), as
supplemented from time to time. Through the Prospectus dated [ ], the Trust offers Class
A, Class C, Institutional Class and Class P shares of AllianzGI Emerging Markets Debt Fund (the
“Emerging Markets Debt Fund Prospectus”). Through a separate Prospectus, the Trust offers up to
nine classes of each of its other series. Class A, Class B, Class C, Class R, Institutional Class,
Class R6, Class P, Administrative Class and Class D shares of other series of the Trust are offered
through the Prospectus dated April 1, 2014 (the “Multi-Strategy Trust Prospectus,” and together
with the Emerging Markets Debt Fund Prospectus, each a “Prospectus,” and together, the
“Prospectuses”).
Audited financial statements for the series of the Trust as of November 30, 2013, including
notes thereto, and the reports of [ ] thereon, are incorporated by reference from the
Trust’s November 30, 2013 Annual Reports. Because AllianzGI Best Styles Global Equity Fund and
AllianzGI Emerging Markets Debt Fund are newly formed, they do not appear in the Trust’s most
recent Annual Reports. The Trust’s November 30, 2013 Annual Reports were filed electronically with
the Securities and Exchange Commission (“SEC”) on January 31, 2014 (Accession No.
0001193125-14-030103).
A copy of the applicable Prospectus and the Annual and Semi-Annual Reports corresponding to
such Prospectus may be obtained free of charge at the addresses and telephone number(s) listed
below.
To obtain the
Allianz Funds Multi-Strategy Trust and Allianz Funds Prospectuses, Annual and
Semi-Annual Reports, and Statements of Additional Information
, please contact:
Allianz Global Investors Distributors LLC
1633 Broadway
New York, NY 10019
|
|
|
|
|
Telephone:
|
|
Class A, Class B, Class C, Class D and Class R — 1-800-988-8380
Class P, Institutional Class, Class R6 and Administrative Class Shares — 1-800-498-5413
|
5
TABLE OF CONTENTS
|
|
|
|
|
|
|
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|
|
8
|
|
|
|
|
|
10
|
|
|
|
|
|
10
|
|
|
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|
|
11
|
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|
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|
12
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|
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|
13
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|
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|
14
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16
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|
18
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18
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|
28
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|
29
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|
30
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|
30
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|
31
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31
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32
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|
32
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32
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34
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|
35
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|
36
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|
36
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|
36
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37
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37
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|
37
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|
38
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38
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|
38
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|
39
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|
39
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|
41
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|
46
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|
47
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|
48
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|
48
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|
49
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|
49
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|
49
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|
50
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52
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|
53
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|
53
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|
59
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60
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|
61
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|
62
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62
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|
66
|
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|
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|
68
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|
79
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|
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|
79
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|
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|
80
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|
80
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|
81
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82
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|
86
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|
6
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|
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|
87
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|
88
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|
89
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91
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|
92
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|
93
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94
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94
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|
95
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|
95
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|
97
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|
97
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|
102
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|
114
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|
115
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|
115
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|
116
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118
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120
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120
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121
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122
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123
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126
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126
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|
127
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127
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128
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|
128
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|
128
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129
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|
129
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130
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|
130
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|
130
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|
130
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131
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|
132
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|
132
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133
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|
133
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133
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133
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133
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134
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135
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|
139
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|
140
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|
140
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|
140
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|
140
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|
140
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|
140
|
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|
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|
|
141
|
|
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|
141
|
|
|
|
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|
A-1
|
|
|
|
|
|
B-1
|
|
|
|
|
|
C-1
|
|
|
|
|
|
D-1
|
|
|
|
|
|
E-1
|
|
7
THE TRUST
Allianz Funds Multi-Strategy Trust (the “Trust”) is an open-end management investment company
(“mutual fund”) that currently consists of [thirty-six] separate investment series, all of which
are offered in this Statement of Additional Information. Except for the
China Equity Fund
and the
Global Water Fund
, each of the Trust’s series offered in this Statement of Additional Information
is “diversified” within the meaning of the Investment Company Act of 1940, as amended (the “1940
Act”). The Trust was organized as a Massachusetts business trust on January 10, 2008.
This Statement of Additional Information relates to the prospectus for the
Behavioral
Advantage Large Cap Fund
(the “
F&T Fund
”), as well as the prospectuses for the
Best Styles Global
Equity Fund
, the
China Equity Fund
, the
Convertible Fund
, the
Disciplined Equity Fund
, the
Dynamic
Emerging Multi-Asset Fund
, the
Emerging Markets Debt Fund
, the
Global Fundamental Strategy Fund
,
the
Global Managed Volatility Fund
, the
Global Water Fund
, the
High Yield Bond Fund
, the
International Small-Cap Fund
, the
Micro Cap Fund
, the
Multi-Asset Real Return Fund
, the
Redwood
Fund
, the
Short Duration High Income Fund
, the
Structured Alpha Fund
, the
Ultra Micro Cap Fund
, the
U.S. Small-Cap Growth Fund
and the
U.S. Equity Hedged Fund (
together, the
“AllianzGI U.S. Funds”),
as well as the prospectus for the
NFJ Emerging Markets Value Fund
, the
NFJ Global Dividend Value
Fund
, the
NFJ International Small-Cap Value Fund
and the
NFJ International Value II Fund (
together,
the “
NFJ Funds
”) (each of the F&T Fund, AllianzGI U.S. Funds and NFJ Funds invests directly in
equity securities and other securities and instruments), as well as the prospectus for the
Global
Allocation Fund
, the
Global Growth Allocation Fund
, the
Retirement 2015 Fund
, the
Retirement 2020
Fund
, the
Retirement 2025 Fund
, the
Retirement 2030 Fund
, the
Retirement 2035 Fund
, the
Retirement
2040 Fund
, the
Retirement 2045 Fund
, the
Retirement 2050 Fund
, the
Retirement 2055 Fund
and the
Retirement Income Fund
(together, the “
Target Funds
”) (each of which invests primarily in series of
the Trust, Allianz Funds, PIMCO Equity Series, PIMCO ETF Trust and PIMCO Funds). The series listed
in the preceding sentence are sometimes referred to collectively as the “Funds.” The
Dynamic
Emerging Multi-Asset Fund
and the
Multi-Asset Real Return Fund
(together, the “
Multi-Asset Funds
”)
and the
Global Fundamental Strategy Fund
may also invest in series of the Trust, Allianz Funds,
PIMCO Equity Series, PIMCO ETF Trust and PIMCO Funds. The Trust may from time to time create
additional series offered through new, revised or supplemented prospectus or private placement
memoranda and statements of additional information.
Pursuant to shareholder approval obtained at a shareholder meeting, on May 4, 2009 the
Global
Allocation Fund
assumed all of the assets and liabilities of the open-end Allianz Global Investors
Multi-Style Fund, a series of Allianz Funds. The purpose of the reorganization was to consolidate
fund-of-funds sub-advisory functions and to seek enhanced performance.
Pursuant to shareholder approval obtained at a shareholder meeting, on April 12, 2010 the
Convertible Fund
,
High Yield Bond Fund
,
International Small-Cap Fund (
formerly
AGIC International
Growth Opportunities Fund)
,
Micro Cap Fund
,
Ultra Micro Cap Fund
and
U.S. Small-Cap Growth Fund
,
assumed all of the assets and liabilities of the open-end Nicholas-Applegate U.S. Convertible Fund,
Nicholas-Applegate U.S. High Yield Bond Fund, Nicholas-Applegate International Growth Opportunities
Fund, Nicholas-Applegate U.S. Micro Cap Fund, Nicholas-Applegate Ultra Micro Cap Fund and
Nicholas-Applegate U.S. Emerging Growth Fund, respectively (collectively, the “Predecessor Funds”).
The purpose of these reorganizations was to seek economies of scale and reduce shareholder expenses
through enhanced distribution opportunities.
On March 30, 2010, the
NACM Global Equity 130/30 Fund
was liquidated and dissolved. All shares
of the Fund outstanding on March 30, 2010 were automatically redeemed.
Prior to August 25, 2010, the
Convertible Fund
,
High Yield Bond Fund
,
International Small-Cap
Fund
,
Micro Cap Fund
,
Ultra Micro Cap Fund
and
U.S. Small-Cap Growth Fund
were sub-advised by
Nicholas-Applegate Capital Management LLC (“Nicholas-Applegate”) and the Funds were named
NACM
Convertible Fund
,
NACM High Yield Bond Fund
,
NACM International Growth Opportunities Fund
,
NACM
Micro Cap Fund
,
NACM Ultra Micro Cap Fund
and
NACM Emerging Growth Fund
, respectively
(collectively, the “NACM Funds”). On August 25, 2010, the Portfolio Management Agreement between
Nicholas-Applegate and the NACM Funds’ Manager, Allianz Global Investors Fund Management LLC
(“Allianz Global Fund Management” or the “Manager”) (the “Portfolio Management Agreement”) was
novated and Allianz Global Investors Capital LLC (“AGIC”) (which was renamed Allianz Global
Investors U.S. LLC (“AllianzGI U.S.”) as of December 31, 2012), the indirect parent of
Nicholas-Applegate and an affiliate of Allianz Global Fund Management, became the investment
sub-adviser to the NACM Funds and is now responsible for day-to-day portfolio management. In
connection with the novation and the substitution of AllianzGI U.S. as sub-adviser for the NACM
Funds, these Funds were renamed accordingly.
On April 1, 2011, the name of the
Global Allocation Fund
changed from Allianz Global Investors
Solutions Core Allocation Fund, and the name of the
Global Growth Allocation Fund
changed from
Allianz Global Investors Solutions Growth Allocation Fund, to AGIC U.S. Emerging Growth Fund,
Allianz Global Investors Solutions Global Allocation Fund and Allianz Global Investors Solutions
Global Growth Allocation Fund, respectively.
On February 27, 2012, the
Global Water Fund
assumed all the assets and liabilities of the
Allianz RCM Global EcoTrendsSM Fund, a series of the Trust. The purpose of the reorganization was
to seek economies of scale and reduce shareholder expenses.
8
Prior to July 13, 2012, the
International Small-Cap Fund
was sub-advised by Allianz Global
Investors U.S. LLC and the Fund was named AGIC International Growth Opportunities Fund.
On October 22, 2012, the name of the
AllianzGI NFJ Emerging Markets Value Fund
changed from
Allianz NFJ Emerging Markets Value Fund, the name of the
AllianzGI Structured Alpha Fund
changed
from Allianz AGIC Structured Alpha Fund and the name of the
AllianzGI U.S. Equity Hedged Fund
changed from Allianz AGIC U.S. Equity Hedged Fund.
As of December 17, 2012, the name of the
AllianzGI Dynamic Emerging Multi-Asset Fund
changed
from Allianz RCM Dynamic Emerging Multi-Asset Fund and the name of the
AllianzGI Multi-Asset Real
Return Fund
changed from Allianz RCM Multi-Asset Real Return Fund.
Prior to January 1, 2013, the
Target Funds
were sub-advised by Allianz Global Investors
Solutions LLC (“AGI Solutions”) pursuant to a Sub-Advisory Agreement between Allianz Global Fund
Management and AGI Solutions, which merged into AllianzGI U.S. on January 1, 2013.
Effective January 28, 2013, the name of each Fund listed in the column entitled “Previous
Name” in the table below was changed to the corresponding name listed in the column entitled
“Current Name.”
|
|
|
|
|
Previous Name
|
|
Current Name
|
|
Allianz AGIC Convertible Fund
|
|
AllianzGI Convertible Fund
|
|
Allianz AGIC Global Managed Volatility Fund
|
|
AllianzGI Global Managed Volatility Fund
|
|
Allianz AGIC High Yield Bond Fund
|
|
AllianzGI High Yield Bond Fund
|
|
Allianz AGIC Micro Cap Fund
|
|
AllianzGI Micro Cap Fund
|
|
Allianz AGIC U.S. Emerging Growth Fund
|
|
AllianzGI U.S. Small-Cap Growth Fund
|
|
|
|
(
formerly, AllianzGI U.S. Emerging Growth Fund
)
|
|
Allianz AGIC Ultra Micro Cap Fund
|
|
AllianzGI Ultra Micro Cap Fund
|
|
Allianz F&T Behavioral Advantage Large Cap Fund
|
|
AllianzGI Behavioral Advantage Large Cap Fund
|
|
Allianz Global Investors Retirement Income Fund
|
|
AllianzGI Retirement Income Fund
|
|
Allianz Global Investors Solutions 2015 Fund
|
|
AllianzGI Retirement 2015 Fund
|
|
Allianz Global Investors Solutions 2020 Fund
|
|
AllianzGI Retirement 2020 Fund
|
|
Allianz Global Investors Solutions 2025 Fund
|
|
AllianzGI Retirement 2025 Fund
|
|
Allianz Global Investors Solutions 2030 Fund
|
|
AllianzGI Retirement 2030 Fund
|
|
Allianz Global Investors Solutions 2035 Fund
|
|
AllianzGI Retirement 2035 Fund
|
|
Allianz Global Investors Solutions 2040 Fund
|
|
AllianzGI Retirement 2040 Fund
|
|
Allianz Global Investors Solutions 2045 Fund
|
|
AllianzGI Retirement 2045 Fund
|
|
Allianz Global Investors Solutions 2050 Fund
|
|
AllianzGI Retirement 2050 Fund
|
|
Allianz Global Investors Solutions 2055 Fund
|
|
AllianzGI Retirement 2055 Fund
|
|
Allianz Global Investors Solutions Global Allocation Fund
|
|
AllianzGI Global Allocation Fund
|
|
Allianz Global Investors Solutions Global Growth Allocation Fund
|
|
AllianzGI Global Growth Allocation Fund
|
|
Allianz NFJ Global Dividend Value Fund
|
|
AllianzGI NFJ Global Dividend Value Fund
|
|
Allianz NFJ International Small-Cap Value Fund
|
|
AllianzGI NFJ International Small-Cap Value Fund
|
|
Allianz NFJ International Value II Fund
|
|
AllianzGI NFJ International Value II Fund
|
|
Allianz RCM China Equity Fund
|
|
AllianzGI China Equity Fund
|
|
Allianz RCM Disciplined Equity Fund
|
|
AllianzGI Disciplined Equity Fund
|
|
Allianz RCM Global Water Fund
|
|
AllianzGI Global Water Fund
|
|
Allianz RCM International Small-Cap Fund
|
|
AllianzGI International Small-Cap Fund
|
|
Allianz RCM Redwood Fund
|
|
AllianzGI Redwood Fund
|
|
Allianz RCM Short Duration High Income Fund
|
|
AllianzGI Short Duration High Income Fund
|
Prior to April 1, 2013, the
China Equity Fund,
the
Disciplined Equity Fund,
the
Global Water
Fund
, the
International Small-Cap Fund (formerly the AGIC International Growth Opportunities Fund)
,
the
Redwood Fund
and the
Short Duration High Income Fund
were sub-advised by RCM Capital Management
LLC (“RCM”) pursuant to a Sub-Advisory Agreement between Allianz Global Fund Management and RCM,
which merged into AllianzGI U.S. on April 1, 2013.
Effective as of April 1, 2013, former Institutional Class shares of the
Retirement 2015 Fund,
the
Retirement 2020 Fund,
the
Retirement 2025 Fund,
the
Retirement 2030 Fund,
the
Retirement 2035
Fund,
the
Retirement 2040 Fund,
the
Retirement 2045 Fund,
the
Retirement 2050 Fund,
the
Retirement
2055 Fund
and the
Retirement Income Fund
(together, the “Target Date Funds”) were reclassified as
Class R6 shares of the Target Date Funds and such Target Date Funds ceased to have any
Institutional Class shares authorized or outstanding.
9
Allianz Global Fund Management is the investment manager of each Fund. Allianz Global Fund
Management is a wholly-owned indirect subsidiary of Allianz Asset Management of America L.P.
(“AAMA”).
On April 1, 2014, the name of the
U.S. Small-Cap Growth Fund
changed from AllianzGI U.S.
Emerging Growth Fund. On April 1, 2011, the name of the AllianzGI U.S. Emerging Growth Fund changed
from AGIC Emerging Growth Fund.
INVESTMENT OBJECTIVES AND POLICIES
In addition to the principal investment strategies and the principal risks of the Funds
described in the applicable Prospectus, each Fund may employ other investment practices and may be
subject to additional risks, which are described below. Because the following is a combined
description of investment strategies and risks for all the Funds, certain strategies and/or risks
described below may not apply to particular Funds. Unless a strategy or policy described below is
specifically prohibited by the investment restrictions listed in the applicable Prospectus, under
“Investment Restrictions” in this Statement of Additional Information, or by applicable law, each
Fund may engage in each of the practices described below. However, no Fund is required to engage in
any particular transaction or purchase any particular type of securities or investment even if to
do so might benefit the Fund. Unless otherwise stated herein, all investment policies of the Funds
may be changed by the Board of Trustees without shareholder approval or notice. In addition, each
Fund may be subject to restriction on its ability to utilize certain investments or investment
techniques. Unless otherwise stated herein, these additional restrictions may be changed with the
consent of the Board of Trustees but without approval by or notice to shareholders.
The Target Funds invest primarily in certain Funds and series of Allianz Funds, PIMCO Equity
Series, PIMCO ETF Trust and PIMCO Funds (the “Underlying Funds”). They may also invest in other
investment companies that are not Underlying Funds (the “Other Acquired Funds”), and may invest
directly in securities and other instruments. The Multi-Asset Funds and the Global Fundamental
Strategy Fund may also invest in Underlying Funds and Other Acquired Funds. For more information
about the principal investments and strategies and principal risks of the Underlying Funds, please
see Appendix E to this Statement of Additional Information. By investing in the Underlying Funds
and Other Acquired Funds, each of the Target Funds, the Multi-Asset Funds and the Global
Fundamental Strategy Fund may have an indirect investment interest in some or all of the securities
and instruments described below, depending upon how its assets are allocated among the Underlying
Funds and Other Acquired Funds. The Target Funds, the Multi-Asset Funds and the Global Fundamental
Strategy Fund may also have an indirect investment interest in other securities and instruments
utilized by the Underlying Funds that are series of Allianz Funds, PIMCO Equity Series and PIMCO
Funds. These securities and instruments are described in the current prospectuses and Statements of
Additional Information of Allianz Funds, PIMCO Equity Series, PIMCO ETF Trust and PIMCO Funds — See
“Investment Strategies of the Target Funds, the Multi-Asset Funds and the Global Fundamental
Strategy Fund” below.
The Funds’ sub-advisers and, in certain cases, individual portfolio managers responsible for
making investment decisions for the Funds, are referred to in this section and the remainder of
this Statement of Additional Information as “Sub-Advisers.”
Borrowing
Subject to the limitations described under “Investment Restrictions” below, a Fund may be
permitted to borrow for temporary purposes and/or for investment purposes. Such a practice will
result in leveraging of a Fund’s assets and may cause a Fund to liquidate portfolio positions when
it would not be advantageous to do so. This borrowing may be secured or unsecured. Provisions of
the 1940 Act require a Fund to maintain continuous asset coverage (that is, total assets including
borrowings, less liabilities exclusive of borrowings) of 300% of the amount borrowed, with an
exception for borrowings not in excess of 5% of the Fund’s total assets made for temporary
administrative purposes. Any borrowings for temporary administrative purposes in excess of 5% of
the Fund’s total assets must maintain continuous asset coverage. If the 300% asset coverage should
decline as a result of market fluctuations or other reasons, a Fund may be required to sell some of
its portfolio holdings within three days to reduce the debt and restore the 300% asset coverage,
even though it may be disadvantageous from an investment standpoint if the Fund sells holdings at
that time. Borrowing, like other forms of leverage, will tend to exaggerate the effect on net asset
value of any increase or decrease in the market value of a Fund’s portfolio. Money borrowed will be
subject to interest costs, which may or may not be recovered by appreciation of the securities
purchased, if any. A Fund also may be required to maintain minimum average balances in connection
with such borrowing or to pay a commitment or other fee to maintain a line of credit; either of
these requirements would increase the cost of borrowing over the stated interest rate.
From time to time, the Trust may enter into, and make borrowings for temporary purposes
related to the redemption of shares under, a credit agreement with third-party lenders. Borrowings
made under such a credit agreement will be allocated among the Funds pursuant to guidelines
approved by the Board of Trustees. In addition to borrowing money, a Fund may enter into reverse
repurchase agreements, dollar rolls, sale-buybacks and other transactions that can be viewed as
forms of borrowings.
10
A reverse repurchase agreement involves the sale of a portfolio-eligible security by a Fund to
another party, such as a bank or broker-dealer, coupled with its agreement to repurchase the
instrument at a specified time and price. Under a reverse repurchase agreement, the Fund continues
to receive any principal and interest payments on the underlying security during the term of the
agreement. Such transactions are advantageous if the interest cost to the Fund of the reverse
repurchase transaction is less than the returns it obtains on investments purchased with the cash.
Dollar rolls are transactions in which a Fund sells mortgage-related securities, such as a
security issued by the Government National Mortgage Association (“GNMA”), for delivery in the
current month and simultaneously contracts to repurchase substantially similar (same type and
coupon) securities on a specified future date at a pre-determined price. Unlike in the case of
reverse repurchase agreements, the dealer with which a Fund enters into a dollar-roll transaction
is not obligated to return the same securities as those originally sold by the Fund, but only
securities that are “substantially identical.” To be considered “substantially identical,” the
securities returned to a Fund generally must: (1) be collateralized by the same types of underlying
mortgages; (2) be issued by the same agency and be part of the same program; (3) have a similar
original stated maturity; (4) have identical net coupon rates; (5) have similar market yields (and
therefore price); and (6) satisfy “good delivery” requirements, meaning that the aggregate
principal amounts of the securities delivered and received back must be within 0.01% of the initial
amount delivered.
A Fund also may effect simultaneous purchase and sale transactions that are known as
“sale-buybacks.” A sale-buyback is similar to a reverse repurchase agreement, except that in a
sale-buyback, the counterparty who purchases the security is entitled to receive any principal or
interest payments made on the underlying security pending settlement of the Fund’s repurchase of
the underlying security.
A Fund will typically segregate or “earmark” assets determined to be liquid by the Manager or
the Fund’s Sub-Adviser in accordance with procedures approved by the Board of Trustees and equal
(on a daily mark-to-market basis) to its obligations under reverse repurchase agreements, dollar
rolls and sale-buybacks. Reverse repurchase agreements, dollar rolls and sale-buybacks involve
leverage risk and the risk that the market value of securities retained by a Fund may decline below
the repurchase price of the securities that the Fund sold and is obligated to repurchase. In the
event the buyer of securities under a reverse repurchase agreement, dollar roll or sale-buyback
files for bankruptcy or becomes insolvent, a Fund’s use of the proceeds of the agreement may be
restricted pending a determination by the other party, or its trustee or receiver, whether to
enforce the Fund’s obligation to repurchase the securities. Reverse repurchase agreements and
dollar rolls will be subject to the Funds’ limitations on borrowings as specified under “Investment
Restrictions” below.
Preferred Stock
Preferred stock represents an equity interest in a company that generally entitles the holder
to receive, in preference to the holders of other stocks such as common stocks, dividends and a
fixed share of the proceeds resulting from a liquidation of the company. Some preferred stocks also
entitle their holders to receive additional liquidation proceeds on the same basis as holders of a
company’s common stock, and thus also represent an ownership interest in that company.
The Funds may invest in preferred stocks that pay fixed or adjustable rates of return.
Preferred shares are subject to issuer-specific and market risks applicable generally to equity
securities. The value of a company’s preferred stock may fall as a result of factors relating
directly to that company’s products or services. A preferred stock’s value may also fall because of
factors affecting not just the company, but companies in the same industry or in a number of
different industries, such as increases in production costs. The value of preferred stock may also
be affected by changes in financial markets that are relatively unrelated to the company or its
industry, such as changes in interest rates or currency exchange rates. In addition, a company’s
preferred stock generally pays dividends only after the company makes required payments to holders
of its bonds and other debt. For this reason, the value of preferred stocks will usually react more
strongly than bonds and other debt to actual or perceived changes in the company’s financial
condition or prospects. Preferred stocks of smaller companies may be more vulnerable to adverse
developments than those of larger companies.
Fixed Rate Preferred Stocks
. Some fixed rate preferred stocks in which a Fund may invest,
known as perpetual preferred stocks, offer a fixed return with no maturity date. Because they never
mature, perpetual preferred stocks act like long-term bonds and can be more volatile than and more
sensitive to changes in interest rates than other types of preferred stocks that have a maturity
date. The Funds may also invest in sinking fund preferred stocks. These preferred stocks also offer
a fixed return, but have a maturity date and are retired or redeemed on a predetermined schedule.
The shorter duration of sinking fund preferred stocks makes them perform somewhat like
intermediate-term bonds and they typically have lower yields than perpetual preferred stocks.
Adjustable Rate and Auction Preferred Stocks
. Typically, the dividend rate on an adjustable
rate preferred stock is determined prospectively each quarter by applying an adjustment formula
established at the time of issuance of the stock. Although adjustment formulas vary among issues,
they typically involve a fixed premium or discount relative to rates on specified debt securities
issued by the U.S. Treasury. Typically, an adjustment formula will provide for a fixed premium or
discount adjustment relative to the highest base yield of three specified U.S. Treasury securities:
the 90-day Treasury bill, the 10-year Treasury note and the 20-year Treasury
11
bond. The premium or
discount adjustment to be added to or subtracted from this highest U.S. Treasury base rate yield is
fixed at the time of issue and cannot be changed without the approval of the holders of the stock.
The dividend rate on another type of preferred stocks in which a Fund may invest, commonly known as
auction preferred stocks, is adjusted at intervals that may be more frequent than quarterly, such
as every 7 or 49 days, based on bids submitted by holders and prospective purchasers of such stocks
and may be subject to stated maximum and minimum dividend rates. The issues of most adjustable rate
and auction preferred stocks currently outstanding are perpetual, but are redeemable after a
specified date, or upon notice, at the option of the issuer. Certain issues supported by the credit
of a high-rated financial institution provide for mandatory redemption prior to expiration of the
credit arrangement. No redemption can occur if full cumulative dividends are not paid. Although the
dividend rates on adjustable and auction preferred stocks are generally adjusted or reset
frequently, the market values of these preferred stocks may still fluctuate in response to changes
in interest rates. Market values of adjustable preferred stocks also may substantially fluctuate if
interest rates increase or decrease once the maximum or minimum dividend rate for a particular
stock is approached. Auctions for U.S. auction preferred stocks have failed since early 2008, and
the dividend rates payable on such preferred shares since that time typically have been paid at
their maximum applicable rate (typically a function of a reference rate of interest). The Manager
expects that auction preferred stocks will continue to pay dividends at their maximum applicable
rate for the foreseeable future and cannot predict whether or when the auction markets for auction
preferred stocks may resume normal functioning.
Securities Loans
Subject to certain conditions described in the Prospectuses and below, each of the Funds may
make secured loans of its portfolio securities to brokers, dealers and other financial
institutions. The risks in lending portfolio securities, as with other extensions of credit,
include possible delay in recovery of the securities or possible loss of rights in the collateral
should the borrowers (which typically include broker-dealers and other financial services
companies) fail financially. However, such loans will be made only to borrowers that are believed
by the Manager or the Sub-Advisers to be of satisfactory credit standing. Securities loans are made
to borrowers pursuant to agreements requiring that loans be continuously secured by collateral
consisting of U.S. Government securities, cash or cash equivalents (negotiable certificates of
deposit, bankers’ acceptances or letters of credit) maintained on a daily mark-to-market basis in
an amount at least equal at all times to the market value of the securities lent. The borrower pays
to the lending Fund an amount equal to any dividends or interest received on the securities lent.
The Funds may invest the cash collateral received or receive a fee from the borrower. In the
case of cash collateral, a Fund typically pays a rebate to the borrower (in addition to payments to
its securities lending agent, as described below). Cash collateral that a Fund receives may be
invested in overnight time deposits, repurchase agreements, interest-bearing or discounted
commercial paper (including U.S. dollar-denominated commercial paper of non-U.S. issuers) and/or
other short-term money market instruments (generally with remaining maturities of 397 days or
less), either directly through joint accounts along with securities lending cash collateral of
other Funds or indirectly through investments in affiliated or unaffiliated money market funds. Any
investment of cash collateral through such joint accounts is subject to conditions established by
the SEC staff. Under the terms of a securities lending agency agreement, the investment of cash
collateral is at the sole risk of the Fund in most cases. Any income or gains and losses from
investing and reinvesting any cash collateral delivered by a borrower pursuant to a loan are at the
Fund’s risk (except as provided below), and to the extent any such losses reduce the amount of cash
below the amount required to be returned to the borrower upon the termination of any loan, the Fund
may be required by the securities lending agent to pay or cause to be paid to such borrower an
amount equal to such shortfall in cash. A portion of any income earned through investment of cash
collateral and a portion of any fees received from borrowers may be retained by the Funds’
securities lending agent, which currently is an affiliate of the Manager. Notwithstanding the
foregoing, to the extent such shortfall is with respect to amounts owed to a borrower as a cash
collateral fee, the securities lending agency agreement provides that the securities lending agent
and the Fund share the difference between the income generated on the investment of cash collateral
with respect to a loan and the amount to be paid to the borrower as a cash collateral fee.
Investments of cash collateral may lose value and/or become illiquid, although each Fund
remains obligated to return the collateral amount to the borrower upon termination or maturity of
the securities loan and may realize losses on the collateral investments and/or be required to
liquidate other portfolio assets in order to satisfy its obligations. Due to continuing adverse
conditions in the mortgage and credit markets, liquidity and related problems in the broader
markets for commercial paper and other factors, any investments of securities lending collateral by
the Funds, including investments in asset-backed commercial paper and notes issued by structured
investment vehicles, would present increased credit and liquidity risks. See “Mortgage-Related and
Asset-Backed Securities” below for more information. To the extent a Fund invests collateral in
instruments that become illiquid, efforts to recall securities and return collateral may force the
Fund to liquidate other portfolio holdings in an effort to generate cash.
Any securities lending income would be disclosed as such in the “Statement of Operations” in
the Trust’s annual report for the applicable fiscal period. The Funds may pay reasonable finders’,
administration and custodial fees in connection with a loan of securities and may share the
interest earned on the collateral with the borrower.
Each Fund may lend portfolio securities up to the maximum percentage set forth in the
applicable Prospectus and under “Investment Restrictions — Fundamental Investment Restrictions”
below.
12
Although control over, and voting rights or rights to consent with respect to, the loaned
securities pass to the borrower, the Fund, as the lender, retains the right to call the loans and
obtain the return of the securities loaned at any time on reasonable notice.
The Fund may call such loans in order to sell the securities involved or, if the holders of
the securities are asked to vote upon or consent to matters that the Sub-Adviser believes
materially affect the investment, in order to vote the securities. If the borrower defaults on its
obligation to return the securities loaned because of insolvency or other reasons, the Fund could
experience delays and costs in recovering the securities loaned or in gaining access to the
collateral. These delays and costs could be greater for non-U.S. securities. When engaged in
securities lending, each Fund’s performance will continue to reflect changes in the value of the
securities loaned and will also reflect the receipt of either interest, through investment of cash
collateral by the Fund in permissible investments, or a fee, if the collateral is U.S. Government
securities.
The Funds do not currently have a program in place pursuant to which they may lend portfolio
securities and do not expect to lend portfolio securities to a significant degree, but they may
establish such a program in the future.
Convertible Securities and Synthetic Convertible Securities
Convertible securities are generally bonds, debentures, notes, preferred stocks or other
securities or investments that may be converted or exchanged (by the holder or by the issuer) into
shares of common stock or other equity securities (or cash or securities of equivalent value) of
the same or a different issuer at a stated exchange ratio or predetermined price (the “conversion
price”). A convertible security is designed to provide current income and also the potential for
capital appreciation through the conversion feature, which enables the holder to benefit from
increases in the market price of the underlying common stock. A convertible security may be called
for redemption or conversion by the issuer after a particular date and under certain circumstances
(including a specified price) established upon issue. If a convertible security held by a Fund is
called for redemption or conversion, the Fund could be required to tender it for redemption,
convert it into the underlying common stock, or sell it to a third party, which may have an adverse
effect on the Fund’s ability to achieve its investment objectives. Convertible securities have
general characteristics similar to both debt and equity securities.
A convertible security generally entitles the holder to receive interest paid or accrued until
the convertible security matures or is redeemed, converted or exchanged. Convertible securities
rank senior to common stock in a corporation’s capital structure and, therefore, generally entail
less risk than the corporation’s common stock, although the extent to which such risk is reduced
depends in large measure upon the degree to which the convertible security sells above its value as
a debt obligation. Before conversion, convertible securities have characteristics similar to
non-convertible debt obligations and are designed to provide for a stable stream of income with
generally higher yields than common stocks. However, there can be no assurance of current income
because the issuers of the convertible securities may default on their obligations. Convertible
securities are subordinate in rank to any senior debt obligations of the issuer, and, therefore, an
issuer’s convertible securities entail more risk than its debt obligations. Moreover, convertible
securities are often rated below investment grade or not rated because they fall below debt
obligations and just above common equity in order of preference or priority on an issuer’s balance
sheet.
Convertible securities generally offer lower interest or dividend yields than non-convertible
debt securities of similar credit quality because of the potential for capital appreciation. The
common stock underlying convertible securities may be issued by a different entity than the issuer
of the convertible securities.
The value of convertible securities is influenced by both the yield of non-convertible
securities of comparable issuers and by the value of the underlying common stock. The value of a
convertible security viewed without regard to its conversion feature (
i.e.
, strictly on the basis
of its yield) is sometimes referred to as its “investment value.” The investment value of the
convertible security typically will fluctuate based on the credit quality of the issuer and will
fluctuate inversely with changes in prevailing interest rates. However, at the same time, the
convertible security will be influenced by its “conversion value,” which is the market value of the
underlying common stock that would be obtained if the convertible security were converted.
Conversion value fluctuates directly with the price of the underlying common stock, and will
therefore be subject to risks relating to the activities of the issuer and/or general market and
economic conditions. Depending upon the relationship of the conversion price to the market value of
the underlying security, a convertible security may trade more like an equity security than a debt
instrument.
If, because of a low price of the common stock, the conversion value is substantially below
the investment value of the convertible security, the price of the convertible security is governed
principally by its investment value. Generally, if the conversion value of a convertible security
increases to a point that approximates or exceeds its investment value, the value of the security
will be principally influenced by its conversion value. A convertible security will sell at a
premium over its conversion value to the extent investors place value on the right to acquire the
underlying common stock while holding an income-producing security.
13
To the extent consistent with its other investment policies, each Fund may also create a
“synthetic” convertible security by combining separate securities that possess the two principal
characteristics of a traditional convertible security,
i.e.
, an income-producing security
(“income-producing element”) and the right to acquire an equity security (“convertible element”).
The income-producing element is achieved by investing in non-convertible, income-producing
securities such as bonds, preferred stocks and money market instruments. The convertible element is
achieved by investing in warrants or options to buy common stock at a certain exercise price, or
options on a stock index. Unlike a traditional convertible security, which is a single security
having a unitary market value, a synthetic convertible comprises two or more separate securities,
each with its own market value. Therefore, the “market value” of a synthetic convertible security
is the sum of the values of its income-producing element and its convertible element. For this
reason, the values of a synthetic convertible security and a traditional convertible security may
respond differently to market fluctuations.
More flexibility is possible in the assembly of a synthetic convertible security than in the
purchase of a convertible security. Although synthetic convertible securities may be selected where
the two elements are issued by a single issuer, thus making the synthetic convertible security
similar to the traditional convertible security, the character of a synthetic convertible security
allows the combination of components representing distinct issuers, when the Manager believes that
such a combination may better achieve a Fund’s investment objective. A synthetic convertible
security also is a more flexible investment in that its two components may be purchased separately.
For example, a Fund may purchase a warrant for inclusion in a synthetic convertible security but
temporarily hold short-term investments while postponing the purchase of a corresponding bond
pending development of more favorable market conditions.
A holder of a synthetic convertible security faces the risk of a decline in the price of the
security or the level of the index or security involved in the convertible element, causing a
decline in the value of the call option or warrant purchased to create the synthetic convertible
security. Should the price of the stock fall below the exercise price and remain there throughout
the exercise period, the entire amount paid for the call option or warrant would be lost. Because a
synthetic convertible security includes the income-producing element as well, the holder of a
synthetic convertible security also faces the risk that interest rates will rise, causing a decline
in the value of the income-producing element.
The Funds may also purchase synthetic convertible securities created by other parties,
including convertible structured notes. Convertible structured notes are income-producing
debentures linked to equity, and are typically issued by investment banks. Convertible structured
notes have the attributes of a convertible security; however, the investment bank that issued the
convertible note, rather than the issuer of the underlying common stock into which the note is
convertible, assumes the credit risk associated with the underlying investment and a Fund in turn
assumes credit risk associated with the convertible note.
Non-U.S. Securities
The Funds may invest in non-U.S. securities. Non-U.S. securities may include, but are not
limited to, securities of companies that are organized and headquartered outside the U.S.; non-U.S.
equity securities as designated by commonly-recognized market data services; U.S. dollar- or
non-U.S. currency-denominated corporate debt securities of non-U.S. issuers; securities of U.S.
issuers traded principally in non-U.S. markets; non-U.S. bank obligations; U.S. dollar- or non-U.S.
currency-denominated obligations of non-U.S. governments or their subdivisions, agencies and
instrumentalities, international agencies and supranational entities; and securities of other
investment companies investing primarily in non-U.S. securities. When assessing compliance with
investment policies that designate a minimum or maximum level of investment in “non-U.S.
securities” for the Fund, the Manager or the Sub-Adviser may apply a variety of factors (either in
addition to or in lieu of one or more of the categories described in the preceding sentence) in
order to determine whether a particular security or instrument should be treated as U.S. or
non-U.S. Some non-U.S. securities may be restricted against transfer within the United States or to
a United States person. For more information about how the Manager or Sub-Adviser may define
non-U.S. securities for purposes of the Fund’s asset tests and investment restrictions, see the
Fund’s principal investments and strategies under “Principal Investments and Strategies of Each
Fund” in the applicable Prospectus.
The non-U.S. securities in which a Fund may invest include Eurodollar obligations and “Yankee
Dollar” obligations. Eurodollar obligations are U.S. dollar-denominated certificates of deposit and
time deposits issued outside the U.S. capital markets by non-U.S. branches of U.S. banks and by
non-U.S. banks. Yankee Dollar obligations are U.S. dollar-denominated obligations issued in the
U.S. capital markets by non-U.S. banks. Eurodollar and Yankee Dollar obligations are generally
subject to the same risks that apply to domestic debt issues, notably credit risk, market risk and
liquidity risk. Additionally, Eurodollar (and to a limited extent, Yankee Dollar) obligations are
subject to certain sovereign risks. One such risk is the possibility that a sovereign country might
prevent capital, in the form of U.S. dollars, from flowing across its borders. Other risks include
adverse political and economic developments; the extent and quality of government regulation of
financial markets and institutions; the imposition of non-U.S. withholding taxes; and the
expropriation or nationalization of non-U.S. issuers.
The Funds may invest in American Depositary Receipts (“ADRs”), European Depositary Receipts
(“EDRs”) or Global Depositary Receipts (“GDRs”). ADRs are U.S. dollar-denominated receipts issued
generally by domestic banks and represent the deposit with the bank of a security of a non-U.S.
issuer. EDRs are foreign currency-denominated receipts similar to ADRs and are issued and traded in
Europe, and are publicly traded on exchanges or over-the-counter in the United States. GDRs may be
offered privately in the United
14
States and also trade in public or private markets in other
countries. ADRs, EDRs and GDRs may be issued as sponsored or unsponsored programs. In sponsored
programs, an issuer has made arrangements to have its securities trade in the form of ADRs, EDRs or
GDRs. In unsponsored programs, the issuer may not be directly involved in the creation of the
program. Although regulatory requirements with respect to sponsored and unsponsored programs are
generally similar, in some cases it may be easier to obtain financial information from an issuer
that has participated in the creation of a sponsored program.
The Funds may invest in Brady Bonds. Brady Bonds are securities created through the exchange
of existing commercial bank loans to sovereign entities for new obligations in connection with debt
restructurings under a debt restructuring plan introduced by former U.S. Secretary of the Treasury,
Nicholas F. Brady (the “Brady Plan”). Brady Plan debt restructurings have been implemented in a
number of countries, including: Albania, Argentina, Bolivia, Brazil, Bulgaria, Columbia, Costa
Rica, the Dominican Republic, Ecuador, Ivory Coast, Jordan, Mexico, Morocco, Niger, Nigeria,
Panama, Peru, the Philippines, Poland, Uruguay, Venezuela and Vietnam.
Brady Bonds may be collateralized or uncollateralized, are issued in various currencies
(primarily the U.S. dollar) and are actively traded in the over-the-counter secondary market. Brady
Bonds are not considered to be U.S. Government securities. U.S. dollar-denominated, collateralized
Brady Bonds, which may be fixed rate par bonds or floating rate discount bonds, are generally
collateralized in full as to principal by U.S. Treasury zero-coupon bonds having the same maturity
as the Brady Bonds. Interest payments on these Brady Bonds generally are collateralized on a
one-year or longer rolling-forward basis by cash or securities in an amount that, in the case of
fixed rate bonds, is equal to at least one year of interest payments or, in the case of floating
rate bonds, initially is equal to at least one year’s interest payments based on the applicable
interest rate at that time and is adjusted at regular intervals thereafter. Certain Brady Bonds are
entitled to “value recovery payments” in certain circumstances, which in effect constitute
supplemental interest payments but generally are not collateralized. Brady Bonds are often viewed
as having three or four valuation components: (i) the collateralized repayment of principal at
final maturity; (ii) the collateralized interest payments; (iii) the uncollateralized interest
payments; and (iv) any uncollateralized repayment of principal at maturity (the uncollateralized
amounts constitute the “residual risk”).
Most Mexican Brady Bonds issued to date have principal repayments at final maturity fully
collateralized by U.S. Treasury zero-coupon bonds (or comparable collateral denominated in other
currencies) and interest coupon payments collateralized on an 18-month rolling-forward basis by
funds held in escrow by an agent for the bondholders. A significant portion of the Venezuelan Brady
Bonds and the Argentine Brady Bonds issued to date have repayments at final maturity collateralized
by U.S. Treasury zero-coupon bonds (or comparable collateral denominated in other currencies)
and/or interest coupon payments collateralized on a 14-month (for Venezuela) or 12-month (for
Argentina) rolling-forward basis by securities held by the Federal Reserve Bank of New York as
collateral agent.
Brady Bonds involve various risk factors including residual risk and the history of defaults
with respect to commercial bank loans by public and private entities of countries issuing Brady
Bonds. There can be no assurance that Brady Bonds in which the Funds may invest will not be subject
to restructuring arrangements or to requests for new credit, which may cause the Funds to suffer a
loss of interest or principal on any of its holdings.
Investing in non-U.S. securities involves special risks and considerations not typically
associated with investing in U.S. securities. These include: differences in accounting, auditing
and financial reporting standards, generally higher commission rates on non-U.S. portfolio
transactions, the possibility of expropriation or confiscatory taxation, adverse changes in
investment or exchange control regulations (which may include suspension of the ability to transfer
currency from a country), market disruption, the possibility of security suspensions, political
instability that affects U.S. investments in non-U.S. countries and potential restrictions on the
flow of international capital. In addition, non-U.S. securities and income derived from those
securities may be subject to non-U.S. taxes, including withholding taxes which will reduce
investment returns. See “Taxation.” Non-U.S. securities often trade with less frequency and volume
than domestic securities and therefore may exhibit greater price volatility. Changes in foreign
exchange rates will affect the value of those securities that are denominated or quoted in
currencies other than the U.S. dollar. The currencies of non-U.S. countries may experience
significant declines against the U.S. dollar, and devaluation may occur subsequent to investments
in these currencies by a Fund.
A Fund’s investments in foreign currency-denominated debt obligations and hedging activities
will likely produce a difference between its book income and its taxable income. This difference
could cause a portion of the Fund’s income distributions to constitute returns of capital for tax
purposes or require the Fund to make distributions exceeding book income to qualify as a regulated
investment company for U.S. federal tax purposes. A Fund’s use of non-U.S. securities may increase
or accelerate the amount of ordinary income recognized by shareholders. See “Taxation.”
Emerging Market Securities.
The risks of investing in non-U.S. securities are particularly
high when the issuers are tied economically to countries with developing (or “emerging market”)
economies. Countries with “emerging market” economies are those with securities markets that are,
in the opinion of a Fund’s Sub-Adviser, less sophisticated than more developed markets in terms of
participation by investors, analyst coverage, liquidity and regulation. Investing in emerging
market countries involves certain risks not
15
typically associated with investing in U.S. securities,
and imposes risks greater than, or in addition to, risks of investing in non-U.S., developed
countries. These risks include: greater risks of nationalization or expropriation of assets or
confiscatory taxation; currency devaluations and other currency exchange rate fluctuations; greater
social, economic and political uncertainty and instability (including the risk of war); more
substantial government involvement in the economy; less government supervision and regulation of
the securities markets and participants in those markets; controls on foreign investment and
limitations on repatriation of invested capital and on the Fund’s ability to exchange local
currencies for U.S. dollars; unavailability of currency hedging techniques in certain emerging
market countries; the fact that companies in emerging market countries may be smaller, less
seasoned and newly organized companies; the difference in, or lack of, auditing and financial
reporting standards, which may result in unavailability of material information about issuers; the
risk that it may be more difficult to obtain and/or enforce a judgment in a court outside the
United States; and greater price volatility, substantially less liquidity and significantly smaller
market capitalization of securities markets. In addition, a number of emerging market countries
restrict, to various degrees, foreign investment in securities, and high rates of inflation and
rapid fluctuations in inflation rates have had, and may continue to have, negative effects on the
economies and securities markets of certain emerging market countries. Also, any change in the
leadership or politics of emerging market countries, or the countries that exercise a significant
influence over those countries, may halt the expansion of or reverse the liberalization of foreign
investment policies now occurring and adversely affect existing investment opportunities.
Foreign Debt Obligations
.
The debt obligations of non-U.S. governments and their agencies and
instrumentalities may or may not be supported by the full faith and credit of the non-U.S.
government. The Funds may invest in securities issued by certain supranational entities, which
include entities designated or supported by governments to promote economic reconstruction or
development, international banking organizations and related government agencies. Examples are the
International Bank for Reconstruction and Development (commonly called the “World Bank”), the Asian
Development Bank and the Inter-American Development Bank.
The governmental members of these supranational entities are “stockholders” that typically
make capital contributions and may be committed to make additional capital contributions if the
entity is unable to repay its borrowings. A supranational entity’s lending activities may be
limited to a percentage of its total capital, reserves and net income. There can be no assurance
that the constituent non-U.S. governments will be able or willing to honor their capitalization
commitments for those entities.
Passive Foreign Investment Companies
.
Some corporations domiciled outside the U.S. in which
the Funds may invest may be considered passive foreign investment companies (“PFICs”) under U.S.
tax laws. PFICs are those foreign corporations that generate primarily passive income.
Investing in PFICs involves the risks associated with investing in foreign securities, as
described above. There is also the risk that a Fund may not realize that a foreign corporation in
which it invests is a PFIC for federal tax purposes, which could cause the Fund to incur U.S.
federal income tax (including interest) charges at the Fund level. See “Taxation” below for a more
detailed discussion of the tax consequences of a Fund’s investment in PFICs.
Subject to applicable limits under the 1940 Act, the Funds may also invest in foreign mutual
funds that are also deemed PFICs (since nearly all of the income of a mutual fund is generally
passive income). Investing in these types of PFICs may allow exposure to various countries because
some foreign countries limit, or prohibit, all direct foreign investment in the securities of
companies domiciled therein. In addition to bearing their proportionate share of a fund’s expenses
(management fees and operating expenses), shareholders will also indirectly bear similar expenses
of such entities. Additional risks of investing in other investment companies are described below
under “Other Investment Companies.”
Foreign Currencies and Related Transactions
Subject to applicable limits set forth in the Prospectuses and this Statement of Additional
Information, the Funds may invest in or utilize foreign currencies, forward foreign currency
exchange contracts, foreign currency futures contracts, options on foreign currencies and foreign
currency futures, currency swap transactions and other foreign currency-related transactions may be
used for a variety of reasons, including to hedge against foreign exchange risk arising from a
Fund’s investment or anticipated investment in securities denominated in foreign currencies, to
increase exposure to a foreign currency for investment or hedging purposes, or to shift exposure of
foreign currency fluctuations from one currency to another.
A Fund may (but is not required to) hedge some or all of its exposure to foreign currencies
derived through its investments to reduce the risk of loss due to fluctuations in currency exchange
rates. Suitable currency hedging transactions may not be available in all circumstances and there
can be no assurance that a Fund will engage in such transactions at any given time or from time to
time when it may be beneficial to do so. Foreign currency transactions may also be unsuccessful and
may result in losses or may eliminate any chance for a Fund to benefit from favorable fluctuations
in relevant foreign currencies.
A forward foreign currency exchange contract involves an obligation to purchase or sell a
specific currency at a future date, which may be any fixed number of days from the date of the
contract agreed upon by the parties, at a price set at the time of the contract. By entering into a
forward foreign currency exchange contract, a fund “locks in” the exchange rate between the
currency it will deliver
16
and the currency it will receive for the duration of the contract. As a
result, a Fund reduces its exposure to changes in the value of the currency it will deliver and
increases its exposure to changes in the value of the currency it will exchange into. Contracts to
sell foreign currencies would limit any potential gain that might be realized by a Fund if the
value of the hedged currency increases.
Forward foreign currency exchange contracts may be used for a variety of reasons, including
the following circumstances:
Lock In
.
When a Fund desires to lock in the U.S. dollar price on the purchase or sale of a
security denominated in a foreign currency.
Cross Hedge
.
If a particular currency is expected to decrease against another currency, a Fund
may sell the currency expected to decrease and purchase a currency that is expected to increase
against the currency sold in an amount approximately equal to some or all of the Fund’s portfolio
holdings denominated in the currency sold.
Direct Hedge
.
If a Fund wants to eliminate substantially all of the risk of owning a
particular currency, and/or if the Fund’s Sub-Adviser believes that the Fund can benefit from price
appreciation in a given country’s currency but does not want to hold the currency, it may employ a
direct hedge back into the U.S. dollar. In either case, a Fund would enter into a forward contract
to sell the currency in which a portfolio security is denominated and purchase U.S. dollars at an
exchange rate established at the time it initiated a contract. The cost of the direct hedge
transaction may offset most, if not all, of the yield advantage offered by the foreign security,
but a Fund would hope to benefit from an increase (if any) in the value of the security.
Proxy Hedge
.
A Fund might choose to use a proxy hedge, which may be less costly than a direct
hedge. In this case, a Fund, having purchased a security, will sell a currency whose value is
believed to be closely linked to the currency in which the security is denominated. Interest rates
prevailing in the country whose currency was sold would be expected to be close to those in the
United States and lower than those of securities denominated in the currency of the original
holding. This type of hedging entails greater risk than a direct hedge because it is dependent on a
stable relationship between the two currencies paired as proxies and the relationships can be very
unstable at times.
Costs of Hedging.
When a Fund purchases a non-U.S. bond with a higher interest rate than is
available on U.S. bonds of a similar maturity, the additional yield on the non-U.S. bond could be
substantially reduced or lost if the Fund were to enter into a direct hedge by selling the foreign
currency and purchasing the U.S. dollar. This is what is known as the “cost” of hedging. Proxy
hedging attempts to reduce this cost through an indirect hedge back to the U.S. dollar.
It is important to note that hedging costs are treated as capital transactions and are not,
therefore, deducted from a Fund’s dividend distribution and are not reflected in its yield. Instead
such costs will, over time, be reflected in the Fund’s net asset value per share.
The forecasting of currency market movement is extremely difficult, and whether any hedging
strategy will be successful is highly uncertain. Moreover, it is impossible to forecast with
precision the market value of portfolio securities at the expiration of a foreign currency forward
contract. Accordingly, a Fund may be required to buy or sell additional currency on the spot market
(and bear the expense of such transaction) if the Manager’s predictions regarding the movement of
foreign currency or securities markets prove inaccurate. In addition, the use of cross-hedging
transactions may involve special risks, and may leave a Fund in a less advantageous position than
if such a hedge had not been established. Because foreign currency forward contracts are privately
negotiated transactions, there can be no assurance that the Fund will have flexibility to roll-over
a foreign currency forward contract upon its expiration if it desires to do so. Additionally, there
can be no assurance that the other party to the contract will perform its services thereunder.
A Fund may hold a portion of its assets in bank deposits denominated in foreign currencies, so
as to facilitate investment in foreign securities as well as to protect against currency
fluctuations and the need to convert such assets into U.S. dollars (thereby also reducing
transaction costs). To the extent these monies are converted back into U.S. dollars, the value of
the assets so maintained will be affected favorably or unfavorably by changes in foreign currency
exchange rates and exchange control regulations.
Tax Consequences of Hedging
.
Under applicable tax law, a Fund’s hedging activities could
result in the application of special tax rules, which could ultimately affect the amount, timing,
and character of distributions to shareholders. Some of a Fund’s hedging transactions are also
likely to produce a difference between its book income and tax income, which could cause a portion
of the Fund’s income distributions to constitute a return of capital for tax purposes or require
the Fund to make distributions exceeding book income to qualify as a regulated investment company
for U.S. federal tax purposes. See “Taxation” below for further details.
Among the risks facing Funds that utilize foreign currencies and related transactions is the
risk that the relative value of currencies will be different than anticipated by the particular
Fund’s Sub-Adviser. A Fund will segregate assets determined to be liquid by the Manager or a
Sub-Adviser in accordance with procedures approved by the Board of Trustees to cover forward
currency contracts entered into for non-hedging purposes. Please see “Derivative Instruments” below
for a description of other foreign currency related transactions that may be used by the Funds.
Certain foreign currency transactions in which the Funds may invest may be over-the-counter
transactions (e.g., currency swap transactions). See “Derivative Instruments—Swap Agreements” for a
discussion of certain risks associated with such transactions.
17
Commodities
Some of the Funds may invest in instruments that provide exposure to, and are subject to the
risks of, investments in commodities. These may include futures, options, swaps and other
instruments, the return on which is dependent upon the return of one or more commodities or
commodity indices. Commodities may include, among other things, oil, gas, coal, alternative energy,
steel, timber, agricultural products, minerals, precious metals (
e.g.
, gold, silver, platinum, and
palladium) and other resources. In addition, the Funds may invest in companies principally engaged
in the commodities industries (such as mining, dealing or transportation companies) with
significant exposure to commodities markets or investments in commodities, and through these
investments may be exposed to the risks of investing in commodities. Commodities generally and
particular commodities have, at times been subject to substantial price fluctuations over short
periods of time and may be affected by unpredictable monetary and political policies such as
currency devaluations or revaluations, economic and social conditions within a country, trade
imbalances, or trade or currency restrictions between countries. The prices of commodities may be,
however, less subject to local and company-specific factors than securities of individual
companies. As a result, commodity prices may be more or less volatile in price than securities of
companies engaged in commodity-related businesses. Investments in commodities can also present
concerns such as delivery, storage and maintenance, possible illiquidity, and the unavailability of
accurate market valuations. To the extent that a Fund invests in companies principally engaged in
the commodities industries the Fund will also be subject to these risks. Commodity investments may
not correlate with equity market returns. Investments in commodity-related companies are also
subject to the risk that the performance of such companies may not correlate with returns on
commodity investments to the extent expected by a Fund’s portfolio manager(s).
In order to qualify for the special U.S. federal income tax treatment accorded regulated
investment companies and their shareholders described in “Taxation” below, a Fund must, among other
things, derive at least 90% of its income from certain specified sources (such income, “qualifying
income”). Income from certain commodity-linked investments does not constitute qualifying income to
a Fund. The tax treatment of certain other commodity-linked investments is not certain, in
particular with respect to whether income and gains from such investments constitute qualifying
income. If such income were determined not to constitute qualifying income and were to cause a
Fund’s nonqualifying income to exceed 10% of the Fund’s gross income for any year, the Fund would
fail the 90% gross income test and fail to qualify as a regulated investment company unless it were
eligible to and did pay a tax at the Fund level. See “Taxation.” A Fund’s intention to so qualify
can therefore limit the manner in or extent to which the Fund seeks exposure to commodities.
Derivative Instruments
A Fund may (but is not required to) use a variety of other derivative instruments (including
both long and short positions) in an attempt to enhance the Fund’s investment returns, to hedge
against market and other risks in the portfolio, to add leverage to the portfolio and/or to obtain
market exposure with reduced transaction costs.
Generally, derivatives are financial contracts whose value depends on, or is derived from, the
value of an underlying asset, reference rate or index and may relate to, among other things,
stocks, bonds, interest rates, currencies or currency exchange rates, commodities, related indexes
and other assets. Examples of derivatives and information about some types of derivatives and risks
associated therewith follows. The derivatives market is always changing and the Funds may invest in
derivatives other than those shown below.
The value of some derivative instruments in which the Funds may invest may be particularly
sensitive to changes in prevailing interest rates, and, like the other investments of the Funds,
the ability of the Funds to utilize these instruments successfully may depend in part upon their
ability to forecast interest rates and other economic factors correctly. If a Fund incorrectly
forecasts such factors and has taken positions in derivative instruments contrary to prevailing
market trends, the Fund could suffer losses.
The Funds might not employ any of the strategies described herein, and no assurance can be
given that any strategy used will succeed. If a Fund incorrectly forecasts interest rates, market
values or other economic factors in utilizing a derivatives strategy, the Fund might have been in a
better position if it had not entered into the transaction at all. Also, suitable derivative
transactions may not be available in all circumstances. The use of derivative strategies involves
certain special risks, including a possible imperfect correlation, or even no correlation, between
price movements of derivative instruments and price movements of related investments. While some
strategies involving derivative instruments can reduce the risk of loss, they also can reduce the
opportunity for gain or even result in losses by offsetting favorable price movements in related
investments or otherwise, due to the possible inability of a Fund to purchase or sell a portfolio
security at a time that otherwise would be favorable or the possible need to sell a portfolio
security at a disadvantageous time because a Fund is required to maintain asset coverage or
offsetting positions in connection with transactions in derivative instruments, and the possible
inability of the Fund to close out or to liquidate its derivatives positions. A Fund’s use of
derivatives may increase or accelerate the amount of ordinary income recognized by shareholders.
18
Among other trading agreements, certain Funds are also party to International Swaps and
Derivatives Association, Inc. Master Agreements (“ISDA Agreements”) with select counterparties that
generally govern over-the-counter derivative transactions entered into by such Funds. The ISDA
Agreements typically include representations and warranties as well as contractual terms related to
collateral, events of default, termination events, and other provisions. Termination events include
the decline in the net assets of a Fund below a certain level over a specified period of time and
entitle a counterparty to elect to terminate early with respect to some or all the transactions
under the ISDA Agreement with that counterparty. Depending on the relative size of a Fund’s
derivatives positions, such an election by one or more of the counterparties could have a material
adverse impact on a Fund’s operations.
As further described below, federal legislation has been recently enacted in the U.S. that
provides for new clearing, margin, reporting and registration requirements for participants in the
derivatives market. While the ultimate impact is not yet clear, these changes could restrict and/or
impose significant costs or other burdens upon a Fund’s ability to participate in derivatives
transactions. Similarly, these changes could impose limits or restrictions on the counterparties
with which the Fund engages in derivatives transactions. As a result, the Fund may be unable to use
certain derivative instruments or otherwise execute its investment strategy. These risks may be
particularly acute to the extent the Fund uses commodity-related derivative instruments. Further,
the requirements for qualification as a “regulated investment company” under federal income tax law
limit the extent to which a Fund may enter into commodity-related derivatives. See “Taxation”
below.
Options on Securities and Indexes.
As described under “Characteristics and Risks of Securities
and Investment Techniques—Derivatives” in the Prospectuses, the Funds may, among other things,
purchase and sell put and call options on equity, debt or other securities or indexes in
standardized contracts traded on foreign or domestic securities exchanges, boards of trade, or
similar entities, or quoted on the National Association of Securities Dealers Automated Quotations
(“NASDAQ”) System or on a regulated foreign over-the-counter market, and agreements, sometimes
called cash puts, which may accompany the purchase of a new issue from a dealer. Among other
reasons, a Fund may purchase put options to protect holdings in an underlying or related security
against a decline in market value, and may purchase call options to protect against increases in
the prices of securities it intends to purchase pending its ability to invest in such securities in
an orderly manner.
An option on a security (or index) is a contract that gives the holder of the option, in
return for a premium, the right to buy from (in the case of a call) or sell to (in the case of a
put) the writer of the option the security underlying the option (or the cash value of the index)
at a specified exercise price at any time during the term of the option. The writer of an option on
a security has the obligation upon exercise of the option to deliver the underlying security upon
payment of the exercise price or to pay the exercise price upon delivery of the underlying
security. Upon exercise, the writer of an option on an index is obligated to pay the difference
between the cash value of the index and the exercise price multiplied by the specified multiplier
for the index option. (An index is designed to reflect features of a particular financial or
securities market, a specific group of financial instruments or securities, or certain economic
indicators.)
When a Fund writes a call (put) option on an underlying security it owns (is short), the
option is sometimes referred to as a “covered option.” All Funds may write such options. When a
Fund writes a call (put) option on an underlying securities it does not own (is not short), the
option is sometimes referred to as a “naked option.” Except for the
AllianzGI Redwood Fund
, none of
the Funds may write “naked” call options on individual securities other than exchange traded funds
(“ETFs”).
However, each Fund may write a call or put option only if the option is “covered” as such term
is used in the context of Section 18 of the 1940 Act. In the case of a call option on a security, a
call option is covered for these purposes if the Fund segregates assets determined to be liquid by
the Manager or a Sub-Adviser in accordance with procedures approved by the Board of Trustees in an
amount equal to the contract value of the position (minus any collateral deposited with a
broker-dealer), on a mark-to-market basis. The option is also covered if the Fund owns the security
underlying the call or has an absolute and immediate right to acquire that security without
additional cash consideration (or, if additional cash consideration is required, cash or other
assets determined to be liquid by the Manager or a Sub-Adviser in accordance with procedures
approved by the Board of Trustees in such amount are segregated) upon conversion or exchange of
other securities held by the Fund. For a call option on an index, the option is covered if the Fund
segregates assets determined to be liquid by the Manager or a Sub-Adviser in accordance with
procedures approved by the Board of Trustees in an amount equal to the contract value of the index.
A call option is also covered if the Fund holds a call on the same index or security as the call
written where the exercise price of the call held is (i) equal to or less than the exercise price
of the call written, or (ii) greater than the exercise price of the call written, provided the
difference is segregated by the Fund in assets determined to be liquid by the Manager or a
Sub-Adviser in accordance with procedures approved by the Board of Trustees. A put option on a
security or an index is “covered” if the Fund segregates assets determined to be liquid by the
Sub-Adviser in accordance with procedures approved by the Board of Trustees equal to the exercise
price. A put option is also covered if the Fund holds a put on the same security or index as the
put written where the exercise price of the put held is (i) equal to or greater than the exercise
price of the put written, or (ii) less than the exercise price of the put written, provided the
difference is segregated by the Fund in assets determined to be liquid by the Manager or a
Sub-Adviser in accordance with procedures approved by the Board of Trustees.
19
The
Redwood Fund
may write “naked” call options on individual securities or instruments in
which it may invest but that are not currently held by the Fund. When writing “naked” call options,
the Fund must deposit and maintain sufficient margin with the broker-dealer through which it wrote
the “naked” call option as collateral to ensure that it meets its obligations as the writer of the
option. The Fund is further subject to the segregation requirements described above when it writes
“naked” call options. Such segregation will ensure that the Fund has assets available to satisfy
its obligations with respect to the transaction, but will not limit the Fund’s exposure to loss.
During periods of declining securities prices or when prices are stable, writing “naked” call
options can be a profitable strategy to increase the Fund’s income with minimal capital risk.
However, when the price of the security underlying the written option increases, the Fund is
exposed to an increased risk of loss, because if the price of the security underlying the option
exceeds the option’s exercise price, the Fund will lose the difference. “Naked” written call
options are riskier because there is no underlying security held by the Fund that can act as a
partial hedge. “Naked” written call options have speculative characteristics, and the potential for
loss is theoretically unlimited. When a “naked” written call option is exercised, the Fund must
purchase the underlying security to meet its delivery obligation or make a payment equal to the
value of its obligation in order to close out the option. There is also a risk, especially with
less liquid preferred and debt securities or small capitalization securities, that the securities
may not be available for purchase.
If an option written by a Fund expires unexercised, the Fund realizes a capital gain equal to
the premium received at the time the option was written. If an option purchased by a Fund expires
unexercised, the Fund realizes a capital loss equal to the premium paid. Prior to the earlier of
exercise or expiration, an option may be closed out by an offsetting purchase or sale of an option
of the same series (type, exchange, underlying security or index, exercise price, and expiration).
In addition, a Fund may sell put or call options it has previously purchased, which could result in
a net gain or loss depending on whether the amount realized on the sale is more or less than the
premium and other transaction costs paid on the put or call option that is sold. There can be no
assurance, however, that a closing purchase or sale transaction can be effected when the Fund
desires.
A Fund will realize a capital gain from a closing purchase transaction if the cost of the
closing option is less than the premium received from writing the option, or, if it is more, the
Fund will realize a capital loss. If the premium received from a closing sale transaction is more
than the premium paid to purchase the option, the Fund will realize a capital gain or, if it is
less, the Fund will realize a capital loss. See “Taxation” below. The principal factors affecting
the market value of a put or a call option include supply and demand, interest rates, the current
market price of the underlying security or index in relation to the exercise price of the option,
the volatility of the underlying security or index, and the time remaining until the expiration
date.
The premium paid for a put or call option purchased by a Fund is an asset of the Fund. The
premium received for an option written by a Fund is recorded as a deferred credit. The value of an
option purchased or written is marked to market daily and is valued in accordance with the Trust’s
valuation policies and procedures.
The Fund may write straddles (covered or uncovered) consisting of a combination of a call and
a put written on the same underlying security. A straddle will be covered when sufficient assets
are deposited to meet the Fund’s immediate obligations. The Fund may use the same liquid assets to
cover both the call and put options where the exercise price of the call and put are the same, or
the exercise price of the call is higher than that of the put. In such cases, the Fund will also
segregate liquid assets equivalent to the amount, if any, by which the put is “in the money.”
OTC Options
.
The Funds may also purchase and write over-the-counter (“OTC”) options. OTC
options differ from traded options in that they are two-party contracts, with price and other terms
negotiated between buyer and seller, and generally do not have as much market liquidity as
exchange-traded options. The Funds may be required to treat as illiquid OTC options purchased and
securities being used to cover certain written OTC options, and they will treat the amount by which
such formula price exceeds the intrinsic value of the option (
i.e.
, the amount, if any, by which
the market price of the underlying security exceeds the exercise price of the option) as an
illiquid investment. The Funds may also purchase and write so-called dealer options.
Risks Associated with Options on Securities and Indexes.
There are several risks associated
with transactions in options on securities, including ETFs, and on indexes. For example, there are
significant differences between the securities and options markets that could result in an
imperfect correlation between these markets, causing a given transaction not to achieve the
intended result. A decision as to whether, when and how to use options involves the exercise of
skill and judgment, and even a well-conceived transaction may be unsuccessful because of market
behavior or unexpected events.
There can be no assurance that a liquid market will exist when a Fund seeks to close out an
option position. If a Fund were unable to close out an option that it had purchased on a security
or index, it would have to exercise the option in order to realize any profit or the option may
expire worthless. If a Fund were unable to close out a call option that it had written on a
security held in its portfolio, it would not be able to sell the underlying security unless the
option expired without exercise. As the writer of a call option on an individual security held in a
Fund’s portfolio, the Fund foregoes, during the option’s life, the opportunity to profit from
increases in the market value of the security or index position covering the call option above the
sum of the premium and the exercise price (the “strike price”) of the call but has retained the
risk of loss (net of premiums received) should the price of the underlying security or index
position decline. Similarly, as the writer of a call option on a securities index or ETF, a Fund
forgoes the opportunity to profit from increases in the index or ETF over the strike price of the
option, though it retains the risk of loss (net of premiums received) should the price of the
Fund’s portfolio securities decline.
20
The value of call options written by a Fund will be affected by, among other factors, changes
in the value of underlying securities (including those comprising an index), changes in the
dividend rates of underlying securities (including those comprising an index), changes in interest
rates, changes in the actual or perceived volatility of the stock market and underlying securities
and the remaining time to an option’s expiration. The value of an option also may be adversely
affected if the market for the option is reduced or becomes less liquid. The writer of an
“American-style” option has no control over the time when it may be required to fulfill its
obligation as a writer of the option. Once an option writer has received an exercise notice, it
cannot effect a closing purchase transaction in order to terminate its obligation under the option
and must deliver the underlying security at the exercise price.
The hours of trading for options may not conform to the hours during which the securities held
by a Fund are traded. To the extent that the options markets close before the markets for the
underlying securities, significant price and rate movements can take place in the underlying
markets that may not be reflected in the options markets. In addition, a Fund’s options
transactions will be subject to limitations established by each of the exchanges, boards of trade
or other trading facilities on which the options are traded. An exchange, board of trade or other
trading facility may order the liquidation of positions found to be in excess of these limits, and
it may impose other sanctions that could adversely affect a Fund engaging in options transactions.
If a put or call option purchased by a Fund is not sold when it has remaining value, and if
the market price of the underlying security or index remains equal to or greater than the exercise
price (in the case of a put), or remains less than or equal to the exercise price (in the case of a
call), the Fund will lose its entire investment in the option. Also, where a put or call option on
a particular security or index is purchased to hedge against price movements in a related security
or index, the price of the put or call option may move more or less than the price of the related
security or index. Furthermore, if trading restrictions or suspensions are imposed on the options
markets, a Fund may be unable to close out a position. Similarly, if restrictions on exercise were
imposed, the Fund might be unable to exercise an option it has purchased. Except to the extent that
a call option on an index or ETF written by a Fund is covered by an option on the same index or ETF
purchased by the Fund, movements in the index or ETF may result in a loss to the Fund; however,
such losses may be mitigated by changes in the value of the Fund’s securities during the period the
option was outstanding (based, in part, on the extent of correlation (if any) between the
performance of the index or ETF and the performance of the Fund’s portfolio securities).
Foreign Currency Options
.
The Funds may buy or sell put and call options on foreign currencies
in various circumstances, including, but not limited to, as a hedge against changes in the value of
the U.S. dollar (or another currency) in relation to a foreign currency in which a Fund’s
securities may be denominated or to cross-hedge or in an attempt to increase the total return when
the Sub-Adviser anticipates that the currency will appreciate or depreciate in value. In addition,
the Funds may buy or sell put and call options on foreign currencies either on exchanges or in the
over-the-counter market. A put option on a foreign currency gives the purchaser of the option the
right to sell a foreign currency at the exercise price until the option expires. A call option on a
foreign currency gives the purchaser of the option the right to purchase the currency at the
exercise price until the option expires. Currency options traded on U.S. or other exchanges may be
subject to position limits, which may limit the ability of a Fund to reduce foreign currency risk
using such options.
Futures Contracts and Options on Futures Contracts
.
The Funds may use interest rate, foreign
currency, index and other futures contracts, and options on such contracts. For example, the Funds
may invest in foreign exchange futures contracts and options thereon (“futures options”) that are
traded on a U.S. or foreign exchange or board of trade, or similar entity, or quoted on an
automated quotation system as an adjunct to their securities activities. The Funds may also enter
into futures contracts for the purchase or sale of securities. The Funds may purchase and sell
futures contracts on various securities indexes (“Index Futures”) and related options for hedging
purposes and for investment purposes. For example, the Funds may invest in Index Futures and
related options when a Sub-Adviser believes that there are not enough attractive securities
available to maintain the standards of diversification and liquidity set for a Fund pending
investment in such securities if or when they do become available. Through the use of Index Futures
and related options, a Fund may diversify risk in its portfolio without incurring the substantial
brokerage costs that may be associated with investment in the securities of multiple issuers. A
Fund may also minimize potential market and liquidity problems that may result from increases in
positions already held by the Fund. A Fund’s purchase and sale of Index Futures is limited to
contracts listed on exchanges that have been approved by the Commodity Futures Trading Commission
(“CFTC”).
Generally, a futures contract provides for the future sale by one party and purchase by
another party of a specified quantity of a financial instrument, foreign currency or the cash value
of an index at a specified price and time.
An Index Future is an agreement pursuant to which two parties agree to take or make delivery
of an amount of cash equal to the difference between the value of a securities index (“Index”) at
the close of the last trading day of the contract and the price at which the index contract was
originally written. Although the value of an Index might be a function of the value of certain
specified securities, no physical delivery of these securities is made. A unit is the value of the
relevant Index from time to time. Entering into a
21
contract to buy units is commonly referred to as
buying or purchasing a contract or holding a long position in an Index. Index Futures contracts can
be traded through all major commodity brokers. A Fund will ordinarily be able to close open
positions on the futures exchange on which Index Futures are then traded at any time up to and
including the expiration day. As described below, a Fund will be required to segregate initial
margin in the name of the futures broker upon entering into an Index Future. Variation margin will
be paid to and received from the broker on a daily basis as the contracts are marked to market. For
example, when a Fund has purchased an Index Future and the price of the relevant Index has risen,
that position will have increased in value and the Fund will receive from the broker a variation
margin payment equal to that increase in value. Conversely, when a Fund has purchased an Index
Future and the price of the relevant Index has declined, the position would be less valuable and
the Fund would be required to make a variation margin payment to the broker.
A Fund may close open positions on the futures exchanges on which Index Futures are traded at
any time up to and including the expiration day. All positions that remain open at the close of the
last business day of the contract’s life are required to settle on the next business day (based
upon the value of the relevant index on the expiration day), with settlement made with the
appropriate clearing house. Additional or different margin requirements as well as settlement
procedures may be applicable to foreign stock Index Futures at the time a Fund purchases such
instruments. Positions in Index Futures may be closed out by a Fund only on the futures exchanges
upon which the Index Futures are then traded.
The following example illustrates generally the manner in which Index Futures operate. The
Standard & Poor’s 100 Stock Index is composed of 100 selected common stocks, most of which are
listed on the New York Stock Exchange. The S&P 100 Index assigns relative weightings to the common
stocks included in the Index, and the Index fluctuates with changes in the market values of those
common stocks. In the case of the S&P 100 Index, contracts are to buy or sell 100 units. Thus, if
the value of the S&P 100 Index were $180, one contract would be worth $18,000 (100 units x $180).
The Index Future specifies that no delivery of the actual stocks making up the Index will take
place. Instead, settlement in cash must occur upon the termination of the contract, with the
settlement being the difference between the contract price and the actual level of the Index at the
expiration of the contract. For example, if a Fund enters into a futures contract to buy 100 units
of the S&P 100 Index at a specified future date at a contract price of $180 and the S&P 100 Index
is at $184 on that future date, the Fund will gain $400 (100 units x gain of $4). If the Fund
enters into a futures contract to sell 100 units of the Index at a specified future date at a
contract price of $180 and the S&P 100 Index is at $182 on that future date, the Fund will lose
$200 (100 units x loss of $2).
A public market exists in futures contracts covering a number of Indexes as well as financial
instruments and foreign currencies, including but not limited to: the S&P 500; the S&P Midcap 400;
the Nikkei 225; the NYSE composite; U.S. Treasury bonds; U.S. Treasury notes; GNMA Certificates;
three-month U.S. Treasury bills; 90-day commercial paper; bank certificates of deposit; Eurodollar
certificates of deposit; the Australian dollar; the Canadian dollar; the British pound; the
Japanese yen; the Swiss franc; the Mexican peso; and certain multinational currencies, such as the
euro. It is expected that other futures contracts in which the Funds may invest will be developed
and traded in the future.
The Funds may purchase and write call and put options on futures contracts (“futures
options”). Futures options possess many of the same characteristics as options on securities and
indexes (discussed above). A futures option gives the holder the right, in return for the premium
paid, to assume a long position (call) or short position (put) in a futures contract at a specified
exercise price at any time during the period of the option. Upon exercise of a call option, the
holder acquires a long position in the futures contract and the writer is assigned the opposite
short position. In the case of a put option, the holder acquires a short position and the writer is
assigned the opposite long position.
When a purchase or sale of a futures contract is made by a Fund, the Fund is required to
segregate a specified amount of assets determined to be liquid by the Manager or a Sub-Adviser in
accordance with procedures approved by the Board of Trustees (“initial margin”). The margin
required for a futures contract is set by the exchange on which the contract is traded and may be
modified during the term of the contract. Margin requirements on foreign exchanges may be different
than U.S. exchanges. The initial margin is in the nature of a performance bond or good faith
deposit on the futures contract, which is returned to the Fund upon termination of the contract,
assuming all contractual obligations have been satisfied. The Funds would ordinarily earn interest
income on initial margin deposits. Each day the Fund pays or receives cash, called “variation
margin,” equal to the daily change in value of the futures contract. This process is known as
“marking to market.” Variation margin does not represent a borrowing or loan by a Fund but is
instead a settlement between the Fund and the broker of the amount one would owe the other if the
futures contract expired. In computing daily net asset value, each Fund will mark to market its
open futures positions.
A Fund is also required to deposit and maintain margin with respect to put and call options on
futures contracts written by it. Such margin deposits will vary depending on the nature of the
underlying futures contract (and the related initial margin requirements), the current market value
of the option, and other futures positions held by the Fund.
Although some futures contracts call for making or taking delivery of the underlying
securities, generally these obligations are closed out prior to delivery by offsetting purchases or
sales of matching futures contracts (
i.e.
, with the same exchange, underlying security or index,
and delivery month). If an offsetting purchase price is less than the original sale price, the Fund
realizes a capital gain, or if it is more, the Fund realizes a capital loss. Conversely, if an
offsetting sale price is more than the original purchase price, the Fund realizes a capital gain,
or if it is less, the Fund realizes a capital loss. Any transaction costs must also be included in
these calculations.
22
Commodity Futures Contracts and Options on Commodity Futures Contracts.
In addition to other
futures contracts and options thereon, the Funds may invest in commodity futures contracts and
options thereon. A commodity futures contract is an agreement between two parties, in which one
party agrees to buy a commodity, such as an energy, agricultural or metal commodity from the other
party at a later date at a price and quantity agreed upon when the contract is made.
Limitations on Use of Futures and Futures Options.
The Funds may enter into positions in
futures contracts and related options for hedging purposes, for example, to hedge against changes
in interest rates, foreign currency exchange rates or securities prices. In addition, the Funds may
utilize futures contracts for investment and/or speculative purposes. For instance, a Fund may
invest to a significant degree in Index Futures on stock indexes and related options (including
those that may trade outside of the United States) as an alternative to purchasing individual
stocks in order to gain or adjust their exposure to a particular market. A Fund may also use these
investments to hedge against changes in the value of securities that the Sub-Adviser intends to
purchase for the portfolio.
When purchasing a futures contract, a Fund will segregate (and mark to market on a daily
basis) assets determined to be liquid by the Manager or a Sub-Adviser in accordance with procedures
approved by the Board of Trustees that, when added to the amounts deposited with a futures
commission merchant as margin, are equal to the total market value of (or in certain cases, such as
contracts required to “cash settle,” the Fund’s obligation under) the futures contract.
Alternatively, the Fund may “cover” its position by purchasing a put option on the same futures
contract with a strike price as high or higher than the price of the contract held by the Fund.
When selling a futures contract, a Fund will segregate (and mark to market on a daily basis)
assets determined to be liquid by the Manager or a Sub-Adviser in accordance with procedures
approved by the Board of Trustees that are equal to the market value of the instruments underlying
the contract (or in certain cases, such as contracts required to “cash settle,” the Fund’s
obligation under the contract). Alternatively, the Fund may “cover” its position by owning the
instruments underlying the contract (or, in the case of an Index Future, a portfolio with a
volatility substantially similar to that of the Index on which the futures contract is based), or
by holding a call option permitting the Fund to purchase the same futures contract at a price no
higher than the price of the contract written by the Fund (or at a higher price if the difference
is maintained in liquid assets with the Trust’s custodian).
When selling a call option on a futures contract, a Fund will segregate (and mark to market on
a daily basis) assets determined to be liquid by the Manager or a Sub-Adviser in accordance with
procedures approved by the Board of Trustees that, when added to the amounts deposited with a
futures commission merchant as margin, equal the total market value of the futures contract
underlying the call option. Alternatively, the Fund may cover its position by entering into a long
position in the same futures contract at a price no higher than the strike price of the call
option, by owning the instruments underlying the futures contract, or by holding a separate call
option permitting the Fund to purchase the same futures contract at a price not higher than the
strike price of the call option sold by the Fund, or by taking other offsetting positions.
When selling a put option on a futures contract, a Fund will segregate (and mark to market on
a daily basis) assets determined to be liquid by the Manager or a Sub-Adviser in accordance with
procedures approved by the Board of Trustees that equal the purchase price of the futures contract,
less any margin on deposit. Alternatively, the Fund may cover the position either by entering into
a short position in the same futures contract, or by owning a separate put option permitting it to
sell the same futures contract so long as the strike price of the purchased put option is the same
or higher than the strike price of the put option sold by the Fund, or by taking other offsetting
positions.
To the extent that securities with maturities greater than one year are used to segregate
liquid assets to cover a Fund’s obligations under futures contracts and related options, such use
will not eliminate the leverage risk arising from such use, which may tend to exaggerate the effect
on net asset value of any increase or decrease in the market value of the Fund’s portfolio, and may
require liquidation of portfolio positions when it is not advantageous to do so.
The requirements for qualification as a regulated investment company also may limit the extent
to which a Fund may enter into futures, futures options or forward contracts. See “Taxation” below.
Commodity Pool Operators and Commodity Trading Advisors
. The Commodity Futures Trading
Commission (“CFTC”) has adopted regulations that subject registered investment companies and their
investment advisers to regulation by the CFTC if the registered investment company invests more
than a prescribed level of its liquidation value in commodity futures, options on commodities or
commodity futures, swaps, or other financial instruments regulated under the CEA (“commodity
interests”), or if the fund markets itself as providing investment exposure to such instruments.
The Manager is registered with the NFA as a “commodity pool operator” (“CPO”) under the Commodity
Exchange Act (“CEA”) with respect to each of the following Funds: [AllianzGI Emerging Markets Debt
Fund,] AllianzGI Multi-Asset Real Return Fund, AllianzGI Dynamic Emerging Multi-Asset Fund,
AllianzGI Retirement Income Fund, AllianzGI Retirement 2015 Fund, AllianzGI Retirement 2020 Fund,
AllianzGI Retirement 2025 Fund, AllianzGI Retirement 2030 Fund and AllianzGI Global Fundamental
Strategy Fund (together, the “CFTC Non-Excluded Funds”).
23
Each CFTC Non-Excluded Fund is a commodity
pool under the CEA. As a result, additional CFTC-mandated disclosure, reporting and recordkeeping
obligations apply with respect to the CFTC Non-Excluded Funds. In addition, AllianzGI U.S. has
registered as a CPO and has registered as a commodity trading advisor (“CTA”) under the CEA and as
such, is subject to CFTC and NFA regulatory oversight in respect of its advisory activities with
respect to the CFTC Non-Excluded Funds.
Compliance with the CFTC’s new regulatory requirements applicable to CPOs and CTAs may
restrict a CFTC Non-Excluded Fund’s ability to pursue its investment strategy, may increase the
costs of implementing its strategy, increase expenses of a CFTC Non-Excluded Fund, and/or may
adversely affect a CFTC Non-Excluded Fund’s total return.
The Manager has claimed an exclusion from CPO registration pursuant to CFTC Rule 4.5 with
respect to all of the Funds other than the CFTC Non-Excluded Funds (together, the “CFTC Excluded
Funds”). To remain eligible for this exclusion, each of the CFTC Excluded Funds must comply with
certain limitations, including limits on its ability to use any commodity interests and limits on
the manner in which the Fund holds out its use of such commodity interests. These limitations may
restrict a Fund’s ability to pursue its investment strategy, increase the costs of implementing its
strategy, increase expenses of the Fund, and/or adversely affect the Fund’s total return.
Certain Funds may also have investments in “underlying funds” not advised by the Manager
(which for purposes of the no-action letter referenced below may include certain securitized
vehicles and/or mortgage REITS that may invest in CFTC Derivatives). The Manager may not have
transparency into the holdings of these underlying funds, which may prevent the Manager from being
able to claim an exemption for such a Fund under Rule 4.5. To address the issues raised by a lack
of transparency into underlying funds, the CFTC staff issued a no-action letter on November 29,
2012 permitting the adviser of a fund that invests in underlying funds and that would otherwise
have been eligible to file a claim of exclusion pursuant to Rule 4.5, to request a delay in its
obligations to register as a “commodity pool operator” of the fund until June 30, 2013 or six
months from the date on which the CFTC issues additional guidance on the treatment of commodity
interests held by underlying funds. The Manager has filed a claim with the CFTC with respect to the
following Funds to enable it to rely on this no-action relief: AllianzGI Global Growth Allocation
Fund, AllianzGI Global Allocation Fund, AllianzGI Retirement 2035 Fund, AllianzGI Retirement 2040
Fund, AllianzGI Retirement 2045 Fund, AllianzGI Retirement 2050 Fund, and AllianzGI Retirement 2055
Fund.
Risks Associated with Futures and Futures Options
.
There are several risks associated with the
use of futures contracts and futures options. A purchase or sale of a futures contract may result
in losses in excess of the amount invested in the futures contract. In the case of futures
contracts used for hedging purposes, some of the risk may be caused by an imperfect correlation
between movements in the price of the futures contract and the price of a security or other
investment being hedged. The hedge will not be fully effective where there is such imperfect
correlation. Also, an incorrect correlation could result in a loss on both the hedged securities in
a Fund and the hedging vehicle. For example, if the price of the futures contract moves more than
the price of the hedged security, a Fund would experience either a loss or gain on the future that
is not completely offset by movements in the price of the hedged securities. In addition, there are
significant differences between the securities and futures markets that could result in an
imperfect correlation between the markets, causing a given hedge not to achieve its objectives. The
degree of imperfection of correlation depends on circumstances such as variations in speculative
market demand for futures and futures options, including technical influences in futures trading
and futures options, and differences between the financial instruments being hedged and the
instruments underlying the standard contracts available for trading in such respects as interest
rate levels, maturities, and creditworthiness of issuers. To compensate for imperfect correlations,
a Fund may purchase or sell futures contracts in a greater dollar amount than the hedged securities
if the volatility of the hedged securities is historically greater than the volatility of the
futures contracts. Conversely, a Fund may purchase or sell fewer contracts if the volatility of the
price of the hedged securities is historically less than that of the futures contracts. The risk of
imperfect correlation generally tends to diminish as the maturity date of the futures contract
approaches. A decision as to whether, when and how to hedge involves the exercise of skill and
judgment, and even a well-conceived hedge may be unsuccessful to some degree because of market
behavior or unexpected interest rate trends. Also, the Funds may not choose to use futures and/or
suitable hedging transactions may not be available in all circumstances. Even if a hedge is
executed successfully, a Fund’s return may have been higher if no hedging had been attempted.
Additionally, the price of Index Futures may not correlate perfectly with movement in the
relevant index due to certain market distortions. First, all participants in the futures market are
subject to margin deposit and maintenance requirements. Rather than meeting additional margin
deposit requirements, investors may close futures contracts through offsetting transactions that
could distort the normal relationship between the index and futures markets. Second, the deposit
requirements in the futures market are less onerous than margin requirements in the securities
market, and as a result, the futures market may attract more speculators than does the securities
market. Increased participation by speculators in the futures market may also cause temporary price
distortions. In addition, trading hours for foreign stock Index Futures may not correspond
perfectly to hours of trading on the foreign exchange to which a particular foreign stock Index
Future relates. This may result in a disparity between the price of Index Futures and the value of
the relevant index due to the lack of continuous arbitrage between the Index Futures price and the
value of the underlying index.
24
Futures exchanges may limit the amount of fluctuation permitted in certain futures contract
prices during a single trading day. The daily limit establishes the maximum amount that the price
of a futures contract may vary either up or down from the previous day’s settlement price at the
end of the current trading session. Once the daily limit has been reached in a futures contract
subject to the limit, no more trades may be made on that day at a price beyond that limit. The
daily limit governs only price movements during a particular trading day and therefore does not
limit potential losses because the limit may work to prevent the liquidation of unfavorable
positions. For example, futures prices have occasionally moved to the daily limit for several
consecutive trading days with little or no trading, thereby preventing prompt liquidation of
positions and subjecting some holders of futures contracts to substantial losses.
There can be no assurance that a liquid market will exist at a time when a Fund seeks to close
out a futures position or a futures option position, and that Fund would remain obligated to meet
margin requirements until the position is closed. In addition, many of the contracts discussed
above are relatively new instruments without a significant trading history. As a result, there can
be no assurance that an active secondary market will develop or continue to exist.
It is important to note that hedging costs are treated as capital transactions and are not,
therefore, deducted from the Funds’ dividend distributions and are not reflected in yield.
Additional Risks Associated with Commodity Futures Contracts.
There are several additional
risks associated with transactions in commodity futures contracts.
Storage.
Unlike the financial futures markets, in the commodity futures markets there are
costs of physical storage associated with purchasing the underlying commodity. The price of the
commodity futures contract will reflect the storage costs of purchasing the physical commodity,
including the time value of money invested in the physical commodity. To the extent that the
storage costs for an underlying commodity change while the Fund is invested in futures contracts on
that commodity, the value of the futures contract may change proportionately.
Reinvestment.
In the commodity futures markets, producers of the underlying commodity may
decide to hedge the price risk of selling the commodity by selling futures contracts today to lock
in the price of the commodity at delivery tomorrow. In order to induce speculators to purchase the
other side of the same futures contract, the commodity producer generally must sell the futures
contract at a lower price than the expected future spot price. Conversely, if most hedgers in the
futures market are purchasing futures contracts to hedge against a rise in prices, then speculators
will only sell the other side of the futures contract at a higher futures price than the expected
future spot price of the commodity. The changing nature of the hedgers and speculators in the
commodity markets will influence whether futures prices are above or below the expected future spot
price, which can have significant implications for a Fund. If the nature of hedgers and speculators
in futures markets has shifted when it is time for a Fund to reinvest the proceeds of a maturing
contract in a new futures contract, the Fund might reinvest at higher or lower futures prices, or
choose to pursue other investments.
Other Economic Factors
. The commodities that underlie commodity futures contracts may be
subject to additional economic and non-economic variables, such as drought, floods, weather,
livestock disease, embargoes, tariffs, and international economic, political and regulatory
developments. These factors may have a larger impact on commodity prices and commodity-linked
instruments, including futures contracts, than on traditional securities. Certain commodities are
also subject to limited pricing flexibility because of supply and demand factors. Others are
subject to broad price fluctuations as a result of the volatility of the prices for certain raw
materials and the instability of supplies of other materials. These additional variables may create
additional investment risks that subject a Fund’s investments to greater volatility than
investments in traditional securities.
Additional Risks of Options on Securities or Indexes, Futures Contracts, Options on Futures
Contracts and Forward Currency Exchange Contracts and Options Thereon.
Options on securities or
indexes, futures contracts, options on futures contracts, and options on currencies may be traded
on non-U.S. exchanges. Such transactions may not be regulated as effectively as similar
transactions in the United States; may not involve a clearing mechanism and related guarantees; and
are subject to the risk of governmental actions affecting trading in, or the prices of, non-U.S.
securities. Some non-U.S. exchanges may be principal markets so that no common clearing facility
exists and a trader may look only to the broker for performance of the contract. The value of such
positions also could be adversely affected by (i) other complex non-U.S. political, legal and
economic factors, (ii) lesser availability than in the United States of data on which to make
trading decisions, (iii) delays in the Trust’s ability to act upon economic events occurring in
non-U.S. markets during non-business hours in the United States, (iv) the imposition of different
exercise and settlement terms and procedures and margin requirements than in the United States and
(v) lesser trading volume. In addition, unless a Fund hedges against fluctuations in the exchange
rate between the U.S. dollar and the currencies in which trading is done on non-U.S. exchanges, any
profits that a Fund might realize in trading could be eliminated by adverse changes in the exchange
rate, or the Fund could incur losses as a result of those changes. The value of some derivative
instruments in which the Funds may invest may be particularly sensitive to changes in prevailing
interest rates, and, like the other investments of the Funds, the ability of a Fund to utilize
these instruments successfully may depend in part upon the ability of the Sub-Adviser to forecast
interest rates and other economic factors correctly. If the Sub-Adviser incorrectly forecasts such
factors and has taken positions in derivative instruments contrary to prevailing market trends, the
Funds could suffer losses. In addition, a Fund’s use of such instruments may increase or accelerate
the amount of ordinary income recognized by its shareholders.
25
Swap Agreements.
The Funds may enter into total return swap agreements, credit default swap
agreements and other swap agreements made with respect to interest rates, currencies, indexes or
baskets of securities (or a single security), commodities and other assets or measures of risk or
return. These transactions are entered into in an attempt to obtain a particular return when it is
considered desirable to do so, possibly at a lower cost to the Fund than if the Fund had invested
directly in an instrument that yielded that desired return.
Swap agreements are two-party contracts entered into primarily by institutional investors for
periods ranging from a few weeks to a number of years. Swap agreements are individually negotiated
and structured to include exposure to a variety of types of investments or market factors. In a
standard “swap” transaction, two parties agree to exchange the returns (or differentials in rates
of return) earned or realized on particular predetermined investments or instruments, which may be
adjusted for an interest factor. The gross returns to be exchanged or “swapped” between the parties
generally are calculated with respect to a “notional amount,” such as the return on or increase in
value of a particular dollar amount invested at a particular interest rate or in a “basket” of
securities representing a particular index.
Forms of swap agreements include: interest rate caps, under which, in return for a premium,
one party agrees to make payments to the other to the extent that interest rates exceed a specified
rate, or “cap;” interest rate floors, under which, in return for a premium, one party agrees to
make payments to the other to the extent that interest rates fall below a specified rate, or
“floor;” and interest rate collars, under which a party sells a cap and purchases a floor or vice
versa in an attempt to protect itself against interest rate movements exceeding given minimum or
maximum levels.
The Funds also may enter into options on swap agreements (“swaptions”). A swaption is a
contract that gives a counterparty the right (but not the obligation) to enter into a new swap
agreement or to shorten, extend, cancel or otherwise modify an existing swap agreement, at some
designated future time on specified terms. The Funds may write (sell) and purchase put and call
swaptions. Depending on the terms of the particular option agreement, a Fund will generally incur a
greater degree of risk when it writes a swaption than it will incur when it purchases a swaption.
When a Fund purchases a swaption, it risks losing only the amount of the premium it has paid should
it decide to let the option expire unexercised. However, when a Fund writes a swaption, upon
exercise of the option the Fund will become obligated according to the terms of the underlying
agreement.
Most swap agreements entered into by a Fund would calculate the obligations of the parties to
the agreement on a “net basis.” Consequently, a Fund’s current obligations (or rights) under a swap
agreement generally will be equal only to the net amount to be paid or received under the agreement
based on the relative values of the positions held by each party to the agreement (the “net
amount”). A Fund’s current obligations under a swap agreement will be accrued daily (offset against
any amounts owed to the Fund) and any accrued but unpaid net amounts owed to a swap counterparty
will be covered through the segregation of assets determined to be liquid by the Manager or
Sub-Adviser in accordance with procedures approved by the Board of Trustees. Obligations under swap
agreements so covered will not be construed to be “senior securities” for purposes of the Fund’s
investment restriction concerning senior securities.
Whether a Fund’s use of swap agreements or swaptions will be successful in furthering its
investment objectives will depend on the Sub-Adviser’s ability to predict correctly whether certain
types of investments are likely to produce greater returns than other investments. Swaps are highly
specialized instruments that require investment techniques, risk analyses, and tax planning
different from those associated with traditional investments. The use of a swap requires an
understanding not only of the referenced asset, reference rate, or index but also of the swap
itself, without the benefit of observing the performance of the swap under all possible market
conditions. Like most other investments, swap agreements are subject to the risk that the market
value of the instrument will change in a way detrimental to a Fund’s interest. The Fund bears the
risk that the Manager will not accurately forecast future market trends or the values of assets,
reference rates, indexes, or other economic factors in establishing swap positions for the Fund.
Because swaps are two-party contracts that may be subject to contractual restrictions on
transferability and termination and because, they may have terms of greater than seven days, swap
agreements may be considered to be illiquid. If a swap is not liquid, it may not be possible to
initiate a transaction or liquidate a position at an advantageous time or price, which may result
in significant losses.
Moreover, a Fund bears the risk of loss of the amount expected to be received under a swap
agreement in the event of the default or bankruptcy of a swap agreement counterparty. When a
counterparty’s obligations are not fully secured by collateral, then the Fund is essentially an
unsecured creditor of the counterparty. If the counterparty defaults, the Fund will have
contractual remedies, but there is no assurance that a counterparty will be able to meet its
obligations pursuant to such contracts or that, in the event of default, the Fund will succeed in
enforcing contractual remedies. Counterparty risk still exists even if a counterparty’s obligations
are secured by collateral because the Fund’s interest in collateral may not be perfected or
additional collateral may not be promptly posted as required. Counterparty risk also may be more
pronounced if a counterparty’s obligations exceed the amount of collateral held by the Fund (if
any), the Fund is unable to exercise its interest in collateral upon default by the counterparty,
or the termination value of the instrument varies significantly from the marked-to-market value of
the instrument.
26
New rules and regulations affecting the derivatives market affect counterparty risk with
respect to derivatives. Some derivatives transactions are required to be centrally cleared, and a
party to a cleared derivatives transaction is subject to the credit risk of the clearing house and
the member of the clearing house (“clearing member”) through which it holds its cleared position,
rather than the credit risk of its original counterparty to the derivative transaction. Credit risk
of market participants with respect to derivatives that are centrally cleared is concentrated in a
few clearing houses, and it is not clear how an insolvency proceeding of a clearing house would be
conducted and what impact an insolvency of a clearing house would have on the financial system. A
clearing member is obligated by contract and by applicable regulation to segregate all funds
received from customers with respect to cleared derivatives transactions from the clearing member’s
proprietary assets. However, all funds and other property received by a clearing broker from its
customers are generally held by the clearing broker on a commingled basis in an omnibus account,
and the clearing member may invest those funds in certain instruments permitted under the
applicable regulations. The assets of a Fund might not be fully protected in the event of the
bankruptcy of a Fund’s clearing member, because the Fund would be limited to recovering only a pro
rata share of all available funds segregated on behalf of the clearing broker’s customers for a
relevant account class. Also, the clearing member is required to transfer to the clearing
organization the amount of margin required by the clearing organization for cleared derivatives,
which amounts are generally held in an omnibus account at the clearing organization for all
customers of the clearing member. Regulations promulgated by the CFTC require that the clearing
member notify the clearing house of the amount of initial margin provided by the clearing member to
the clearing organization that is attributable to each customer. However, if the clearing member
does not provide accurate reporting, the Funds are subject to the risk that a clearing organization
will use a Fund’s assets held in an omnibus account at the clearing organization to satisfy payment
obligations of a defaulting customer of the clearing member to the clearing organization. In
addition, clearing members generally provide to the clearing organization the net amount of
variation margin required for cleared swaps for all of its customers in the aggregate, rather than
the gross amount of each customer. The Funds are therefore subject to the risk that a clearing
organization will not make variation margin payments owed to a Fund if another customer of the
clearing member has suffered a loss and is in default, and the risk that a Fund will be required to
provide additional variation margin to the clearing house before the clearing house will move the
Fund’s cleared derivatives transactions to another clearing member. In addition, if a clearing
member does not comply with the applicable regulations or its agreement with the Funds, or in the
event of fraud or misappropriation of customer assets by a clearing member, a Fund could have only
an unsecured creditor claim in an insolvency of the clearing member with respect to the margin held
by the clearing member.
If the Manager attempts to use a swap as a hedge against, or as a substitute for, a portfolio
investment, the Fund will be exposed to the risk that the swap will have or will develop imperfect
or no correlation with the portfolio investment. This could cause substantial losses for the Fund.
While hedging strategies involving swap instruments can reduce the risk of loss, they can also
reduce the opportunity for gain or even result in losses by offsetting favorable price movements in
other Fund investments.
Many swaps are complex and often valued subjectively. Many over-the-counter derivatives are
complex and their valuation often requires modeling and judgment, which increases the risk of
mispricing or incorrect valuation. The pricing models used may not produce valuations that are
consistent with the values the Fund realizes when it closes or sells an over-the-counter
derivative. Valuation risk is more pronounced when the Fund enters into over-the-counter
derivatives with specialized terms because the market value of those derivatives in some cases is
determined in part by reference to similar derivatives with more standardized terms. Incorrect
valuations may result in increased cash payment requirements to counterparties,
undercollateralization and/or errors in calculation of the Fund’s net asset value.
Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank
Act”) established a framework for the regulation of OTC swap markets; the framework outlined the
joint responsibility of the CFTC and the SEC in regulating swaps. The CFTC is responsible for the
regulation of swaps, the SEC is responsible for the regulation of security-based swaps and jointly
they are both responsible for the regulation of mixed swaps.
Risk of Potential Governmental Regulation of Derivatives.
It is possible that government
regulation of various types of derivative instruments, including futures and swap agreements, may
limit or prevent the Funds from using such instruments as a part of their investment strategy, and
could ultimately prevent the Funds from being able to achieve their investment objectives. It is
impossible to predict fully the effects of legislation and regulation in this area, but the effects
could be substantial and adverse.
The futures markets are subject to comprehensive statutes, regulations, and margin
requirements. The SEC, the CFTC and the exchanges are authorized to take extraordinary actions in
the event of a market emergency, including, for example, the implementation or reduction of
speculative position limits, the implementation of higher margin requirements, the establishment of
daily price limits and the suspension of trading.
27
The regulation of swaps and futures transactions in the U.S. is a rapidly changing area of law
and is subject to modification by government and judicial action. There is a possibility of future
regulatory changes altering, perhaps to a material extent, the nature of an investment in a Fund or
the ability of a Fund to continue to implement its investment strategies. In particular, the
Dodd-Frank Act, which was signed into law in July 2010, sets forth a new legislative framework for
over-the-counter (“OTC”) derivatives, such as swaps, in which the Funds may invest. Title VII of
the Dodd-Frank Act makes broad changes to the OTC derivatives market, grants significant new
authority to the SEC and the CFTC to regulate OTC derivatives and market participants, and will
require clearing of many OTC derivatives transactions.
Under recently adopted rules and regulations, transactions in some types of swaps (including
interest rate swaps and credit default swaps on North American and European indices) are required
to be centrally cleared. In a transaction involving those swaps (“cleared derivatives”), a Fund’s
counterparty is a clearing house, rather than a bank or broker. Since the Funds are not members of
clearing houses and only clearing members can participate directly in the clearing house, the Funds
will hold cleared derivatives through accounts at clearing members. In cleared derivatives
transactions, the Funds will make payments (including margin payments) to and receive payments from
a clearing house through their accounts at clearing members. Clearing members guarantee performance
of their clients’ obligations to the clearing house.
In many ways, cleared derivative arrangements are less favorable to mutual funds than
bilateral arrangements. For example, the Funds may be required to provide more margin for cleared
derivatives transactions than for bilateral derivatives transactions. Also, in contrast to a
bilateral derivatives transaction, following a period of notice to a Fund, a clearing member
generally can require termination of an existing cleared derivatives transaction at any time or an
increase in margin requirements above the margin that the clearing member required at the beginning
of a transaction. Clearing houses also have broad rights to increase margin requirements for
existing transactions or to terminate those transactions at any time. Any increase in margin
requirements or termination of existing cleared derivatives transactions by the clearing member or
the clearing house could interfere with the ability of a Fund to pursue its investment strategy.
Further, any increase in margin requirements by a clearing member could expose a Fund to greater
credit risk to its clearing member, because margin for cleared derivatives transactions in excess
of a clearing house’s margin requirements typically is held by the clearing member. Also, a Fund is
subject to risk if it enters into a derivatives transaction that is required to be cleared (or that
the Manager or a Sub-Adviser expects to be cleared), and no clearing member is willing or able to
clear the transaction on the Fund’s behalf. In those cases, the transaction might have to be
terminated, and a Fund could lose some or all of the benefit of the transaction, including loss of
an increase in the value of the transaction and/or loss of hedging protection. In addition, the
documentation governing the relationship between the Funds and clearing members is drafted by the
clearing members and generally is less favorable to the Funds than typical bilateral derivatives
documentation. For example, documentation relating to cleared derivatives generally includes a
one-way indemnity by a Fund in favor of the clearing member for losses the clearing member incurs
as the Fund’s clearing member and typically does not provide the Fund any remedies if the clearing
member defaults or becomes insolvent. While futures contracts entail similar risks, the risks
likely are more pronounced for cleared swaps due to their more limited liquidity and market
history.
Some types of cleared derivatives are required to be executed on an exchange or on a swap
execution facility. A swap execution facility is a trading platform where multiple market
participants can execute derivatives by accepting bids and offers made by multiple other
participants in the platform. While this execution requirement is designed to increase
transparency and liquidity in the cleared derivatives market, trading on a swap execution facility
can create additional costs and risks for the Funds. For example, swap execution facilities
typically charge fees, and if a Fund executes derivatives on a swap execution facility through a
broker intermediary, the intermediary may impose fees as well. Also, a Fund may indemnify a swap
execution facility, or a broker intermediary who executes cleared derivatives on a swap execution
facility on the Fund’s behalf, against any losses or costs that may be incurred as a result of the
Fund’s transactions on the swap execution facility.
These and other new rules and regulations could, among other things, further restrict a Fund’s
ability to engage in, or increase the cost to the Fund of, derivatives transactions, for example,
by making some types of derivatives no longer available to the Fund, increasing margin or capital
requirements, or otherwise limiting liquidity or increasing transaction costs. These regulations
are new and evolving, so their potential impact on the Funds and the financial system are not yet
known. While the new regulations and central clearing of some derivatives transactions are designed
to reduce systemic risk (i.e., the risk that the interdependence of large derivatives dealers could
cause them to suffer liquidity, solvency or other challenges simultaneously), there is no assurance
that the new clearing mechanisms will achieve that result, and in the meantime, as noted above,
central clearing and related requirements expose the Funds to new kinds of risks and costs.
Short Sales
Except as specified in the Prospectuses, each of the Funds may make use of short sales
transactions. A Fund may make use of short sales for investment and risk management purposes,
including when a Sub-Adviser anticipates that the market price of securities will decline or will
underperform relative to other securities held in the Fund’s portfolio. Short sales are
transactions in which a Fund sells a security or other instrument (such as an option, forward,
futures or other derivatives contract) that it does not own. A Fund may engage in short sales by
entering into a repurchase agreement with respect to the securities it wishes to sell short. See
“Repurchase Agreements.” Short exposure with respect to securities or market segments may also be
achieved through the use of derivatives, such
28
as futures on indices or swaps on individual
securities. To the extent a Fund seeks to obtain some or all of its short exposure by using
derivative instruments instead of engaging directly in short sales on individual securities, it
will be subject to many of the risks described in this section, as well as to those described under
“Derivative Instruments” above. When a Fund engages in a short sale on a security, it must borrow
the security to be sold short and will be subject to an obligation to deliver it to the
counterparty. A Fund will ordinarily have to pay a fee or premium to borrow a particular security
and be obligated to repay the lender of the security any dividends or interest that accrue on the
security during the period of the loan. The amount of any gain from a short sale will be reduced,
and the amount of any loss increased, by the amount of the premium, dividends, interest or expenses
the Fund pays in connection with the short sale. Until a short position is closed out, the net
proceeds of the short sale will be retained by the lending broker to the extent necessary to meet
margin requirements, together with any additional assets the broker requires as collateral. A Fund
is also required to designate, on its books or the books of its custodian, liquid assets (less any
additional collateral held by the broker) to cover the short sale obligation, marked-to-market
daily, as described further below. Depending on the arrangements made with the broker or custodian,
a Fund may or may not receive any payments (including interest) on collateral it has deposited.
A short sale is “against the box” if a Fund holds in its portfolio or has the right to acquire
the security sold short at no additional cost. For these purposes, a short sale will be considered
to be “against the box” if the Fund holds or has the right to acquire securities which, without the
payment of further consideration, are convertible or exchangeable for the securities sold short.
Short sales by a Fund that are not made “against the box” create opportunities to increase the
Fund’s return but, at the same time, involve special risk considerations and may be considered a
speculative technique.
Short sales may involve unlimited loss potential, as the market price of securities sold short
may continuously increase, although it is possible that a Fund could mitigate such losses by
replacing the securities sold short before the market price has increased significantly. Under
adverse market and other conditions, a Fund might have difficulty purchasing securities to meet its
short sale delivery obligations, and might have to sell portfolio securities to raise the capital
necessary to meet its short sale obligations at a time when investment considerations would not
favor such sales. A Fund’s use of short sales in combination with long positions in its portfolio
in an attempt to improve performance may not be successful and may result in greater losses or
lower positive returns than if the Fund held only long positions. It is possible that a Fund’s long
equity positions will decline in value at the same time that the value of the securities it has
sold short increase, thereby increasing potential losses to the Fund. In addition, a Fund’s short
selling strategies may limit its ability to fully benefit from increases in the equity markets.
Short selling also involves a form of financial leverage that may exaggerate any losses realized by
a Fund that utilizes short sales. See “Leveraging Risk” in the Prospectuses. Also, there is the
risk that the counterparty to a short sale may fail to honor its contractual terms, causing a loss
to a Fund. The SEC and other (including non-U.S.) regulatory authorities have previously imposed,
and may in the future impose, restrictions on short selling, either on a temporary or permanent
basis, which may include placing limitations on specific companies and/or industries with respect
to which a Fund may enter into short positions. Any such restrictions may hinder a Fund in, or
prevent it from, fully implementing its investment strategies, and may negatively affect
performance.
In the view of the SEC, a short sale involves the creation of a “senior security” as such term
is defined in the 1940 Act, unless the sale is “against the box,” or unless the Fund’s obligation
to deliver the securities sold short is “covered” by segregating cash, U.S. Government securities
or other liquid debt or equity securities in an amount equal to the difference between the market
value of the securities sold short at the time of the short sale and any cash or securities
required to be deposited as collateral with a broker in connection with the sale (not including the
proceeds from the short sale), which difference is adjusted daily for changes in the value of the
securities sold short.
Each Fund will not make short sales of securities or maintain a short position if doing so
could create liabilities or require collateral deposits and segregation of assets aggregating more
than 25% of the value of the Fund’s total assets.
A Fund’s use of short sale transactions will likely increase the portion of the Fund’s
distributions that are taxable to Fund shareholders as ordinary income. See “Taxation” below.
When-Issued, Delayed Delivery and Forward Commitment Transactions
A Fund may purchase or sell securities on a when-issued, delayed delivery or forward
commitment basis. These transactions involve a commitment by the Fund to purchase or sell
securities for a predetermined price or yield, with payment and delivery taking place more than
seven days in the future, or after a period longer than the customary settlement period for that
type of security. When delayed delivery purchases are outstanding, the Fund will segregate until
the settlement date assets determined to be liquid by the Manager or a Sub-Adviser in accordance
with procedures approved by the Board of Trustees in an amount sufficient to meet the purchase
price. Typically, no income accrues on securities purchased on a delayed delivery basis prior to
the time delivery of the securities is made, although a Fund may earn income on segregated
securities.
29
When purchasing a security on a when-issued, delayed delivery or forward commitment basis, the
Fund assumes the rights and risks of ownership of the security, including the risk of price and
yield fluctuations, and takes such fluctuations into account when determining its net asset value.
Because a Fund is not required to pay for the security until the delivery date, these risks are in
addition to the risks associated with the Fund’s other investments. If the Fund remains
substantially fully invested at a time when delayed delivery purchases are outstanding, the delayed
delivery purchases may result in a form of leverage.
When the Fund has sold a security on a when-issued, delayed delivery or forward commitment
basis, the Fund does not participate in future gains or losses with respect to the security. If the
other party to a delayed delivery transaction fails to deliver or pay for the securities, the Fund
could miss a favorable price or yield opportunity or could suffer a loss. Additionally, when
selling a security on a when-issued, delayed delivery or forward commitment basis without owning
the security, the Fund will incur a loss if the security’s price appreciates in value such that the
security’s price is above the agreed upon price on the settlement date. The Fund may dispose of or
renegotiate a transaction after it is entered into, and may sell when-issued, delayed delivery or
forward commitment securities before the settlement date, which may result in a capital gain or
loss.
Each Fund may make contracts to purchase securities for a fixed price at a future date beyond
customary settlement time (“forward commitments”) if the Fund either (i) segregates until the
settlement date assets determined to be liquid by the Manager or a Sub-Adviser in accordance with
procedures approved by the Board of Trustees in an amount sufficient to meet the purchase price or
(ii) enters into an offsetting contract for the forward sale of securities of equal value that it
owns. The Funds may also enter into forward commitments for the purchase or sale of non-U.S.
currencies. Forward commitments may be considered securities themselves. They involve a risk of
loss if the value of the security to be purchased declines prior to the settlement date, which risk
is in addition to the risk of decline in value of the Fund’s other assets. A Fund may dispose of a
commitment prior to settlement and may realize short-term profits or losses upon such disposition.
To Be Announced Securities (“TBAs”).
As with other delayed delivery transactions, a seller
agrees to issue a TBA security at a future date. However, the seller does not specify the
particular securities to be delivered. Instead, the Fund agrees to accept any security that meets
specified terms. For example, in a TBA mortgage-backed security transaction, the Fund and the
seller would agree upon the issuer, interest rate and terms of the underlying mortgages. The seller
would not identify the specific underlying mortgages until it issues the security. TBA
mortgage-backed securities increase market risks because the underlying mortgages may be less
favorable than anticipated by the Fund.
Rights and Warrants to Purchase Securities
A right is a privilege granted to existing shareholders of a corporation to subscribe for
shares of a new issue of common stock before it is issued. Rights normally have a short life,
usually two to four weeks, are freely transferable and entitle the holder to buy the new common
stock at a lower price than the public offering price. Warrants are securities that are usually
issued together with a debt security or preferred stock and that give the holder the right to buy a
proportionate amount of common stock at a specified price. Warrants are freely transferable and are
often traded on major exchanges. Unlike rights, warrants normally have a life that is measured in
years and entitle the holder to buy common stock of a company at a price that is usually higher
than the market price at the time the warrant is issued. Corporations often issue warrants to make
the accompanying debt security more attractive.
Warrants and rights may entail greater risks than certain other types of investments.
Generally, rights and warrants do not carry the right to receive dividends or exercise voting
rights with respect to the underlying securities, and they do not represent any rights in the
assets of the issuer. In addition, their value does not necessarily change with the value of the
underlying securities, and they cease to have value if they are not exercised on or before their
expiration date. If the market price of the underlying stock does not exceed the exercise price
during the life of the warrant or right, the warrant or right will expire worthless. Rights and
warrants may increase the potential profit or loss to be realized from the investment as compared
with investing the same amount in the underlying securities. Similarly, the percentage increase or
decrease in the value of an equity security warrant may be greater than the percentage increase or
decrease in the value of the underlying common stock.
Warrants may relate to the purchase of equity or debt securities. Debt obligations with
warrants attached to purchase equity securities have many characteristics of convertible securities
and their prices may, to some degree, reflect the performance of the underlying stock. Debt
obligations also may be issued with warrants attached to purchase additional debt securities at the
same coupon rate. A decline in interest rates would permit a Fund to sell such warrants at a
profit. If interest rates rise, these warrants would generally expire with no value.
Repurchase Agreements
For the purposes of maintaining liquidity and achieving income, each Fund may enter into
repurchase agreements with domestic commercial banks or registered broker/dealers. A repurchase
agreement is a contract under which a Fund would acquire a security for a relatively short period
(usually not more than one week) subject to the obligation of the seller to repurchase and the Fund
to resell such security at a fixed time and price (representing the Fund’s cost plus interest). In
the case of repurchase agreements with broker-dealers, the value of the underlying securities (or
collateral) will be at least equal at all times to the total amount of the repurchase obligation,
including the interest factor. The Fund bears a risk of loss in the event that the other party to a
repurchase agreement
30
defaults on its obligations and the Fund is delayed or prevented from
exercising its rights to dispose of the collateral securities. This risk includes the risk of
procedural costs or delays in addition to a loss on the securities if their value should fall below
their repurchase price. The Manager and the Sub-Advisers, as appropriate, will monitor the
creditworthiness of the counterparties.
Other Investment Companies
The Funds may invest in securities of other open-end, closed-end or unit investment trust
investment companies, including exchange-traded funds (“ETFs”), to the extent that such investments
are consistent with the Fund’s investment objective and policies and permissible under the 1940 Act
and related rules and any exemptive relief from or interpretations of the SEC.
In general, under the 1940 Act, an investment company such as the Fund may not (i) own more
than 3% of the outstanding voting securities of any one registered investment company, (ii) invest
more than 5% of its total assets in the securities of any single registered investment company or
(iii) invest more than 10% of its total assets in securities of other registered investment
companies. The
Target Funds
rely on an exception to these limits provided in Section 12(d)(1)(G) of
the 1940 Act to invest without limit in shares of Underlying Funds.
A Fund may invest in other investment companies during periods when it has large amounts of
uninvested cash, during periods when there is a shortage of attractive securities available in the
market, or when a Sub-Adviser believes share prices of other investment companies offer attractive
values. The Funds may also invest in other investment companies because the laws of some foreign
countries may make it difficult or impossible for a Fund to invest directly in issuers organized or
headquartered in those countries, or may limit such investments. The most efficient, and sometimes
the only practical, means of investing in such companies may be through investment in other
investment companies that in turn are authorized to invest in the securities of such issuers. The
Funds may invest, in excess of the general limits described above, in investment companies that are
advised by Allianz Global Fund Management or its affiliates, as well as in money market funds and
ETF’s, to the extent permitted by applicable law and/or pursuant to exemptive relief from the SEC.
Investment companies, and in particular ETFs, may be structured to perform in a similar
fashion to a broad-based securities index or may focus on a particular strategy or class of assets.
ETFs typically seek to track the performance or dividend yield of specific indexes or companies in
related industries. These indexes may be broad-based, sector-based or international. Investing in
investment companies involves substantially the same risks as investing directly in the underlying
instruments, but also involves expenses at the investment company-level, such as portfolio
management fees and operating expenses. These expenses are in addition to the fees and expenses of
the fund itself, which may lead to duplication of expenses while the fund owns another investment
company’s shares. In addition, investing in investment companies involves the risk that they will
not perform in exactly the same fashion, or in response to the same factors, as the underlying
instruments or index. For information regarding the tax treatment of ETFs, please see “Taxation”
below.
Open-end investment companies typically offer their shares continuously at net asset value
plus any applicable sales charge and stand ready to redeem shares upon shareholder request. The
shares of certain other types of investment companies, such as ETFs and closed-end investment
companies, typically trade on a stock exchange or over-the-counter at a premium or a discount to
their net asset value. In the case of closed-end investment companies, the number of shares is
typically fixed. The securities of closed-end investment companies and ETFs carry the risk that the
price the fund pays or receives may be higher or lower than the investment company’s net asset
value. ETFs and closed-end investment companies are also subject to certain additional risks,
including the risks of illiquidity and of possible trading halts due to market conditions or other
reasons, based on the policies of the relevant exchange. The shares of investment companies,
particularly closed-end investment companies, may also be leveraged, which would increase the
volatility of the fund’s net asset value.
As a shareholder in an investment company, a Fund will bear its ratable share of that
investment company’s expenses, and would remain subject to payment of the Fund’s management fees
and other expenses with respect to assets so invested. A Fund’s shareholders would therefore be
subject to duplicative expenses to the extent the Fund invests in other investment companies. In
addition, the securities of other investment companies may be leveraged and will therefore be
subject to the same risks of leverage described in the Prospectuses and herein.
The
Target Funds
ordinarily invest primarily, and the
Multi-Asset Funds
and the
Global
Fundamental Strategy Fund
may invest, in the Funds or funds advised by the Manager and its
affiliates. See “Investment Strategies of the Target Funds, the Multi-Asset Funds and the Global
Fundamental Strategy Fund” below.
Investment Strategies of the Target Funds, the Multi-Asset Funds and the Global Fundamental Strategy Fund
The
Target Funds
invest primarily, and the
Multi-Asset Funds
and the
Global Fundamental
Strategy Fund
may invest, in Underlying Funds, which include certain series of the Trust and series
of Allianz Funds, PIMCO Equity Series, PIMCO ETF Trust and PIMCO Funds, as specified in the
applicable Prospectus. By investing in Underlying Funds, the Target Funds, the Multi-Asset
31
Funds
and the Global Fundamental Strategy Fund may be subject to some or all of the risks associated with
the securities, instruments and techniques utilized by the Funds as described herein. They may also
be subject to additional risks associated with other securities, instruments and techniques
utilized by Underlying Funds that are series of Allianz Funds, PIMCO Equity Series, PIMCO ETF Trust
and PIMCO Funds. The Allianz Funds, PIMCO Equity Series, PIMCO ETF Trust and PIMCO Funds series and
their attendant risks are described in the current prospectus and Statements of Additional
Information of Allianz Funds, PIMCO Equity Series, PIMCO ETF Trust and PIMCO Funds, which are
included in the Allianz Funds registration statement (File Nos. 033-36528 and 811-06161), PIMCO
Equity Series registration statement (Files Nos. 333-164077 and 811-22375), PIMCO ETF Trust
registration statement (Files Nos. 333-155395 and 811-22250) and PIMCO Funds registration statement
(File Nos. 033-12113 and 811-5028) on file with the SEC. In addition, summary information about the
principal investments and strategies and principal risks of the Underlying Funds is contained in
Appendix E to this Statement of Additional Information. These summaries are qualified in their
entirety by reference to the prospectus and Statements of Additional Information of the Trust,
Allianz Funds, PIMCO Equity Series, PIMCO ETF Trust and PIMCO Funds, and the Trust disclaims any
obligation to update these summaries in the event the information in the applicable Underlying Fund
prospectus and/or Statement of Additional Information changes. The principal investments and
strategies and principal risks of the Underlying Funds may change following the date of this
Statement of Additional Information, and investors should refer to the prospectus and Statements of
Additional Information of the Trust, Allianz Funds, PIMCO Equity Series, PIMCO ETF Trust and PIMCO
Funds for the most current information regarding the Underlying Funds. These documents may be
obtained free of charge by calling Allianz Global Investors Distributors LLC at 1-800-498-5413.
Illiquid Securities
A Fund may invest in securities that are illiquid, so long as no more than 15% of the net
assets of the Fund (taken at market value at the time of investment) would be invested in such
securities. Certain illiquid securities may require pricing using fair valuation procedures
approved by the Board of Trustees. A Sub-Adviser may be subject to significant delays in disposing
of illiquid securities, and transactions in illiquid securities may entail registration expenses
and other transaction costs that are higher than those for transactions in liquid securities.
The term “illiquid securities” for this purpose means securities that cannot be disposed of
within seven days in the ordinary course of business at approximately the amount at which a Fund
has valued the securities. Depending on the circumstances, illiquid securities may be considered to
include, among other things, written over-the-counter options and other derivative instruments,
repurchase agreements with maturities in excess of seven days, certain loan participation
interests, fixed time deposits that are not subject to prepayment or provide for withdrawal
penalties upon prepayment (other than overnight deposits), securities that are subject to legal or
contractual restrictions on resale (such as privately placed debt securities), and other securities
that legally or in the Manager’s or a Sub-Adviser’s opinion may be deemed illiquid (not including
securities issued pursuant to Rule 144A under the Securities Act of 1933 and certain commercial
paper that the Manager or a Sub-Adviser has determined to be liquid under procedures approved by
the Board of Trustees).
Corporate Debt Securities
The Funds may invest in a variety of bonds and related debt obligations of varying maturities
issued by U.S. and non-U.S. companies, banks and other corporate entities. Corporate debt
securities include bills, notes, debentures, money market instruments and similar instruments and
securities, and are generally used by corporations and other issuers to borrow money from investors
for such purposes as working capital or capital expenditures. The issuer pays the investor a
variable or fixed rate of interest and normally must repay the amount borrowed on or before
maturity. Certain bonds are “perpetual” in that they have no maturity date.
The investment return of corporate debt securities reflects interest earnings and changes in
the market value of the security. The market value of a corporate debt obligation may be expected
to rise and fall inversely with interest rates generally. In addition to interest rate risk,
corporate debt securities also involve the risk that the issuers of the securities may not be able
to meet their obligations on interest or principal payments at the time called for by an
instrument. The rate of return or return of principal on some debt obligations may be linked or
indexed to the level of exchange rates between the U.S. dollar and a foreign currency or
currencies.
U.S. Government Securities
U.S. Government securities are obligations of and, in certain cases, guaranteed by, the U.S.
Government, its agencies or instrumentalities. The U.S. Government does not guarantee the net asset
value of the Funds’ shares. U.S. Government securities are subject to market and interest rate
risk, and may be subject to varying degrees of credit risk. Investments in U.S. Government
Securities remain subject to the risks associated with downgrade or default. Some U.S. Government
securities, such as Treasury bills, notes and bonds, and securities guaranteed by the Government
National Mortgage Association (“GNMA”), are supported by the full faith and credit of the United
States; others, such as those of the Federal Home Loan Banks, are supported by the right of the
issuer to borrow from the U.S. Department of the Treasury (the “U.S. Treasury”); others, such as
those of the Federal National Mortgage Association (“FNMA”), are supported by the discretionary
authority of the U.S. Government to purchase the agency’s obligations; and still others, such as
securities issued by members of the Farm Credit System, are supported only by the credit of the
agency, instrumentality or corporation. U.S. Government securities may include zero coupon
securities, which do not distribute interest on a current basis and tend to be subject to greater
risk than interest-paying securities of similar maturities.
32
Securities issued by U.S. Government agencies or government-sponsored enterprises may not be
guaranteed by the U.S. Treasury. GNMA, a wholly owned U.S. Government corporation, is authorized to
guarantee, with the full faith and credit of the U.S. Government, the timely payment of principal
and interest on securities issued by institutions approved by GNMA and backed by pools of mortgages
insured by the Federal Housing Administration or guaranteed by the Department of Veterans Affairs.
Government-related guarantors (i.e., not backed by the full faith and credit of the U.S.
Government) include the FNMA and the Federal Home Loan Mortgage Corporation (“FHLMC”). Pass-through
securities issued by FNMA are guaranteed as to timely payment of principal and interest by FNMA but
are not backed by the full faith and credit of the U.S. Government. FHLMC guarantees the timely
payment of interest and ultimate collection of principal, but its participation certificates are
not backed by the full faith and credit of the U.S. Government.
Prior to September 2008, FNMA and FHLMC were government-sponsored enterprises owned entirely
by private stockholders. However, the value of these entities’ stock fell sharply in 2008 due to
concerns that the entities did not have sufficient capital to offset losses and in mid-2008, the
U.S. Treasury was authorized to increase the size of home loans that FNMA and FHLMC could purchase
in certain residential areas and, until 2009, to lend FNMA and FHLMC emergency funds and to
purchase the entities’ stock. In September 2008, the U.S. Treasury announced that FNMA and FHLMC
had been placed in conservatorship by the Federal Housing Finance Agency (“FHFA”), a newly created
independent regulator. As the conservator, FHFA succeeded to all rights, titles, powers and
privileges of FNMA and FHLMC and of any stockholder, officer or director of FNMA and FHLMC with
respect to FNMA and FHLMC and the assets of FNMA and FHLMC. FHFA selected a new chief executive
officer and chairman of the board of directors for each of FNMA and FHLMC.
In connection with the conservatorship, the U.S. Treasury entered into a Senior Preferred
Stock Purchase Agreement with each of FNMA and FHLMC pursuant to which the U.S. Treasury would
purchase up to an aggregate of $100 billion of each of FNMA and FHLMC to maintain a positive net
worth in each enterprise. This agreement contains various covenants that severely limit each
enterprise’s operations. In exchange for entering into these agreements, the U.S. Treasury received
$1 billion of each enterprise’s senior preferred stock and warrants to purchase 79.9% of each
enterprise’s common stock. In 2009, the U.S. Treasury announced that it was doubling the size of
its commitment to each enterprise under the Senior Preferred Stock Program to $200 billion. The
U.S. Treasury’s obligations under the Senior Preferred Stock Program are for an indefinite period
of time for a maximum amount of $200 billion per enterprise. In 2009, the U.S. Treasury further
amended the Senior Preferred Stock Purchase Agreement to allow the cap on the U.S. Treasury’s
funding commitment to increase as necessary to accommodate any cumulative reduction in FNMA’s and
FHLMC’s net worth through the end of 2012. In August 2012, the Senior Preferred Stock Purchase
Agreement was further amended to, among other things, accelerate the wind down of the retained
portfolio, terminate the requirement that FNMA and FHLMC each pay a 10% dividend annually on all
amounts received under the funding commitment, and require the submission of an annual risk
management plan to the U.S. Treasury.
FNMA and FHLMC are continuing to operate as going concerns while in conservatorship and each
remain liable for all of its obligations, including its guaranty obligations, associated with its
mortgage-backed securities. The Senior Preferred Stock Purchase Agreement is intended to enhance
each of FNMA’s and FHLMC’s ability to meet its obligations. The FHFA has indicated that the
conservatorship of each enterprise will end when the director of FHFA determines that FHFA’s plan
to restore the enterprise to a safe and solvent condition has been completed.
Under the Federal Housing Finance Regulatory Reform Act of 2008 (the “Reform Act”), which was
included as part of the Housing and Economic Recovery Act of 2008, FHFA, as conservator or
receiver, has the power to repudiate any contract entered into by FNMA or FHLMC prior to FHFA’s
appointment as conservator or receiver, as applicable, if FHFA determines, in its sole discretion,
that performance of the contract is burdensome and that repudiation of the contract promotes the
orderly administration of FNMA’s or FHLMC’s affairs. The Reform Act requires FHFA to exercise its
right to repudiate any contract within a reasonable period of time after its appointment as
conservator or receiver. FHFA, in its capacity as conservator, has indicated that it has no
intention to repudiate the guaranty obligations of FNMA or FHLMC because FHFA views repudiation as
incompatible with the goals of the conservatorship. However, in the event that FHFA, as conservator
or if it is later appointed as receiver for FNMA or FHLMC, were to repudiate any such guaranty
obligation, the conservatorship or receivership estate, as applicable, would be liable for actual
direct compensatory damages in accordance with the provisions of the Reform Act. Any such liability
could be satisfied only to the extent of FNMA’s or FHLMC’s assets available therefor.
In the event of repudiation, the payments of interest to holders of FNMA or FHLMC
mortgage-backed securities would be reduced if payments on the mortgage loans represented in the
mortgage loan groups related to such mortgage-backed securities are not made by the borrowers or
advanced by the servicer. Any actual direct compensatory damages for repudiating these guaranty
obligations may not be sufficient to offset any shortfalls experienced by such mortgage-backed
security holders. Further, in its capacity as conservator or receiver, FHFA has the right to
transfer or sell any asset or liability of FNMA or FHLMC without any approval, assignment or
consent. Although FHFA has stated that it has no present intention to do so, if FHFA, as
conservator or receiver, were to transfer any such guaranty obligation to another party, holders of
FNMA or FHLMC mortgage-backed securities would have to rely on that party for satisfaction of the
guaranty obligation and would be exposed to the credit risk of that party.
33
In addition, certain rights provided to holders of mortgage-backed securities issued by FNMA
and FHLMC under the operative documents related to such securities may not be enforced against
FHFA, or enforcement of such rights may be delayed, during the conservatorship or any future
receivership. The operative documents for FNMA and FHLMC mortgage-backed securities may provide (or
with respect to securities issued prior to the date of the appointment of the conservator may have
provided) that upon the occurrence of an event of default on the part of FNMA or FHLMC, in its
capacity as guarantor, which includes the appointment of a conservator or receiver, holders of such
mortgage-backed securities have the right to replace FNMA or FHLMC as trustee if the requisite
percentage of mortgage-backed securities holders consent. The Reform Act prevents mortgage-backed
security holders from enforcing such rights if the event of default arises solely because a
conservator or receiver has been appointed. The Reform Act also provides that no person may
exercise any right or power to terminate, accelerate or declare an event of default under certain
contracts to which FNMA or FHLMC is a party, or obtain possession of or exercise control over any
property of FNMA or FHLMC, or affect any contractual rights of FNMA or FHLMC, without the approval
of FHFA, as conservator or receiver, for a period of 45 or 90 days following the appointment of
FHFA as conservator or receiver, respectively.
In addition, in a February 2011 report to Congress from the Treasury Department and the
Department of Housing and Urban Development, the Obama administration provided a plan to reform
America’s housing finance market. The plan would reduce the role of and eventually eliminate FNMA
and FHLMC. Notably, the plan does not propose similar significant changes to GNMA, which guarantees
payments on mortgage-related securities backed by federally insured or guaranteed loans such as
those issued by the Federal Housing Association or guaranteed by the Department of Veterans
Affairs. The report also identified three proposals for Congress and the administration to consider
for the long-term structure of the housing finance markets after the elimination of FNMA and FHLMC,
including implementing: (i) a privatized system of housing finance that limits government insurance
to very limited groups of creditworthy low- and moderate-income borrowers; (ii) a privatized system
with a government backstop mechanism that would allow the government to insure a larger share of
the housing finance market during a future housing crisis; and (iii) a privatized system where the
government would offer reinsurance to holders of certain highly-rated mortgage-related securities
insured by private insurers and would pay out under the reinsurance arrangements only if the
private mortgage insurers were insolvent.
U.S. Government securities include securities that have no coupons, or have been stripped of
their unmatured interest coupons, individual interest coupons from such securities that trade
separately, and evidences of receipt of such securities. Such securities may pay no cash income,
and are purchased at a deep discount from their value at maturity. Because interest on zero coupon
securities is not distributed on a current basis but is, in effect, compounded, zero coupon
securities tend to be subject to greater risk than interest-paying securities of similar
maturities. Custodial receipts issued in connection with so-called trademark zero coupon
securities, such as CATs and TIGRs, are not issued by the U.S. Treasury, and are therefore not U.S.
Government securities, although the underlying bond represented by such receipt is a debt
obligation of the U.S. Treasury. Other zero coupon Treasury securities (
e.g.
, STRIPs and CUBEs) are
direct obligations of the U.S. Government.
High Yield Securities (“Junk Bonds”)
The Funds may invest in debt securities, including convertible securities, that are below
investment grade quality. A security is considered to be below “investment grade” quality if it is
either (1) not rated in one of the four highest rating categories by one of the Nationally
Recognized Statistical Rating Organizations (“NRSROs”) (
i.e.
, rated Ba or below by Moody’s
Investors Service, Inc. (“Moody’s”) or BB or below by Standard & Poor’s Ratings Services (“S&P”) or
Fitch, Inc. (“Fitch”)) or (2) if unrated, determined by the relevant Sub-Adviser to be of
comparable quality to obligations so rated. Additional information about Moody’s, S&P’s and Fitch’s
securities ratings are included in Appendix A to this Statement of Additional Information.
Below investment grade securities are sometimes referred to as “high yield securities” or
“junk bonds.” Investing in high yield securities involves special risks in addition to the risks
associated with investments in higher rated debt securities. While investments in high yield
securities generally provide greater income and increased opportunity for capital appreciation than
investments in higher quality securities, investments in high yield securities typically entail
greater price volatility as well as principal and income risk. High yield securities are regarded
as predominantly speculative with respect to the issuer’s continuing ability to meet principal and
interest payments. Analysis of the creditworthiness of issuers of high yield securities may be more
complex than for issuers of higher quality debt securities. The Funds may continue to hold high
yield securities following a decline in their rating if in the opinion of the Manager or the
Sub-Adviser, as the case may be, it would be advantageous to do so. Investments in high yield
securities are described as “speculative” by ratings agencies. Securities ranked in the lowest
investment grade category may also be considered speculative by certain ratings agencies.
High yield securities may be more susceptible to real or perceived adverse economic and
competitive industry conditions than investment grade securities. The prices of high yield
securities are likely to be sensitive to adverse economic downturns or individual corporate
developments. A projection of an economic downturn or of a period of rising interest rates, for
example, could cause a
34
decline in high yield security prices because the advent of a recession
could lessen the ability of a highly leveraged company to make principal and interest payments on
its debt securities. If an issuer of high yield securities defaults, in addition to risking payment
of all or a portion of interest and principal, the Funds investing in such securities may incur
additional expenses to seek recovery. The market prices of high yield securities structured as
“zero-coupon” or “pay-in-kind” securities are affected to a greater extent by interest rate
changes, and therefore tend to be more volatile than securities that pay interest periodically and
in cash. Even though such securities do not pay current interest in cash, a Fund nonetheless is
required to accrue interest income on these investments and to distribute the interest income on a
current basis. Thus, a Fund could be required at times to liquidate other investments in order to
satisfy its distribution requirements.
Prices of high yield securities are generally more sensitive to economic downturns or
individual corporate developments than higher quality securities. The secondary market on which
high yield securities are traded may be less liquid than the market for higher grade securities.
Less liquidity in the secondary trading market could adversely affect the price at which the Funds
could sell a high yield security, and could adversely affect a Fund’s daily net asset value.
Adverse publicity and investor perceptions, whether or not based on fundamental analysis, may
decrease the values and liquidity of high yield securities, especially in a thinly traded market.
When secondary markets for high yield securities are less liquid than the market for higher grade
securities, it may be more difficult to value lower rated securities because such valuation may
require more research, and elements of judgment may play a greater role in the valuation because
there is less reliable, objective data available.
The average maturity or duration of the debt securities in a Fund’s portfolio may vary in
response to anticipated changes in interest rates and to other economic factors. Securities may be
bought and sold in anticipation of a decline or a rise in market interest rates. In addition, a
Fund may sell a security and purchase another of comparable quality and maturity (usually, but not
always, of a different issuer) at approximately the same time to take advantage of what are
believed to be short-term differentials in values or yields.
Inflation-Indexed Bonds
The Funds may invest in inflation-indexed bonds, which are debt obligations whose value is
periodically adjusted according to the rate of inflation. Two structures are common. The U.S.
Treasury and some other issuers utilize a structure that accrues inflation into the principal value
of the bond. Many other issuers pay out the Consumer Price Index (“CPI”) accruals as part of a
semiannual coupon.
Inflation-indexed bonds issued by the U.S. Treasury have maturities of approximately five, ten
or thirty years, although it is possible that securities with other maturities will be issued in
the future. The U.S. Treasury securities pay interest on a semi-annual basis equal to a fixed
percentage of the inflation-adjusted principal amount. For example, if a Fund purchased an
inflation-indexed bond with a par value of $1,000 and a 3% real rate of return coupon (payable 1.5%
semi-annually), and the rate of inflation over the first six months was 1%, the mid-year par value
of the bond would be $1,010 and the first semi-annual interest payment would be $15.15 ($1,010
times 1.5%). If inflation during the second half of the year resulted in the whole year’s inflation
equaling 3%, the end-of-year par value of the bond would be $1,030 and the second semi-annual
interest payment would be $15.45 ($1,030 times 1.5%).
If the periodic adjustment rate measuring inflation falls, the principal value of
inflation-indexed bonds will be adjusted downward, and consequently the interest payable on these
securities (calculated with respect to a smaller principal amount) will be reduced. Repayment of
the original bond principal upon maturity (as adjusted for inflation) is guaranteed in the case of
U.S. Treasury inflation-indexed bonds, even during a period of deflation. However, the current
market value of the bonds is not guaranteed and will fluctuate. A Fund may also invest in other
inflation-related bonds that may or may not provide a similar guarantee. If a guarantee of
principal is not provided, the adjusted principal value of the bond repaid at maturity may be less
than the original principal amount.
The value of inflation-indexed bonds is expected to change in response to changes in real
interest rates. Real interest rates in turn are tied to the relationship between nominal interest
rates and the rate of inflation. Therefore, if the rate of inflation rises at a faster rate than
nominal interest rates, real interest rates might decline, leading to an increase in value of
inflation-indexed bonds. In contrast, if nominal interest rates increase at a faster rate than
inflation, real interest rates might rise, leading to a decrease in value of inflation-indexed
bonds.
While these securities are expected to provide protection from long-term inflationary trends,
short-term increases in inflation may lead to a decline in value. If interest rates rise due to
reasons other than inflation (for example, due to changes in currency exchange rates), investors in
these securities may not be protected to the extent that the increase is not reflected in the
bond’s inflation measure.
The periodic adjustment of U.S. inflation-indexed bonds is tied to the Consumer Price Index
for Urban Consumers (“CPI-U”), which is calculated monthly by the U.S. Bureau of Labor Statistics.
The CPI-U is a measurement of changes in the cost of living, made up of components such as housing,
food, transportation and energy. Inflation-indexed bonds issued by a non-U.S. government are
generally adjusted to reflect a comparable inflation index calculated by that government. There can
be no assurance that the CPI-U or any non-U.S. inflation index will accurately measure the real
rate of inflation in the prices of goods and services. Moreover, there can be no assurance that the
rate of inflation in a non-U.S. country will be correlated to the rate of inflation in the United
States.
35
Any increase in the principal amount of an inflation-indexed bond will be considered taxable
ordinary income, even though investors do not receive their principal until maturity.
Delayed Funding Loans and Revolving Credit Facilities
The Funds may enter into, or acquire participations in, delayed funding loans and revolving
credit facilities. Delayed funding loans and revolving credit facilities are borrowing arrangements
in which the lender agrees to make loans up to a maximum amount upon demand by the borrower during
a specified term. A revolving credit facility differs from a delayed funding loan in that as the
borrower repays the loan, an amount equal to the repayment may be borrowed again during the term of
the revolving credit facility. These commitments may have the effect of requiring a Fund to
increase its investment in a company at a time when it might not otherwise decide to do so
(including a time when the company’s financial condition makes it unlikely that such amounts will
be repaid).
The Funds may acquire a participation interest in delayed funding loans or revolving credit
facilities from a bank or other financial institution. See “Loan Participations and Assignments”
below. The terms of the participation require a Fund to make a pro rata share of all loans extended
to the borrower and entitle a Fund to a pro rata share of all payments made by the borrower.
Delayed funding loans and revolving credit facilities may be subject to restrictions on transfer,
and also limited opportunities may exist to resell such investments. These instruments may often be
illiquid. See “Characteristics and Risks of Securities and Investment Techniques—Illiquid
Securities” in the applicable Prospectus. Delayed funding loans and revolving credit facilities
usually provide for floating or variable rates of interest. To the extent that a Fund is committed
to advance additional funds, it will at all times segregate assets that the Manager or Sub-Adviser,
in accordance with procedures approved by the Board of Trustees, have determined are liquid in an
amount sufficient to meet such commitments.
Event-Linked Bonds
The Funds may obtain event-linked exposure by investing in “event-linked bonds” or
“event-linked swaps,” or may implement “event-linked strategies.” Event-linked exposure results in
gains that typically are contingent on the non-occurrence of a specific “trigger” event, such as a
hurricane or an earthquake or other physical or weather-related phenomena. Some event-linked bonds
are commonly referred to as “catastrophe bonds.” They may be issued by government agencies,
insurance companies, reinsurers, special purpose corporations or other on-shore or off-shore
entities (such special purpose entities are created to accomplish a narrow and well-defined
objective, such as the issuance of a note in connection with a reinsurance transaction). If a
trigger event causes losses exceeding a specific amount in the geographic region and time period
specified in a bond, a Fund investing in the bond may lose a portion or all of its principal
invested in the bond. If no trigger event occurs, the Fund would expect to recover its principal
plus interest. For some event-linked bonds, the trigger event or losses may be based on company
wide losses, index-portfolio losses, industry indices or readings of scientific instruments rather
than specified actual losses. Often the event-linked bonds provide for extensions of maturity that
are mandatory, or optional at the discretion of the issuer, in order to process and audit loss
claims in those cases where a trigger event has, or possibly has, occurred. In addition to the
specified trigger events, event-linked bonds may also expose a Fund to certain unanticipated risks
including but not limited to issuer (credit) default, adverse regulatory or jurisdictional
interpretations and adverse tax consequences.
Event-linked bonds are a relatively new type of financial instrument. As such, there is no
significant trading history for many of these securities, and there can be no assurance that a
liquid market in these bonds will develop. See “Characteristics and Risks of Securities and
Investment Techniques—Illiquid Securities” in the applicable Prospectus. Lack of a liquid market
may impose the risk of higher transaction costs and the possibility that a Fund may be forced to
liquidate positions when it would not be advantageous to do so.
Loan Participations and Assignments
The Funds may invest in fixed- and floating-rate loans arranged through private negotiations
between an issuer of debt instruments and one or more financial institutions (“lenders”).
Generally, a Fund’s investments in loans are expected to take the form of loan participations and
assignments of portions of loans from third parties.
Large loans to corporations or governments may be shared or syndicated among several lenders,
usually banks. A Fund may participate in such syndicates, or can buy part of a loan, becoming a
direct lender. Participations and assignments involve special types of risk, including liquidity
risk and the risks of being a lender. If a Fund purchases a participation, it may only be able to
enforce its rights through the lender, and may assume the credit risk of the lender in addition to
the borrower. With respect to assignments, a Fund’s rights against the borrower may be more limited
than those held by the original lender.
36
Participation on Creditors Committees
A Fund may from time to time participate on committees formed by creditors to negotiate with
the management of financially troubled issuers of securities held by the Fund. Such participation
may subject a Fund to expenses such as legal fees and may make the Fund an “insider” of the issuer
for purposes of the federal securities laws, and therefore may restrict the Fund’s ability to trade
in or acquire additional positions in a particular security when it might otherwise desire to do
so. Participation by a Fund on such committees also may expose the Fund to potential liabilities
under the federal bankruptcy laws or other laws governing the rights of creditors and debtors. A
Fund would participate in such committees only when the Manager and the relevant Sub-Adviser
believe that such participation is necessary or desirable to enforce the Fund’s rights as a
creditor or to protect the value of securities held by the Fund.
Bank Obligations
The Funds may invest in bank capital securities. Bank capital securities are issued by banks
to help fulfill their regulatory capital requirements. There are three common types of bank
capital: Lower Tier II, Upper Tier II and Tier I. Bank capital is generally, but not always, of
investment grade quality. Upper Tier II securities are commonly thought of as hybrids of debt and
preferred stock. Upper Tier II securities are often perpetual (with no maturity date), callable and
have a cumulative interest deferral feature. This means that under certain conditions, the issuer
bank can withhold payment of interest until a later date. However, such deferred interest payments
generally earn interest. Tier I securities often take the form of trust preferred securities.
Bank obligations in which the Funds may invest include certificates of deposit, bankers’
acceptances, and fixed time deposits. Certificates of deposit are negotiable certificates issued
against funds deposited in a commercial bank for a definite period of time and that earn a
specified return. Bankers’ acceptances are negotiable drafts or bills of exchange, normally drawn
by an importer or exporter to pay for specific merchandise, which are “accepted” by a bank,
meaning, in effect, that the bank unconditionally agrees to pay the face value of the instrument on
maturity. Fixed time deposits are bank obligations payable at a stated maturity date and bearing
interest at a fixed rate. Fixed time deposits may be withdrawn on demand by the investor, but may
be subject to early withdrawal penalties that vary depending upon market conditions and the
remaining maturity of the obligation. There are generally no contractual restrictions on the right
to transfer a beneficial interest in a fixed time deposit to a third party, although there is
generally no market for such deposits. Fixed time deposits which (1) are not subject to prepayment
or (2) provide for withdrawal penalties upon prepayment (other than overnight deposits) may be
considered illiquid for purposes of the Funds’ restrictions on investments in illiquid securities.
Each Fund may also hold funds in an interest-bearing account for temporary purposes.
Obligations of non-U.S. banks involve certain risks associated with investing in non-U.S.
securities described under “Non-U.S. Securities” above, including the possibilities that their
liquidity could be impaired because of future political and economic developments, that their
obligations may be less marketable than comparable obligations of United States banks, that a
non-U.S. jurisdiction might impose withholding taxes on interest income payable on those
obligations, that non-U.S. deposits may be seized or nationalized, that non-U.S. governmental
restrictions such as exchange controls may be adopted and in turn might adversely affect the
payment of principal and interest on those obligations and that the selection of those obligations
may be more difficult because there may be less publicly available information concerning non-U.S.
banks or the accounting, auditing and financial reporting standards, practices and requirements
applicable to non-U.S. banks may differ from those applicable to United States banks. Non-U.S.
banks are not generally subject to examination by any U.S. Government agency or instrumentality.
Senior and Other Bank Loans
The Funds may invest in fixed- and floating-rate loans issued by banks (including, among
others, Senior Loans, delayed funding loans and revolving credit facilities). Loan interests may
take the form of direct interests acquired during a primary distribution and may also take the form
of assignments of, novations of or participations in a bank loan acquired in secondary markets.
As noted, the Funds may purchase “assignments” of bank loans from lenders. The purchaser of an
assignment typically succeeds to all the rights and obligations under the loan agreement with the
same rights and obligations as the assigning lender. Assignments may, however, be arranged through
private negotiations between potential assignees and potential assignors, and the rights and
obligations acquired by the purchaser of an assignment may differ from, and be more limited than,
those held by the assigning lender.
The Funds may also invest in “participations” in bank loans. Participations by the Funds in a
lender’s portion of a bank loan typically will result in the Funds having a contractual
relationship only with such lender, not with the borrower. As a result, the Funds may have the
right to receive payments of principal, interest and any fees to which it is entitled only from the
lender selling the participation and only upon receipt by such lender of such payments from the
borrower. In connection with purchasing participations, the Funds generally will have no right to
enforce compliance by the borrower with the terms of the loan agreement, nor any rights with
respect to any funds acquired by other lenders through set-off against the borrower, and the Funds
may not directly benefit from any collateral supporting the loan in which it has purchased the
participation. As a result, the Funds may assume the credit risk of both the borrower and the
lender selling the participation.
37
The Senior Loans in which the Funds may invest typically pay interest at rates that are
re-determined periodically on the basis of a floating base lending rate (such as the LIBOR Rate)
plus a premium. Although Senior Loans are typically of below investment grade quality (i.e., high
yield securities), they tend to have more favorable recovery rates than other types of below
investment grade quality debt obligations. Senior Loans generally (but not always) hold the most
senior position in the capital structure of a borrower and are often secured with collateral. A
Senior Loan is typically originated, negotiated and structured by a U.S. or foreign commercial
bank, insurance company, finance company or other financial institution (the “Agent”) for a lending
syndicate of financial institutions (“Lenders”). The Agent typically administers and enforces the
Senior Loan on behalf of the other Lenders in the syndicate. In addition, an institution, typically
but not always the Agent, holds any collateral on behalf of the Lenders. A financial institution’s
employment as an Agent might be terminated in the event that it fails to observe a requisite
standard of care or becomes insolvent. A successor Agent would generally be appointed to replace
the terminated Agent, and assets held by the Agent under the loan agreement would likely remain
available to holders of such indebtedness. However, if assets held by the Agent for the benefit of
the Funds were determined to be subject to the claims of the Agent’s general creditors, the Funds
might incur certain costs and delays in realizing payment on a loan or loan participation and could
suffer a loss of principal and/or interest. In situations involving other interposed financial
institutions (e.g., an insurance company or government agency) similar risks may arise.
Purchasers of Senior Loans and other forms of direct indebtedness depend primarily upon the
creditworthiness of the corporate or other borrower for payment of principal and interest. If the
Funds do not receive scheduled interest or principal payments on such indebtedness, the net asset
value, market price and/or yield of the common shares could be adversely affected. Senior Loans
that are fully secured may offer the Funds more protection than an unsecured loan in the event of
non-payment of scheduled interest or principal. However, there is no assurance that the liquidation
of any collateral from a secured Senior Loan would satisfy the borrower’s obligation, or that such
collateral could be liquidated. Also, the Funds may invest in Senior Loans that are unsecured.
Senior Loans and interests in other bank loans may not be readily marketable and may be
subject to restrictions on resale. In some cases, negotiations involved in disposing of
indebtedness may require weeks to complete. Consequently, some indebtedness may be difficult or
impossible to dispose of readily at what the Sub-Adviser believes to be a fair price.
Senior Loans usually require, in addition to scheduled payments of interest and principal, the
prepayment of the Senior Loan from free cash flow. The degree to which borrowers prepay Senior
Loans, whether as a contractual requirement or at their election, may be affected by general
business conditions, the financial condition of the borrower and competitive conditions among
lenders, among others. As such, prepayments cannot be predicted with accuracy. Upon a prepayment,
either in part or in full, the actual outstanding debt on which the Funds derive interest income
will be reduced. However, the Funds may receive both a prepayment penalty fee from the prepaying
borrower and a facility fee upon the purchase of a new Senior Loan with the proceeds from the
prepayment of the former. The effect of prepayments on a Fund’s performance may be mitigated by the
receipt of prepayment fees and the Fund’s ability to reinvest prepayments in other Senior Loans
that have similar or identical yields.
Commercial Paper
Commercial paper represents short-term unsecured promissory notes issued in bearer form by
banks or bank holding companies, corporations and finance companies. The commercial paper purchased
by the Funds may consist of U.S. dollar- or foreign currency-denominated obligations of domestic or
non-U.S. issuers, and may be rated or unrated (see Appendix A for a description of the ratings
assigned by various rating agencies to commercial paper). The rate of return on commercial paper
may be linked or indexed to the level of exchange rates between the U.S. dollar and a foreign
currency or currencies. See also “Mortgage-Related and Asset-Backed Securities — Asset-Backed
Securities” for a discussion of asset-backed commercial paper.
Money Market Instruments
Money market instruments may include, among other things, (1) short-term U.S. Government
securities; (2) certificates of deposit, bankers’ acceptances and other bank obligations; (3)
commercial paper; (4) corporate obligations with a remaining maturity of 397 days or less; and (5)
repurchase agreements with banks or registered broker dealers. Money market instruments may also
include variable amount master demand notes, which are corporate obligations that permit the
investment of fluctuating amounts by a Fund at varying rates of interest under direct arrangements
between the Fund, as lender, and the borrower, and which permit daily changes in the amounts
borrowed. The Fund has the right to increase the amount invested under such notes at any time up to
the full amount provided by the note agreement or to decrease the amount, while the borrower may
prepay up to the full amount of the note without penalty. Variable amount master demand notes may
or may not be backed by bank letters of credit.
Variable and Floating Rate Securities
Variable- or floating-rate securities are securities that pay interest at rates that adjust
whenever a specified interest rate changes, float at a fixed margin above a generally recognized
base lending rate and/or reset or are redetermined (
e.g.
, pursuant to an auction) on specified
dates (such as the last day of a month or calendar quarter). These instruments may include, without
limitation, variable-rate preferred stock, bank loans, money market instruments and certain types
of mortgage-backed and other asset-backed securities. Due to
38
their variable- or floating-rate
features, these instruments will generally pay higher levels of income in a rising interest rate
environment and lower levels of income as interest rates decline. For the same reason, the market
value of a variable- or floating-rate instrument is generally expected to have less sensitivity to
fluctuations in market interest rates than a fixed-rate instrument, although the value of a
floating-rate instrument may nonetheless decline as interest rates rise and due to other factors,
such as changes in credit quality.
The Funds may invest in floating-rate debt instruments (“floaters”) and engage in
credit-spread trades. The interest rate on a floater is a variable rate that is tied to another
interest rate, such as a money-market index or Treasury bill rate. The interest rate on a floater
resets periodically, typically every six months. While, because of the interest-rate reset feature,
floaters provide a Fund with a certain degree of protection against rises in interest rates, a Fund
will participate in any declines in interest rates as well. A credit-spread trade is an investment
position relating to a difference in the prices or interest rates of two securities or currencies,
where the value of the investment position is determined by movements in the difference between the
prices or interest rates, as the case may be, of the respective securities or currencies. The Funds
may also invest in inverse floating-rate debt instruments (“inverse floaters”). The interest rate
on an inverse floater resets in the opposite direction from the market rate of interest to which
the inverse floater is indexed. An inverse floater may exhibit greater price volatility than a
fixed-rate obligation of similar credit quality. When a Fund holds variable- or floating-rate
securities, a decrease (or, in the case of inverse floating-rate securities, an increase) in market
interest rates will adversely affect the income received from such securities and the net asset
value of the Fund’s shares.
Certain of a Fund’s investments, including variable- and floating-rate securities, may require
the Fund to accrue and distribute income not yet received. As a result, in order to generate cash
to make the requisite distributions, the Fund may be required to sell securities in its portfolio
that it would otherwise have continued to hold. Please see “Taxation.”
Zero Coupon, Pay-in-Kind and Step Coupon Securities
Zero coupon bonds are issued and traded at a discount from their face value. They do not
entitle the holder to any periodic payment of interest prior to maturity. Step coupon bonds trade
at a discount from their face value and pay coupon interest. The coupon rate is low for an initial
period and then increases to a higher coupon rate. The discount from the face amount or par value
depends on the time remaining until cash payments begin, prevailing interest rates, liquidity of
the security and the perceived credit quality of the issuer. Pay-in-kind bonds normally give the
issuer an option to pay in cash at a coupon payment date or in securities with a face value equal
to the amount of the coupon payment that would have been made.
Because the Funds will not receive cash payments on a current basis in respect of accrued
original-issue discount on zero coupon bonds or step coupon bonds during the period before interest
payments begin, in some years the Funds may have to distribute cash obtained from other sources in
order to satisfy the distribution requirements for treatment as a regulated investment company
under the Code. The Fund might obtain such cash from selling other portfolio holdings, which might
cause the Fund to incur capital gains or losses on the sale. These actions are likely to reduce the
assets to which Fund expenses could be allocated and to reduce the rate of return for the Fund. In
addition, such sales might be necessary even though investment considerations might otherwise make
it undesirable for the Fund to sell the securities at the time. Please see “Taxation.”
Generally, the market prices of zero coupon, step coupon and pay-in-kind securities are more
volatile than the prices of securities that pay interest periodically and in cash and are likely to
respond to changes in interest rates to a greater degree than other types of debt securities having
similar maturities and credit quality. Under many market and other conditions, investments in zero
coupon, step-coupon and pay-in-kind securities may be illiquid, making it difficult for a Fund to
dispose of them or to determine their current value.
Municipal Securities
The Funds may invest in municipal securities issued by states, territories and possessions of
the United States and the District of Columbia. The value of municipal securities can be affected
by changes in their actual or perceived credit quality. The credit quality of municipal securities
can be affected by, among other things, the financial condition of the issuer or guarantor, the
issuer’s future borrowing plans and sources of revenue, the economic feasibility of the revenue
bond project or general borrowing purpose, political or economic developments in the state or
region where the security is issued, and the liquidity of the security. Because municipal
securities are generally traded over-the-counter, the liquidity of a particular issue often depends
on the willingness of dealers to make a market in the security. The liquidity of some municipal
obligations may be enhanced by demand features, which may enable a Fund to demand payment on short
notice from the issuer or a financial intermediary.
The Funds may purchase insured municipal debt securities in which scheduled payments of
interest and principal are guaranteed by a private, non-governmental or governmental insurance
company. The insurance does not guarantee the market value of the municipal debt or the value of
the shares of a Fund.
39
Securities of issuers of municipal securities are subject to the provisions of bankruptcy,
insolvency and other laws affecting the rights and remedies of creditors, such as the Bankruptcy
Code. In addition, the obligations of such issuers may become subject to laws enacted in the future
by Congress, state legislatures or referenda extending the time for payment of principal or
interest, or imposing other constraints upon enforcement of such obligations or upon the ability of
municipalities to levy taxes. Furthermore, as a result of legislation or other conditions, the
power or ability of any issuer to pay, when due, the principal of and interest on its municipal
obligations may be materially affected.
Municipal securities may include “moral obligation” securities, which are usually issued by
special purpose public authorities. If the issuer of moral obligation bonds cannot fulfill its
financial responsibilities from current revenues, it may draw upon a reserve fund, the maintenance
and restoration of which is a moral commitment but not a legal obligation of the state or
municipality that created the issuer.
Municipal securities may also include industrial development bonds and pollution control
bonds, which in most cases are revenue bonds and generally are not payable from the unrestricted
revenues of an issuer. They are issued by or on behalf of public authorities to raise money to
finance privately operated facilities for business, manufacturing, housing, sport complexes, and
pollution control. Consequently, the credit quality of these securities depend upon the ability of
the user of the facilities financed by the bonds and any guarantor to meet its financial
obligations.
The Funds may invest in lease obligations or installment purchase contract obligations of
municipal authorities or entities (“municipal lease obligations”). Although lease obligations do
not constitute general obligations of the municipality for which its taxing power is pledged, a
lease obligation is ordinarily backed by the municipality’s covenant to budget for, appropriate and
make the payment due under the lease obligation. The Funds may also purchase “certificates of
participation,” which are securities issued by a particular municipality or municipal authority to
evidence a proportionate interest in base rental or lease payments relating to a specific project
to be made by the municipality, agency or authority. However, certain lease obligations contain
“non-appropriation” clauses that provide that the municipality has no obligation to make lease or
installment purchase payments in any year unless money is appropriated for such purpose for such
year. Although “non-appropriation” lease obligations are secured by the leased property,
disposition of the property in the event of default and foreclosure might prove difficult.
The Funds may also invest in various short-term municipal securities, including tax
anticipation notes, revenue anticipation notes, bond anticipation notes, construction loan notes
and short-term discount notes. Tax Anticipation Notes are used to finance working capital needs of
municipalities and are issued in anticipation of various seasonal tax revenues, to be payable from
these specific future taxes. They are usually general obligations of the issuer, secured by the
taxing power of the municipality for the payment of principal and interest when due. Revenue
Anticipation Notes are generally issued in expectation of receipt of other kinds of revenue, such
as the revenues expected to be generated from a particular project. They may also be general
obligations of the issuer. Bond Anticipation Notes normally are issued to provide interim financing
until long-term financing can be arranged. The long-term bonds then provide the money for the
repayment of the notes. Construction Loan Notes are sold to provide construction financing for
specific projects. After successful completion and acceptance, many such projects may receive
permanent financing through another source. Short-Term Discount Notes (tax-exempt commercial paper)
are short-term (365 days or less) promissory notes issued by municipalities to supplement their
cash flow.
Pre-refunded municipal bonds are tax-exempt bonds that have been refunded to a call date on or
before the final maturity of principal and remain outstanding in the municipal market. The payment
of principal and interest of the pre-refunded municipal bonds held by a fund is fund from
securities in a designated escrow account that holds U.S. Treasury securities or other obligations
of the U.S. Government, including its agencies and instrumentalities (“Agency Securities”). While
still tax-exempt, pre-refunded municipal bonds usually will bear a Aaa rating (if a re-rating has
been requested and paid for) because they are backed by the U.S. Treasury or Agency Securities. As
the payment of principal and interest is generated from securities held in a designated escrow
account, the pledge of the municipality has been fulfilled and the original pledge of revenue by
the municipality is no longer in place. The escrow account securities pledged to pay the principal
and interest of the pre-refunded municipal bonds held by a fund may subject the fund to interest
rate risk and market risk. In addition, while a secondary market exists for pre-refunded municipal
bonds, if a fund sells pre-refunded municipal bonds prior to maturity, the price received may be
more or less than the original cost, depending on market conditions at the time of sale.
Residual interest bonds (“RIBs”) are municipal bonds that brokers create by depositing a
municipal bond in a trust. The interest rate for the variable rate security is determined by the
remarketing broker-dealer, while the RIB holder receives the balance of the income from the
underlying municipal bond. The market prices of RIBs may be highly sensitive to changes in market
rates and may decrease significantly when market rates increase. In a transaction in which a fund
purchases a RIB from a trust where the underlying municipal bond was held by a fund prior to being
deposited into a trust, a fund treats the transaction as a secured borrowing for financial
reporting purposes. As a result, a fund will incur a non-cash interest expense with respect to
interest paid by the trust on the variable rate securities, and will recognize additional interest
income in an amount directly corresponding to the non-cash interest expense. Therefore, a funds NAV
per share and performance are not affected by the non-cash interest expense. This accounting
treatment does not apply to RIBS acquired by funds where a fund did not previously own the
underlying municipal bond.
40
A Fund may invest in Build America Bonds, which are taxable municipal bonds with federal
subsidies for a portion of the issuer’s borrowing costs. Build America Bonds were issued through
the Build America Bond program, which was created as part of the American Recovery and Reinvestment
Act of 2009 (the “Act”). The objective of the program was to reduce the borrowing costs of state
and local governments. Because the Act was not extended beyond its expiration date on December 31,
2010, tax subsidies will not apply to, and the Funds will not purchase, Build America Bonds issued
following such date (if any). However, Build America Bonds outstanding and issued before such date
remain eligible for the federal interest rate subsidy, which continues for the life of the Build
America Bonds.
The interest the Fund receives from its investments in either type of Build America Bonds will
be included in a Fund’s taxable income and distributed to shareholders as taxable ordinary income.
For any tax credit Build America Bond held by the Fund, the Fund may elect to pass through to its
shareholders any tax credits from those bonds that otherwise would be allowed to the Fund. These
tax credits can generally be used to offset U.S. federal income taxes and the federal alternative
minimum tax, but such credits are generally not refundable. Any unused credits may be carried
forward to succeeding taxable years.
Mortgage-Related and Asset-Backed Securities
The Funds may invest in mortgage-related securities, and in other asset-backed securities
(whether or not related to mortgage loans) that are offered to investors currently or in the
future. Mortgage-related securities are interests in pools of residential or commercial mortgage
loans, including mortgage loans made by savings and loan institutions, mortgage bankers, commercial
banks and others. Pools of mortgage loans are assembled as securities for sale to investors by
various governmental, government-related and private organizations. The value of some
mortgage-related or asset-backed securities in which the Funds invest may be particularly sensitive
to changes in prevailing interest rates, and, like other debt securities, the ability of a Fund to
utilize these instruments successfully may depend in part upon the ability of the applicable
Sub-Adviser to forecast interest rates and other economic factors correctly. Certain debt
securities are also secured with collateral consisting of mortgage-related securities. See
“Collateralized Mortgage Obligations” below.
Through investments in mortgage-related securities, including those that are issued by private
issuers, the Funds may have some exposure to subprime loans as well as to the mortgage and credit
markets generally. Private issuers include commercial banks, savings associations, mortgage
companies, investment banking firms, finance companies and special purpose finance entities (called
special purpose vehicles or SPVs) and other entities that acquire and package mortgage loans for
resale as mortgage-related securities.
In addition, mortgage-related securities that are issued by private issuers are not subject to
the underwriting requirements for the underlying mortgages that are applicable to those
mortgage-related securities that have a government or government-sponsored entity guarantee. As a
result, the mortgage loans underlying private mortgage-related securities may, and frequently do,
have less favorable collateral, credit risk or other underwriting characteristics than government
or government-sponsored mortgage-related securities and have wider variances in a number of terms
including interest rate, term, size, purpose and borrower characteristics. Privately issued pools
more frequently include second mortgages, high loan-to-value mortgages and manufactured housing
loans. The coupon rates and maturities of the underlying mortgage loans in a private-label
mortgage-related securities pool may vary to a greater extent than those included in a government
guaranteed pool, and the pool may include subprime mortgage loans. Subprime loans refer to loans
made to borrowers with weakened credit histories or with a lower capacity to make timely payments
on their loans. For these reasons, the loans underlying these securities have had in many cases
higher default rates than those loans that meet government underwriting requirements.
The risk of non-payment is greater for mortgage-related securities that are backed by mortgage
pools that contain subprime loans, but a level of risk exists for all loans. Market factors
adversely affecting mortgage loan repayments may include a general economic turndown, high
unemployment, a general slowdown in the real estate market, a drop in the market prices of real
estate, or an increase in interest rates resulting in higher mortgage payments by holders of
adjustable rate mortgages.
Mortgage Pass-Through Securities.
Mortgage Pass-Through Securities are securities representing
interests in “pools” of mortgage loans secured by residential or commercial real property.
Interests in pools of mortgage-related securities differ from other forms of debt securities, which
normally provide for periodic payment of interest in fixed amounts with principal payments at
maturity or specified call dates. Instead, these securities provide a monthly payment that consists
of both interest and principal payments. In effect, these payments are a “pass-through” of the
monthly payments made by the individual borrowers on their residential or commercial mortgage
loans, net of any fees paid to the issuer or guarantor of such securities. Additional payments are
caused by repayments of principal resulting from the sale of the underlying property, refinancing
or foreclosure, net of fees or costs that may be incurred. Some mortgage-related securities (such
as securities issued by GNMA) are described as “modified pass-through.” These securities entitle
the holder to receive all interest and principal payments owed on the mortgage pool, net of certain
fees, at the scheduled payment dates regardless of whether or not the mortgagor actually makes the
payment.
41
The rate of prepayments on underlying mortgages will affect the price and volatility of a
mortgage-related security, and may have the effect of shortening or extending the effective
duration of the security relative to what was anticipated at the time of purchase. Early repayment
of principal on some mortgage-related securities (arising from prepayments of principal due to sale
of the underlying property, refinancing, or foreclosure, net of fees and costs that may be
incurred) may expose a Fund to a lower rate of return upon reinvestment of principal. Also, if a
security subject to prepayment has been purchased at a premium, the value of the premium would be
lost in the event of prepayment. Like other debt securities, when interest rates rise, the value of
a mortgage-related security generally will decline; however, when interest rates are declining, the
value of mortgage-related securities with prepayment features may not increase as much as other
debt securities. Adjustable rate mortgage-related and other asset-backed securities are also
subject to some interest rate risk. For example, because interest rates on most adjustable rate
mortgage- and other asset-backed securities only reset periodically (
e.g.
, monthly or quarterly),
changes in prevailing interest rates (and particularly sudden and significant changes) can be
expected to cause some fluctuations in the market value of these securities, including declines in
value as interest rates rise. In addition, to the extent that unanticipated rates of prepayment on
underlying mortgages increase the effective duration of a mortgage-related security, the volatility
of such security can be expected to increase.
The residential mortgage market in the United States recently has experienced difficulties
that may adversely affect the performance and market value of certain of the Funds’
mortgage-related investments. Delinquencies and losses on residential mortgage loans (especially
subprime and second-lien mortgage loans) generally have increased recently and may continue to
increase, and a decline in or flattening of housing values (as has recently been experienced and
may continue to be experienced in many housing markets) may exacerbate such delinquencies and
losses. Borrowers with adjustable rate mortgage loans are more sensitive to changes in interest
rates, which affect their monthly mortgage payments, and may be unable to secure replacement
mortgages at comparably low interest rates. Also, a number of residential mortgage loan originators
have recently experienced serious financial difficulties or bankruptcy. Owing largely to the
foregoing, reduced investor demand for mortgage loans and mortgage-related securities and increased
investor yield requirements have caused limited liquidity in the secondary market for
mortgage-related securities, which can adversely affect the market value of mortgage-related
securities. It is possible that such limited liquidity in such secondary markets could continue or
worsen.
Payment of principal and interest on some mortgage pass-through securities (but not the market
value of the securities themselves) may be guaranteed by the full faith and credit of the U.S.
Government (in the case of securities guaranteed by GNMA) or guaranteed by agencies or
instrumentalities of the U.S. Government (in the case of securities guaranteed by the FNMA or the
FHLMC). The principal governmental guarantor of mortgage-related securities is GNMA. GNMA is a
wholly-owned U.S. Government corporation within the Department of Housing and Urban Development.
GNMA is authorized to guarantee, with the full faith and credit of the U.S. Government, the timely
payment of principal and interest on securities issued by institutions approved by GNMA (such as
savings and loan institutions, commercial banks and mortgage bankers) and backed by pools of
mortgages insured by the Federal Housing Administration (the “FHA”), or guaranteed by the
Department of Veterans Affairs (the “VA”).
Government-related guarantors (
i.e.
, not backed by the full faith and credit of the U.S.
Government) include FNMA and the FHLMC. FNMA is a government-sponsored corporation. As described
above under “U.S. Government Securities,” FNMA is now under conservatorship by the FHFA. FNMA
primarily purchases conventional (
i.e.
, not insured or guaranteed by any government agency)
residential mortgages from a list of approved seller/servicers, which includes state and federally
chartered savings and loan associations, mutual savings banks, commercial banks, and credit unions
and mortgage bankers, although it may purchase other types of mortgages as well. Pass-through
securities issued by FNMA are guaranteed as to timely payment of principal and interest by FNMA but
are not backed by the full faith and credit of the U.S. Government. Instead, they are supported
only by the discretionary authority of the U.S. Government to purchase the agency’s obligations.
FHLMC was created by Congress in 1970 for the purpose of increasing the availability of
mortgage credit for residential housing. It is a government-sponsored corporation that issues
Participation Certificates (“PCs”) which represent interests in conventional mortgages from FHLMC’s
national portfolio. As described above under “U.S. Government Securities,” FHLMC is now under
conservatorship by the FHFA. FHLMC guarantees the timely payment of interest and ultimate
collection of principal, but PCs are not backed by the full faith and credit of the U.S.
Government. Instead, they are supported only by the discretionary authority of the U.S. Government
to purchase the agency’s obligations.
Commercial banks, savings and loan institutions, private mortgage insurance companies,
mortgage bankers and other secondary market issuers also create pass-through pools of conventional
residential mortgage loans. Such issuers may, in addition, be the originators and/or servicers of
the underlying mortgage loans as well as the guarantors of the mortgage-related securities. Pools
created by such non-governmental issuers generally offer a higher rate of interest than government
and government-related pools because there are no direct or indirect government or agency
guarantees of payments in the former pools. However, timely payment of interest and principal of
these pools may be supported by various forms of insurance or guarantees, including individual
loan, title, pool and hazard insurance and letters of credit. The insurance and guarantees are
issued by governmental entities, private insurers and the mortgage poolers. There can be no
assurance that the private insurers or guarantors can meet their obligations under the insurance
policies or guarantee arrangements. A Fund may buy mortgage-related securities without insurance or
guarantees. Securities issued by certain private organizations may not be readily marketable.
42
Mortgage-related securities that are issued or guaranteed by the U.S. Government, its agencies
or instrumentalities, are not subject to a Fund’s industry concentration restrictions (see
“Investment Restrictions”) by virtue of the exclusion from that test available to all U.S.
Government securities. In the case of privately issued mortgage-related securities, the Funds take
the position that mortgage-related securities do not represent interests in any particular
“industry” or group of industries. The assets underlying such securities may be represented by a
portfolio of first lien residential mortgages (including both whole mortgage loans and mortgage
participation interests) or portfolios of mortgage pass-through securities issued or guaranteed by
GNMA, FNMA or FHLMC. Mortgage loans underlying a mortgage-related security may in turn be insured
or guaranteed by the FHA or the VA. In the case of private issue mortgage-related securities whose
underlying assets are neither U.S. Government securities nor U.S. Government-insured mortgages, to
the extent that real properties securing such assets may be located in the same geographical
region, the security may be subject to a greater risk of default than other comparable securities
in the event of adverse economic, political or business developments that may affect such region
and, ultimately, the ability of residential homeowners to make payments of principal and interest
on the underlying mortgages.
Collateralized Mortgage Obligations (“CMOs”).
A CMO is a hybrid between a mortgage-backed bond
and a mortgage pass-through security. Similar to a bond, interest and prepaid principal is paid, in
most cases, semi-annually or on a monthly basis. CMOs may be collateralized by whole mortgage
loans, but are more typically collateralized by portfolios of mortgage pass-through securities
guaranteed by GNMA, FHLMC, or FNMA, and their income streams.
CMOs are structured into multiple classes, often referred to as “tranches,” with each class
bearing a different stated maturity and entitled to a different schedule for payments of principal
and interest, including prepayments. Actual maturity and average life will depend upon the
prepayment experience of the collateral. CMOs provide for a modified form of call protection
through a
de facto
breakdown of the underlying pool of mortgages according to how quickly the loans
are repaid. Monthly payment of principal received from the pool of underlying mortgages, including
prepayments, is first returned to investors holding the shortest maturity class. Investors holding
the longer maturity classes receive principal only after the first class has been retired. This
payment structure provides investors with some protection against a premature return of principal.
In a typical CMO transaction, a corporation (“issuer”) issues multiple series (
e.g.
, A, B, C,
Z) of CMO bonds (“Bonds”). Proceeds of the Bond offering are used to purchase mortgages or mortgage
pass-through certificates (“Collateral”). The Collateral is pledged to a third party trustee as
security for the Bonds. Principal and interest payments from the Collateral are used to pay
principal on the Bonds in the order A, B, C, Z. The Series A, B, and C Bonds all bear current
interest. Interest on the Series Z Bond is accrued and added to principal and a like amount is paid
as principal on the Series A, B, or C Bond currently being paid off. When the Series A, B, and C
Bonds are paid in full, interest and principal on the Series Z Bond begin to be paid currently.
With some CMOs, the issuer serves as a conduit to allow loan originators (primarily builders or
savings and loan associations) to borrow against their loan portfolios. CMOs may be less liquid and
may exhibit greater price volatility than other types of mortgage- or asset-backed securities.
CMOs that are issued or guaranteed by the U.S. Government or by any of its agencies or
instrumentalities will be considered U.S. Government securities by a Fund, while other CMOs, even
if collateralized by U.S. Government securities, will have the same status as other privately
issued securities for purposes of applying a Fund’s diversification tests.
FHLMC Collateralized Mortgage Obligations.
FHLMC CMOs are debt obligations of FHLMC issued in
multiple classes having different maturity dates, which are secured by the pledge of a pool of
conventional mortgage loans purchased by FHLMC. Payments of principal and interest on the CMOs are
made semi-annually, as opposed to monthly. The amount of principal payable on each semi-annual
payment date is determined in accordance with FHLMC’s mandatory sinking fund schedule, which in
turn, is equal to approximately 100% of FHA prepayment experience applied to the mortgage
collateral pool. All sinking fund payments in the CMOs are allocated to the retirement of the
individual classes of bonds in the order of their stated maturities. Payment of principal on the
mortgage loans in the collateral pool in excess of the amount of FHLMC’s minimum sinking fund
obligation for any payment date are paid to the holders of the CMOs as additional sinking fund
payments. Because of the “pass-through” nature of all principal payments received on the collateral
pool in excess of FHLMC’s minimum sinking fund requirement, the rate at which principal of the CMOs
is actually repaid is likely to be such that each class of bonds will be retired in advance of its
scheduled maturity date.
If collection of principal (including prepayments) on the mortgage loans during any
semi-annual payment period is not sufficient to meet FHLMC’s minimum sinking fund obligation on the
next sinking fund payment date, FHLMC agrees to make up the deficiency from its general funds.
Criteria for the mortgage loans in the pool backing the FHLMC CMOs are identical to those of
FHLMC PCs. FHLMC has the right to substitute collateral in the event of delinquencies and/or
defaults.
43
Commercial Mortgage-Backed Securities.
Commercial Mortgage-Backed Securities include
securities that reflect an interest in, and are secured by, mortgage loans on commercial real
property. The market for commercial mortgage-backed securities developed more recently and in terms
of total outstanding principal amount of issues is relatively small compared to the market for
residential single-family mortgage-backed securities. Many of the risks of investing in commercial
mortgage-backed securities reflect the risks of investing in the real estate securing the
underlying mortgage loans. These risks reflect the effects of local and other economic conditions
on real estate markets, the ability of tenants to make loan payments, and the ability of a property
to attract and retain tenants. Commercial mortgage-backed securities may be less liquid and exhibit
greater price volatility than other types of mortgage- or asset-backed securities.
Other Mortgage-Related Securities
.
Other mortgage-related securities include securities other
than those described above that directly or indirectly represent a participation in, or are secured
by and payable from, mortgage loans on real property, including CMO residuals or stripped
mortgage-backed securities. Other mortgage-related securities may be equity or debt securities
issued by agencies or instrumentalities of the U.S. Government or by private originators of, or
investors in, mortgage loans, including savings and loan associations, homebuilders, mortgage
banks, commercial banks, investment banks, partnerships, trusts and special purpose entities of the
foregoing.
CMO Residuals.
CMO residuals are mortgage securities issued by agencies or instrumentalities
of the U.S. Government or by private originators of, or investors in, mortgage loans, including
savings and loan associations, homebuilders, mortgage banks, commercial banks, investment banks and
special purpose entities of the foregoing.
The cash flow generated by the mortgage assets underlying a series of CMOs is applied first to
make required payments of principal and interest on the CMOs and second to pay the related
administrative expenses of the issuer. The residual in a CMO structure generally represents the
interest in any excess cash flow remaining after making the foregoing payments. Each payment of
such excess cash flow to a holder of the related CMO residual represents income and/or a return of
capital. The amount of residual cash flow resulting from a CMO will depend on, among other things,
the characteristics of the mortgage assets, the coupon rate of each class of CMO, prevailing
interest rates, the amount of administrative expenses and the prepayment experience on the mortgage
assets. In particular, the yield to maturity on CMO residuals is extremely sensitive to prepayments
on the related underlying mortgage assets, in the same manner as an interest-only (“IO”) class of
stripped mortgage-backed securities. See “Other Mortgage-Related Securities—Stripped
Mortgage-Backed Securities.” In addition, if a series of a CMO includes a class that bears interest
at an adjustable rate, the yield to maturity on the related CMO residual will also be extremely
sensitive to changes in the level of the index upon which interest rate adjustments are based. As
described below with respect to stripped mortgage-backed securities, in certain circumstances a
Fund may fail to recoup some or all of its initial investment in a CMO residual.
CMO residuals are generally purchased and sold by institutional investors through several
investment banking firms acting as brokers or dealers. The CMO residual market has developed fairly
recently and CMO residuals currently may not have the liquidity of other more established
securities trading in other markets. CMO residuals may, or pursuant to an exemption therefrom, may
not, have been registered under the Securities Act of 1933, as amended (the “1933 Act”). CMO
residuals, whether or not registered under the 1933 Act, may be subject to certain restrictions on
transferability, and may be deemed “illiquid” and subject to a Fund’s limitations on investment in
illiquid securities.
Adjustable Rate Mortgage Backed Securities.
Adjustable rate mortgage-backed securities
(“ARMBSs”) have interest rates that reset at periodic intervals. Acquiring ARMBSs permits a Fund to
participate in increases in prevailing current interest rates through periodic adjustments in the
coupons of mortgages underlying the pool on which ARMBSs are based. Such ARMBSs generally have
higher current yield and lower price fluctuations than is the case with more traditional fixed
income debt securities of comparable rating and maturity. In addition, when prepayments of
principal are made on the underlying mortgages during periods of rising interest rates, a Fund can
reinvest the proceeds of such prepayments at rates higher than those at which they were previously
invested. Mortgages underlying most ARMBSs, however, have limits on the allowable annual or
lifetime increases that can be made in the interest rate that the mortgagor pays. Therefore, if
current interest rates rise above such limits over the period of the limitation, a Fund holding an
ARMBS does not benefit from further increases in interest rates. Moreover, when interest rates are
in excess of coupon rates (
i.e.
, the rates being paid by mortgagors) of the mortgages, ARMBSs
behave more like fixed income securities and less like adjustable rate securities and are subject
to the risks associated with fixed income securities. In addition, during periods of rising
interest rates, increases in the coupon rate of adjustable rate mortgages generally lag current
market interest rates slightly, thereby creating the potential for capital depreciation on such
securities.
Stripped Mortgage-Backed Securities.
Stripped mortgage-backed securities (“SMBS”) are
derivative multi-class mortgage securities. SMBS may be issued by agencies or instrumentalities of
the U.S. Government, or by private originators of, or investors in, mortgage loans, including
savings and loan associations, mortgage banks, commercial banks, investment banks and special
purpose entities of the foregoing.
44
SMBS are usually structured with two classes that receive different proportions of the
interest and principal distributions on a pool of mortgage assets. A common type of SMBS will have
one class receiving some of the interest and most of the principal from the mortgage assets, while
the other class will receive most of the interest and the remainder of the principal. In the most
extreme case, one class will receive all of the interest (the “IO” class), while the other class
will receive all of the principal (the “PO” class). The yield to maturity on an IO class is
extremely sensitive to the rate of principal payments (including prepayments) on the related
underlying mortgage assets, and a rapid rate of principal payments may have a material adverse
effect on a Fund’s yield to maturity from these securities. If the underlying mortgage assets
experience greater than anticipated prepayments of principal, the Fund may fail to recoup some or
all of its initial investment in these securities even if the security is in one of the highest
rating categories. SMBS may be deemed “illiquid” and subject to a Fund’s limitations on investment
in illiquid securities.
Asset-Backed Securities.
The Funds may invest in, or have exposure to, asset-backed
securities, which are securities that represent a participation in, or are secured by and payable
from, a stream of payments generated by particular assets, most often a pool or pools of similar
assets (
e.g.
, trade receivables). The credit quality of these securities depends primarily upon the
quality of the underlying assets and the level of credit support and/or enhancement provided.
The underlying assets (
e.g.
, loans) are subject to prepayments that shorten the securities’
weighted average maturity and may lower their return. If the credit support or enhancement is
exhausted, losses or delays in payment may result if the required payments of principal and
interest are not made. The value of these securities also may change because of changes in the
market’s perception of the creditworthiness of the servicing agent for the pool, the originator of
the pool or the financial institution or trust providing the credit support or enhancement.
Typically, there is no perfected security interest in the collateral that relates to the financial
assets that support asset-backed securities. Asset-backed securities have many of the same
characteristics and risks as the mortgage-backed securities described above.
The Funds may purchase or have exposure to commercial paper, including asset-backed commercial
paper (“ABCP”), that is issued by structured investment vehicles or other conduits. These conduits
may be sponsored by mortgage companies, investment banking firms, finance companies, hedge funds,
private equity firms and special purpose finance entities. ABCP typically refers to a short-term
debt security, the payment of which is supported by cash flows from underlying assets, or one or
more liquidity or credit support providers, or both. Assets backing ABCP include credit card, car
loan and other consumer receivables and home or commercial mortgages, including subprime mortgages.
The repayment of ABCP issued by a conduit depends primarily on the cash collections received from
the conduit’s underlying asset portfolio and the conduit’s ability to issue new ABCP. Therefore,
there could be losses to a Fund investing in ABCP in the event of credit or market value
deterioration in the conduit’s underlying portfolio, mismatches in the timing of the cash flows of
the underlying asset interests and the repayment obligations of maturing ABCP, or the conduit’s
inability to issue new ABCP. To protect investors from these risks, ABCP programs may be structured
with various protections, such as credit enhancement, liquidity support, and commercial paper
stop-issuance and wind-down triggers.
However there can be no guarantee that these protections will be sufficient to prevent losses
to investors in ABCP.
Some ABCP programs provide for an extension of the maturity date of the ABCP if, on the
related maturity date, the conduit is unable to access sufficient liquidity through the issue of
additional ABCP. This may delay the sale of the underlying collateral and a Fund may incur a loss
if the value of the collateral deteriorates during the extension period. Alternatively, if
collateral for ABCP deteriorates in value, the collateral may be required to be sold at inopportune
times or at prices insufficient to repay the principal and interest on the ABCP. ABCP programs may
provide for the issuance of subordinated notes as an additional form of credit enhancement. The
subordinated notes are typically of a lower credit quality and have a higher risk of default. A
Fund purchasing these subordinated notes will therefore have a higher likelihood of loss than
investors in the senior notes.
Collateralized Debt Obligations.
The Funds may invest in collateralized debt obligations
(“CDOs”), which include collateralized bond obligations (“CBOs”), collateralized loan obligations
(“CLOs”) and other similarly structured securities. CBOs and CLOs are types of asset-backed
securities. A CBO is a trust that is backed by a diversified pool of high risk, below investment
grade debt securities. A CLO is a trust typically collateralized by a pool of loans, which may
include, among others, domestic and non-U.S. senior secured loans, senior unsecured loans, and
subordinate corporate loans, including loans that may be rated below investment grade or equivalent
unrated loans. CDOs may charge management fees and administrative expenses.
For both CBOs and CLOs, the cash flows from the trust are split into two or more portions,
called tranches, varying in risk and yield. The riskiest portion is the “equity” tranche which
bears the bulk of defaults from the bonds or loans in the trust and serves to protect the other,
more senior tranches from default in all but the most severe circumstances. Since it is partially
protected from defaults, a senior tranche from a CBO trust or CLO trust typically have higher
ratings and lower yields than their underlying securities, and can be rated investment grade.
Despite the protection from the equity tranche, CBO or CLO tranches can experience substantial
losses due to actual defaults, downgrades of the underlying collateral by rating agencies, forced
liquidation of the collateral pool due to a failure of coverage tests, increased sensitivity to
defaults due to collateral default and disappearance of protecting tranches, market anticipation of
defaults, as well as aversion to CBO or CLO securities as a class. Interest on certain tranches of
a CDO may be paid in kind or deferred and capitalized (paid in the form of obligations of the same
type rather than cash), which involves continued exposure to default risk with respect to such
payments.
45
The risks of an investment in a CDO depend largely on the type of the collateral securities
and the class of the CDO in which a Fund invests. Normally, CBOs, CLOs and other CDOs are privately
offered and sold, and thus, are not registered under the securities laws. As a result, investments
in CDOs may be characterized by the Funds as illiquid securities, however, an active dealer market
may exist for CDOs allowing a CDO to qualify for Rule 144A transactions. In addition to the normal
risks associated with debt securities discussed elsewhere in this Statement of Additional
Information and the Funds’ Prospectuses (
e.g.
, interest rate risk and default risk), CDOs carry
additional risks that include, but are not limited to: (i) the possibility that distributions from
collateral securities will not be adequate to make interest or other payments; (ii) risk that the
collateral may default or decline in value or be downgraded, if rated by a nationally recognized
statistical rating organization (“NRSRO”); (iii) a Fund may invest in tranches of CDOs that are
subordinate to other tranches; (iv) the structure and complexity of the transaction and the legal
documents could lead to disputes among investors regarding the characterization of proceeds; (v)
the investment return achieved by the Fund could be significantly different than those predicted by
financial models; (vi) the lack of a readily available secondary market for CDOs; (vii) risk of
forced “fire sale” liquidation due to technical defaults such as coverage test failures; and (viii)
the CDO’s manager may perform poorly.
Other Asset-Backed Securities.
Other asset-backed securities (unrelated to mortgage loans)
will be offered to investors in the future and may be purchased by the Funds that may invest in
mortgage-related securities. Several types of asset-backed securities have already been offered to
investors, including Enhanced Equipment Trust Certificates (“EETCs”) and Certificates for
Automobile ReceivablesSM (“CARSSM”).
EETCs are typically issued by specially-created trusts established by airlines, railroads, or
other transportation corporations. The proceeds of EETCs are used to purchase equipment, such as
airplanes, railroad cars, or other equipment, which in turn serve as collateral for the related
issue of the EETCs. The equipment generally is leased by the airline, railroad or other
corporations, which makes rental payments to provide the projected cash flow for payments to EETC
holders. Holders of EETCs must look to the collateral securing the certificates, typically together
with a guarantee provided by the lessee corporation or its parent company for the payment of lease
obligations, in the case of default in the payment of principal and interest on the EETCs. However,
because principal and interest payments of EETCs are funded in the ordinary course by the lessee
corporation, the Fund treats EETCs as corporate bonds/obligations for purposes of compliance
testing and related classifications.
CARSSM represent undivided fractional interests in a trust whose assets consist of a pool of
motor vehicle retail installment sales contracts and security interests in the vehicles securing
the contracts. Payments of principal and interest on CARSSM are passed through monthly to
certificate holders, and are guaranteed up to certain amounts and for a certain time period by a
letter of credit issued by a financial institution unaffiliated with the trustee or originator of
the trust. An investor’s return on CARSSM may be affected by early prepayment of principal on the
underlying vehicle sales contracts. If the letter of credit is exhausted, the trust may be
prevented from realizing the full amount due on a sales contract because of state law requirements
and restrictions relating to foreclosure sales of vehicles and the obtaining of deficiency
judgments following such sales or because of depreciation, damage or loss of a vehicle, the
application of federal and state bankruptcy and insolvency laws, or other factors. As a result,
certificate holders may experience delays in payments or losses if the letter of credit is
exhausted.
Consistent with a Fund’s investment objective and policies, the Fund also may invest in other
types of asset-backed securities. Other asset-backed securities may be collateralized by the fees
earned by service providers. The value of asset-backed securities may be substantially dependent on
the servicing of the underlying asset pools and are therefore subject to risks associated with the
negligence by, or defalcation of, their servicers. In certain circumstances, the mishandling of
related documentation may also affect the rights of the security holders in and to the underlying
collateral. The insolvency of entities that generate receivables or that utilize the assets may
result in added costs and delays in addition to losses associated with a decline in the value of
the underlying assets.
Investors should note that Congress from time to time may consider actions that would limit or
remove the explicit or implicit guarantee of the payment of principal and/or interest on many types
of asset-backed securities. Any such action would likely adversely impact the value of such
securities.
Real Estate Securities and Related Derivatives
The Funds may gain exposure to the real estate sector by investing in real estate-linked
derivatives, real estate investment trusts (“REITs”), and common, preferred and convertible
securities of issuers in real estate-related industries. Each of these types of investments are
subject to risks similar to those associated with direct ownership of real estate, including loss
to casualty or condemnation, increases in property taxes and operating expenses, zoning law
amendments, changes in interest rates, overbuilding and increased competition, variations in market
value, adverse changes in the real estate markets generally or in specific sectors of the real
estate industry and possible environmental liabilities.
REITs are pooled investment vehicles that invest primarily in income-producing real estate or
real estate-related loans or interests. REITs are generally classified as equity REITs, mortgage
REITs or a combination of equity and mortgage REITs. Equity REITs invest the majority of their
assets directly in real property and derive income primarily from the collection of rents. Equity
REITs can
46
also realize capital gains by selling properties that have appreciated in value. Mortgage
REITs invest the majority of their assets in real estate mortgages and derive income from the
collection of interest payments. REITs are not taxed on income distributed to shareholders provided
they comply with the applicable requirements of the Code. A Fund will indirectly bear its
proportionate share of any management and other expenses paid by REITs in which it invests in
addition to the expenses paid by the Fund. Debt securities issued by REITs are, for the most part,
general and unsecured obligations and are subject to risks associated with REITs.
Investing in REITs involves certain unique risks in addition to those risks associated with
investing in the real estate industry in general. An equity REIT may be affected by changes in the
value of the underlying properties owned by the REIT. A mortgage REIT may be affected by changes in
interest rates and the ability of the issuers of its portfolio mortgages to repay their
obligations. REITs are dependent upon the skills of their managers and are not diversified. REITs
are generally dependent upon maintaining cash flows to repay borrowings and to make distributions
to shareholders and are subject to the risk of default by lessees or borrowers. REITs whose
underlying assets are concentrated in properties used by a particular industry, such as health
care, are also subject to risks associated with such industry.
REITs (especially mortgage REITs) are also subject to interest rate risks. When interest rates
decline, the value of a REIT’s investment in fixed rate obligations can be expected to rise.
Conversely, when interest rates rise, the value of a REIT’s investment in fixed rate obligations
can be expected to decline. If the REIT invests in adjustable rate mortgage loans the interest
rates on which are reset periodically, yields on a REIT’s investments in such loans will gradually
align themselves to reflect changes in market interest rates. This causes the value of such
investments to fluctuate less dramatically in response to interest rate fluctuations than would
investments in fixed rate obligations.
REITs may have limited financial resources, may trade less frequently and in a more limited
volume and may be subject to more abrupt or erratic price movements than larger company securities.
Historically REITs have been more volatile in price than the larger capitalization stocks included
in S&P 500 Index.
Exchange Traded Notes
The Funds may invest in exchange traded notes (“ETNs”). ETNs are typically senior, unsecured,
unsubordinated debt securities whose returns are linked to the performance of a particular market
index less applicable fees and expenses. ETNs are listed on an exchange and traded in the secondary
market. A Fund may hold an ETN until maturity, at which time the issuer is obligated to pay a
return linked to the performance of the relevant market index. ETNs do not make periodic interest
payments and principal is not protected.
The market value of an ETN may be influenced by, among other things, time to maturity, level
of supply and demand of the ETN, volatility and lack of liquidity in the underlying assets, changes
in the applicable interest rates, the current performance of the market index to which the ETN is
linked, and the credit rating of the ETN issuer. The market value of an ETN may differ from the
performance of the applicable market index and there may be times when an ETN trades at a premium
or discount. This difference in price may be due to the fact that the supply and demand in the
market for ETNs at any point in time is not always identical to the supply and demand in the market
for the securities underlying the market index that the ETN seeks to track. A change in the
issuer’s credit rating may also impact the value of an ETN despite the underlying market index
remaining unchanged. ETNs are also subject to tax risk. No assurance can be given that the Internal
Revenue Service (the “IRS”) will accept, or a court will uphold, how the fund characterizes and
treats ETNs for tax purposes. The extent of a Fund’s investment in commodity-linked ETNs, if any,
is limited by tax considerations. For more information regarding the tax treatment of
commodity-linked ETNs, please see “Taxation” below.
An ETN that is tied to a specific market index may not be able to replicate and maintain
exactly the composition and relative weighting of securities, commodities or other components in
the applicable market index. ETNs also incur certain expenses not incurred by their applicable
market index, and a Fund would bear a proportionate share of any fees and expenses borne by the ETN
in which it invests.
A Fund’s decision to sell its ETN holdings may be limited by the availability of a secondary
market. In addition, although an ETN may be listed on an exchange, the issuer may not be required
to maintain the listing and there can be no assurance that a secondary market will exist for an
ETN. Some ETNs that use leverage in an effort to amplify the returns of an underlying market index
can, at times, be relatively illiquid and may therefore be difficult to purchase or sell at a fair
price. Leveraged ETNs may offer the potential for greater return, but the potential for loss and
speed at which losses can be realized also are greater.
ETNs are generally similar to structured investments and hybrid instruments. For discussion of
these investments and the risks generally associated with them, see “Hybrid Instruments” in this
SAI.
47
Hybrid Instruments
The Funds may invest in “hybrid” or indexed securities. A hybrid instrument is a type of
potentially high-risk derivative that combines a traditional stock, bond, or commodity with an
option or forward contract. Generally, the principal amount, amount payable upon maturity or
redemption, or interest rate of a hybrid is tied (positively or negatively) to the price of some
commodity, currency or securities index or another interest rate or some other economic factor
(each a “benchmark”). The interest rate or (unlike most fixed income securities) the principal
amount payable at maturity of a hybrid security may be increased or decreased, depending on changes
in the value of the benchmark. An example of a hybrid could be a bond issued by an oil company that
pays a small base level of interest with additional interest that accrues in correlation to the
extent to which oil prices exceed a certain predetermined level. Such a hybrid instrument would be
a combination of a bond and a call option on oil.
Hybrids can be used as an efficient means of pursuing a variety of investment goals, including
currency hedging, duration management and increased total return. Hybrids may not bear interest or
pay dividends. The value of a hybrid or its interest rate may be a multiple of a benchmark and, as
a result, may be leveraged and move (up or down) more steeply and rapidly than the benchmark. These
benchmarks may be sensitive to economic and political events, such as commodity shortages and
currency devaluations, which cannot be readily foreseen by the purchaser of a hybrid. Under certain
conditions, the redemption value of a hybrid could be zero. Thus, an investment in a hybrid may
entail significant market risks that are not associated with a similar investment in a traditional,
U.S. dollar-denominated bond that has a fixed principal amount and pays a fixed rate or floating
rate of interest. The purchase of hybrids also exposes a Fund to the credit risk of the issuer of
the hybrids. These risks may cause significant fluctuations in the net asset value of a Fund.
Certain hybrid instruments may provide exposure to the commodities markets. These are
derivative securities with one or more commodity-linked components that have payment features
similar to commodity futures contracts, commodity options, or similar instruments. Commodity-linked
hybrid instruments may be either equity or debt securities, and are considered hybrid instruments
because they have both security and commodity-like characteristics. A portion of the value of these
instruments may be derived from the value of a commodity, futures contract, index or other economic
variable. The Funds will only invest in commodity-linked hybrid instruments that qualify under
applicable rules of the CFTC for an exemption from the provisions of the CEA.
Certain issuers of structured products such as hybrid instruments may be deemed to be
investment companies as defined in the 1940 Act. If so, a Fund’s investments in these products will
be subject to limits applicable to investments in investment companies and may be subject to other
restrictions imposed by the 1940 Act.
Structured Notes and Indexed Securities.
Structured notes are derivative debt instruments, the
interest rate or principal of which is determined by an unrelated indicator (for example, a
currency, security, commodity or index thereof). The terms of the instrument may be “structured” by
the purchaser and the borrower issuing the note. Indexed securities may include structured notes as
well as securities other than debt securities, the interest rate or principal of which is
determined by an unrelated indicator. Indexed securities may include a multiplier that multiplies
the indexed element by a specified factor and, therefore, the value of such securities may be very
volatile. The terms of structured notes and indexed securities may provide that in certain
circumstances no principal is due at maturity, which may result in a loss of invested capital.
Structured notes and indexed securities may be positively or negatively indexed, so that
appreciation of the unrelated indicator may produce an increase or a decrease in the interest rate
or the value of the structured note or indexed security at maturity may be calculated as a
specified multiple of the change in the value of the unrelated indicator. Therefore, the value of
such notes and securities may be very volatile. Structured notes and indexed securities may entail
a greater degree of market risk than other types of debt securities because the investor bears the
risk of the unrelated indicator. Structured notes or indexed securities also may be more volatile,
less liquid, and more difficult to accurately price than less complex securities and instruments or
more traditional debt securities. A Fund’s Sub-Adviser analyzes these notes and securities in its
overall assessment of the effective duration of the Fund’s holdings in an effort to monitor the
Fund’s interest rate risk.
Potential Impact of Large Redemptions and Purchases of Fund Shares
From time to time, shareholders of a Fund (which may include affiliates of the Manager or, for
certain Funds, affiliated and/or non-affiliated registered investment companies that invest in a
Fund) may make relatively large redemptions or purchases of Fund shares. These transactions may
cause the Fund to have to sell securities, or invest additional cash, as the case may be. While the
overall impact of these transactions over time is not known, there could be adverse effects on the
Fund’s performance to the extent that the Fund is required to sell securities or invest cash at
times when it would not otherwise do so, which may result in a loss to the Fund. These transactions
may result in higher portfolio turnover, accelerate the realization of taxable income if sales of
securities resulted in capital gains or other income and increase transaction costs, which may
impact the Fund’s expense ratio. To the extent that such transactions result in short-term capital
gains, such gains will generally be taxed at the ordinary income tax rate.
48
INVESTMENT RESTRICTIONS
Investment Objectives
Except to the extent set forth in the applicable Prospectus, the investment objective(s) of
each Fund is/are non-fundamental and may be changed by the Board of Trustees without shareholder
approval.
Fundamental Investment Restrictions
The investment restrictions set forth below are fundamental policies of the Target Funds and
may not be changed with respect to any such Fund without shareholder approval by vote of a majority
of the outstanding voting securities of that Fund. Under these restrictions, each such Fund:
(1) may not invest in a security if, as a result of such investment, more than 25% of its
total assets (taken at market value at the time of such investment) would be invested in the
securities of issuers in any particular industry, except that this restriction does not apply to
securities issued or guaranteed by the U.S. Government or its agencies or instrumentalities (or
repurchase agreements with respect thereto) or securities issued by any investment company;
(2) may not purchase securities of any issuer unless such purchase is consistent with the
maintenance of the Fund’s status as a diversified company under the Investment Company Act of 1940,
as amended;
(3) may not purchase or sell real estate, although it may purchase securities secured by real
estate or interests therein, or securities issued by companies in the real estate industry or that
invest in real estate or interests therein;
(4) may not purchase or sell commodities, except that the Fund may purchase and sell futures
contracts and options, may enter into foreign exchange contracts, and may enter into swap
agreements and other financial transactions not requiring delivery of physical commodities;
(5) may borrow money to the maximum extent permitted by law, as interpreted or modified, or
otherwise permitted by regulatory authority having jurisdiction from time to time;
(6) may not issue senior securities, except as permitted borrowings or as otherwise permitted
under the 1940 Act;
(7) may not make loans, except that this restriction shall not prohibit the purchase of debt
obligations or entering into repurchase agreements or the lending of the Fund’s portfolio
securities; and
(8) may not act as an underwriter of securities of other issuers, except to the extent that in
connection with the disposition of portfolio securities, it may be deemed to be an underwriter
under the federal securities laws.
Notwithstanding any other fundamental investment restriction or policy, each of the Target
Funds may invest some or all of its assets in a single registered open-end investment company or a
series thereof. Unless specified above, any fundamental investment restriction or policy of any
such registered open-end investment company or series thereof shall not be considered a fundamental
investment restriction or policy of the Target Funds.
The investment restrictions set forth below are fundamental policies of the Behavioral
Advantage Large Cap Fund, Best Styles Global Equity Fund, China Equity Fund, Convertible Fund,
Disciplined Equity Fund, Dynamic Emerging Multi-Asset Fund, Emerging Markets Debt Fund, Global
Fundamental Strategy Fund, Global Managed Volatility Fund, High Yield Bond Fund, International
Small-Cap Fund, Micro Cap Fund, Multi-Asset Real Return Fund, NFJ Emerging Markets Value Fund, NFJ
Global Dividend Value Fund, NFJ International Small-Cap Value Fund, NFJ International Value II
Fund, Redwood Fund, Short Duration High Income Fund, Structured Alpha Fund, Ultra Micro Cap Fund,
U.S. Small-Cap Growth Fund and U.S. Equity Hedged Fund may not be changed with respect to any such
Fund without shareholder approval by vote of a majority of the outstanding voting securities of
that Fund. Under these restrictions, each such Fund:
(1) may not invest in a security if, as a result of such investment, more than 25% of its
total assets (taken at market value at the time of such investment) would be invested in the
securities of issuers in any particular “industry,” as the term is used in the 1940 Act, as
interpreted, modified or otherwise permitted from time to time by regulatory authority having
jurisdiction. This restriction does not apply to securities issued or guaranteed by the U.S.
Government or its agencies or instrumentalities (or repurchase agreements with respect thereto);
(2) may not purchase or sell real estate, although it may purchase securities secured by real
estate or interests therein, or securities issued by companies in the real estate industry or that
invest in real estate or interests therein;
(3) may not act as an underwriter of securities of other issuers, except to the extent that in
connection with the disposition of portfolio securities, it may be deemed to be an underwriter
under the federal securities laws;
49
(4) may not purchase or sell commodities. This restriction shall not prohibit a Fund, subject
to the restrictions described in the applicable Prospectus and elsewhere in this Statement of
Additional Information, from purchasing, selling or entering into futures contracts, options,
foreign exchange contracts, swap agreements and other financial transactions not requiring delivery
of physical commodities;
(5) may borrow money to the maximum extent permitted by law, as interpreted or modified, or
otherwise permitted by regulatory authority having jurisdiction from time to time;
(6) may not issue senior securities, except as permitted borrowings or as otherwise permitted
under the 1940 Act; and
(7) may not make loans, except that this restriction shall not prohibit the purchase of debt
obligations or entering into repurchase agreements or the lending of the Fund’s portfolio
securities.
While each of the above mentioned Funds, except for the China Equity Fund, is “diversified”
within the meaning of the 1940 Act and may only purchase securities consistent with the maintenance
of such Fund’s status as a diversified Company, each of the Behavioral Advantage Large Cap Fund,
the International Value II Fund, and the Short Duration High Income Fund have an explicit
fundamental policy that they may not purchase securities of any issuer unless such purchase is
consistent with the maintenance of the Fund’s status as a diversified company under the Investment
Company Act of 1940, as amended.
The investment restrictions set forth below are fundamental policies of the Global Water Fund,
and may not be changed with respect to such Fund without shareholder approval by vote of a majority
of the outstanding voting securities of that Fund. Under these restrictions, such Fund:
(1) may not concentrate its investments in a particular “industry,” as that term is used in
the 1940 Act, as interpreted, modified or otherwise permitted from time to time by regulatory
authority having jurisdiction;
(2) may not purchase or sell real estate, although it may purchase securities secured by real
estate or interests therein, or securities issued by companies that invest in real estate, or
interests therein;
(3) may not act as an underwriter of securities of other issuers, except to the extent that in
connection with the disposition of portfolio securities, it may be deemed to be an underwriter
under the federal securities laws;
(4) may not purchase or sell commodities or commodities contracts or oil, gas or mineral
programs. This restriction shall not prohibit the Fund, subject to restrictions described in the
applicable Prospectus and elsewhere in this Statement of Additional Information, from purchasing,
selling or entering into futures contracts, options on futures contracts, forward contracts, or any
interest rate, securities-related or other hedging instrument, including swap agreements and other
derivative instruments, subject to compliance with any applicable provisions of the federal
securities or commodities laws;
(5) may not borrow money or issue any senior security, except to the extent permitted under
the 1940 Act, and as interpreted, modified, or otherwise permitted by regulatory authority having
jurisdiction, from time to time; and
(6) may not make loans, except to the extent permitted under the 1940 Act, and as interpreted,
modified, or otherwise permitted by regulatory authority having jurisdiction, from time to time.
The Global Water Fund would be deemed to “concentrate” in a particular industry if it invested
25% or more of its total assets in that industry. The industry concentration policy of such Fund
does not preclude it from focusing investments in issuers in a group of related industrial sectors.
Currently, under the 1940 Act, a Fund generally is not permitted to engage in borrowings
unless immediately after a borrowing the value of the Fund’s total assets less liabilities (other
than the borrowing) is at least 300% of the principal amount of such borrowing (
i.e.
, such
principal amount may not exceed 33 1/3% of the Fund’s total assets). In addition, a Fund is not
permitted to declare any cash dividend or other distribution on its shares unless, at the time of
such declaration, the value of the Fund’s total assets, less liabilities other than borrowing, is
at least 300% of such principal amount.
Policies Relating to Rule 35d-1 under the 1940 Act
The Funds have adopted policies pursuant to Rule 35d-1(a) under the 1940 Act. The Funds will
provide to shareholders the notice required by Rule 35d-1 under the 1940 Act, as such may be
interpreted or revised from time to time, with respect to any change in any policy adopted pursuant
to Rule 35d-1(a). Under such policies:
1. The
Behavioral Advantage Large Cap Fund
invests at least 80% of its net assets (plus
borrowings made for investment purposes) in common stocks of large capitalization companies based
in the U.S.
50
2. The
NFJ Global Dividend Value Fund
, under normal circumstances, invests at least 80% of its
net assets (plus any borrowings for investment purposes) in common stocks that pay or are expected
to pay dividends.
3. The
China Equity Fund
invests at least 80% of its net assets (plus borrowings made for
investment purposes) in equity securities of Chinese companies. See the Fund’s Fund Summary in the
applicable Prospectus for details.
4. The
Disciplined Equity Fund
invests at least 80% of its net assets (plus borrowings made
for investment purposes) in equity securities and equity-related instruments.
5. The
Global Water Fund
seeks to achieve its investment objective by investing, under normal
circumstances, at least 80% of its net assets (plus borrowings made for investment purposes) in
common stocks and other equity securities of companies that are represented in one or more of the
S&P Global Water Index, the Palisades Water or Global Water Indices or the S-Network Global Water
Index (Composite), or that are substantially engaged in water-related activities. See “Summary of
Principal Risks—Water-Related Risk” in the applicable Prospectus for a detailed description of
water-related activities.
6. The
Short Duration High Income Fund
invests at least 80% of its net assets (plus borrowings
made for investment purposes) in debt securities issued by public and private companies, which are
rated below investment grade, while maintaining an average duration of less than three years and in
derivatives and other synthetic instruments that have economic characteristics similar to such debt
securities. Derivatives transactions may have the effect of either magnifying or limiting the
Fund’s gains and losses.
7. The
Convertible Fund
invests at least 80% of its net assets (plus borrowings made for
investment purposes) in convertible securities, which include, but are not limited to, corporate
bonds, debentures, notes or preferred stocks and their hybrids that can be converted into
(exchanged for) equity securities or other securities, such as warrants or options, which provide
an opportunity for equity participation.
8. The
U.S. Small-Cap Growth Fund
invests at least 80% of its net assets (plus borrowings made
for investment purposes) in equity securities of U.S. companies with smaller market
capitalizations.
9. The
High Yield Bond Fund
invests at least 80% of its net assets (plus borrowings made for
investment purposes) in high yield securities (“junk bonds”), which are fixed income securities
rated below investment grade (rated Ba or below by Moody’s, or BB or below by S&P or Fitch, or if
unrated, determined by the Sub-Adviser to be of comparable quality).
10. The
Micro Cap Fund
invests at least 80% of its net assets (plus borrowings made for
investment purposes) in equity securities of micro-cap companies.
11. The
Ultra Micro Cap Fund
invests at least 80% of its net assets (plus borrowings made for
investment purposes) in equity securities of ultra micro-cap companies.
12. The
NFJ International Small-Cap Value Fund
seeks to achieve its objective by normally
investing at least 80% of its net assets (plus borrowings made for investment purposes) in common
stocks and other equity securities (such as preferred stocks, convertible securities and warrants)
with smaller market capitalizations.
13. The
International Small-Cap Fund
invests at least 80% of its net assets (plus borrowings
made for investment purposes) in companies with smaller market capitalizations. As currently
contemplated, for purposes of this 80% policy, the Fund would consider smaller market
capitalization companies to be companies with market capitalizations of below $5 billion.
14. The
U.S. Equity Hedged Fund
invests at least 80% of its net assets (plus borrowings made
for investment purposes) in common stocks of U.S. companies.
15. The
Dynamic Emerging Multi-Asset Fund
will normally invest at least 80% of its net assets
(plus borrowings made for investment purposes) in securities and instruments that are tied
economically to emerging market countries.
16. The
NFJ Emerging Markets Value Fund
invests at least 80% of its net assets (plus
borrowings made for investment purposes) in equity securities of companies that are domiciled in or
tied economically to countries with emerging securities markets—that is, countries with securities
markets which are, in the opinion of the portfolio managers, less sophisticated that more developed
markets in terms of participation by investors, analyst coverage, liquidity and regulation.
17. The
Best Styles Global Equity Fund
will normally invest at least 80% of its net assets
(plus borrowings made for investment purposes) in equity securities and equity-related instruments.
51
18. The
Emerging Markets Debt Fund
seeks to achieve its investment objective by normally
investing at least 80% of its net assets (plus borrowings made for investment purposes) in a
diversified portfolio of debt instruments issued by Sovereign, Quasi-Sovereign or Corporate issuers
of emerging market countries.
Other Information Regarding Investment Restrictions and Policies
The Funds are also subject to other restrictions under the 1940 Act; however, the registration
of the Trust under the 1940 Act does not involve any supervision by any federal or other agency of
the Trust’s management or investment practices or policies, other than incident to occasional or
periodic compliance examinations conducted by the SEC staff or other regulators.
Unless otherwise stated, all limitations applicable to a Fund’s investments will apply at the
time of investment. A Fund will not violate these limitations unless an excess or deficiency occurs
or exists immediately after and as a result of an investment. Any subsequent change in the
percentage of a Fund’s total assets invested in certain securities or other instruments resulting
from market fluctuations or other changes in a Fund’s total assets will not require the Fund to
dispose of an investment until the Sub-Adviser determines that it is practicable to sell or close
out the investment without undue market or tax consequences to the Fund. The Manager or applicable
Sub-Adviser will take into account market, tax and other consequences to a Fund in considering
whether or not sell or close out an investment that has become inconsistent with an investment
limitation after its purchase due to market fluctuations, a change in ratings assigned to the
security or other factors. In the event that ratings services assign different ratings to the same
security, the Manager or Sub-Adviser will determine which rating it believes best reflects the
security’s quality and risk at that time, which may be the higher of the several assigned ratings.
Unless otherwise indicated, references to assets in the percentage limitations on a Fund’s
investments refers to total assets.
The Sub-Advisers may use Standard Industrial Classification (SIC) Codes, North American
Industry Classification System (NAICS) Codes, the FTSE/Dow Jones Industry Classification Benchmark
(ICB) system or any other reasonable industry classification system (including systems developed by
the Sub-Advisers) for purposes of the Funds’ investment restrictions and policies relating to
industry concentration, and the approaches used by the various Sub-Advisers may differ from one
another.
In addition, each Sub-Adviser may use definitions and standards to determine compliance with
the investment policies, strategies and restrictions of the Funds it sub-advises that are specific
to that Sub-Adviser. For example, the Sub-Advisers may employ its own internally-developed
definitions and standards in connection with defining Fund market capitalization criteria (
e.g.
,
determining whether a company is a “large,” “mid” or “small” capitalization company),
characterizing a security as an “equity” or “fixed income” security, characterizing a security as a
“growth” or “value” security, determining the composition of an “industry,” “sector” or group of
related industries or sectors, determining the scope of a “geographic region” and characterizing an
investment as a U.S. or non-U.S. investment (or otherwise determining the location of an investment
for purposes of a Fund’s geographic restrictions). In addition, the definitions and standards used
by a Sub-Adviser may change over time and without notice to investors, and in certain cases a
Sub-Adviser may use definitions and standards for a Fund that differ from the definitions and
standards it uses for other series of the Trust or for other funds and accounts that it advises.
Under the 1940 Act, a “senior security” does not include any promissory note or evidence of
indebtedness when such loan is for temporary purposes only and in an amount not exceeding 5% of the
value of the total assets of the issuer at the time the loan is made. A loan is presumed to be for
temporary purposes if it is repaid within sixty days and is not extended or renewed.
To the extent a Fund covers its commitment under a derivative instrument or other borrowing by
the segregation of liquid assets, equal in value to the amount of the Fund’s commitment, or by
entering into offsetting positions, such instrument is not considered a “senior security” for
purposes of the asset coverage requirements otherwise applicable to borrowings by the Fund.
A Fund interprets its policies with respect to borrowing and lending to permit such activities
as may be lawful for a Fund, to the full extent permitted by the 1940 Act or by exemption from the
provisions therefrom pursuant to an exemptive order of the SEC.
The phrase “shareholder approval,” as used in the applicable Prospectus, and the phrase a
“vote of a majority of the outstanding voting securities,” as used herein, means the affirmative
vote of the lesser of (1) more than 50% of the outstanding shares of the Fund, Trust or share
class, as the case may be, or (2) 67% or more of the shares of the Fund, Trust or share class, as
the case may be, present at a meeting if more than 50% of the outstanding shares are represented at
the meeting in person or by proxy.
52
MANAGEMENT OF THE TRUST
Trustees and Officers
The business of the Trust is managed under the direction of the Trust’s Board of Trustees.
Subject to the provisions of the Trust’s Amended and Restated Agreement and Declaration of Trust,
its Amended and Restated By-Laws and Massachusetts law, the Trustees have all powers necessary and
convenient to carry out this responsibility, including the election and removal of the Trust’s
officers.
Board Leadership Structure
— The Trust’s Board of Trustees consists of seven Trustees, six of
whom are not “interested persons” (within the meaning of Section 2(a)(19) of the 1940 Act) of the
Trust or of the Manager (the “Independent Trustees”), which represents over 85% of Board members
that are Independent Trustees. An Independent Trustee serves as Chairman of the Trustees and is
selected by vote of the majority of the Independent Trustees. The Chairman of the Trustees presides
at meetings of the Board and acts as a liaison with service providers, officers, attorneys and
other Trustees generally between meetings, and performs such other functions as may be requested by
the Board from time to time.
The Board of Trustees meets regularly four times each year to discuss and consider matters
concerning the Trust and the Funds, and also holds special meetings to address matters arising
between regular meetings. The Independent Trustees regularly meet outside the presence of Trust
management and are advised by independent legal counsel. Regular meetings generally take place
in-person; other meetings may take place in-person or by telephone.
The Board of Trustees has established four standing Committees to facilitate the Trustees’
oversight of the management of the Trust: the Audit Oversight Committee, the Nominating Committee,
the Valuation Committee and the Compensation Committee. The functions and role of each Committee
are described below under “Committees of the Board of Trustees.” The membership of each Committee
consists of all of the Independent Trustees, which the Board believes allows them to participate in
the full range of the Board’s oversight duties.
The Board reviews its leadership structure periodically and has determined that this
leadership structure, including an Independent Chairman, a supermajority of Independent Trustees
and Committee membership limited to Independent Trustees, is appropriate in light of the
characteristics and circumstances of the Trust. In reaching this conclusion, the Board considered,
among other things, the predominant role of the Manager and Sub-Advisers in the day-to-day
management of Fund affairs, the extent to which the work of the Board is conducted through the
Committees, the number of portfolios that comprise the Trust and the Fund Complex (defined below),
the variety of asset classes those series include, the net assets of each Fund, the Trust and the
Fund Complex and the management, distribution and other service arrangements of each Fund, the
Trust and the Fund Complex. The Board also believes that its structure, including the presence of
one Trustee who is an executive with various Manager-affiliated entities, facilitates an efficient
flow of information concerning the management of the Trust to the Independent Trustees.
Risk Oversight
— Each of the Funds has retained the Manager and the applicable Sub-Adviser to
provide investment advisory services, and, in the case of the Manager, administrative services, and
these service providers are immediately responsible for the management of risks that may arise from
Fund investments and operations. Some employees of the Manager and its affiliates serve as the
Trust’s officers, including the Trust’s principal executive officer and principal financial and
accounting officer, chief compliance officer and chief legal officer. The Manager and the
Sub-Advisers employ different processes, procedures and controls to identify and manage different
types of risks that may affect the Funds. The Board oversees the performance of these functions by
the Manager and Sub-Advisers, both directly and through the Committee structure it has established.
The Board receives from the Manager and Sub-Advisers a wide range of reports and presentations,
both on a regular and as-needed basis, relating to the Funds’ activities and to the actual and
potential risks of the Funds and the Trust as a whole. These include reports and presentations on
investment risks, custody and valuation of the Funds’ assets, compliance with applicable laws, the
Funds’ financial accounting and reporting and the Board’s oversight of risk management functions.
The Board also regularly receives, from the Funds’ principal underwriter and the CCO (as defined
below), reports regarding the distribution, sale and marketing of the Funds’ shares. In addition,
the Board meets periodically with the individual portfolio managers of the Funds to receive reports
regarding the portfolio management of the Funds and their performance, including their investment
risks. In the course of these meetings and discussions with Allianz Global Fund Management and the
Sub-Advisers, the Board has emphasized the importance of maintaining vigorous risk-management
programs and procedures.
In addition, the Board has appointed a Chief Compliance Officer (“CCO”). The CCO oversees the
development of compliance policies and procedures that are reasonably designed to minimize the risk
of violations of the federal securities laws (“Compliance Policies”). The CCO reports directly to
the Independent Trustees, interacts with individuals within Allianz Global Fund Management’s
organization including its Head of Risk Management, and provides presentations to the Board at its
quarterly meetings and an annual report on the application of the Compliance Policies. The Board
periodically discusses relevant risks affecting the Trust with the CCO at these meetings. The Board
has approved the Compliance Policies and reviews the CCO’s reports. Further, the Board annually
reviews the sufficiency of the Compliance Policies, as well as the appointment and compensation of
the CCO.
The Board recognizes that the reports it receives concerning risk management matters are, by
their nature, typically summaries of the relevant information. Moreover, the Board recognizes that
not all risks that may affect the Funds can be identified in advance; that it may not be practical
or cost-effective to eliminate or mitigate certain risks; that it may be necessary to bear certain
risks (such as investment-related risks) in seeking to achieve the Funds’ investment objectives;
and that the processes, procedures and controls employed to address certain risks may be limited in
their effectiveness. As a result of the foregoing and for other reasons, the Board’s risk
management oversight is subject to substantial limitations.
53
The Trustees and executive officers of the Trust, their years of birth, the position they hold
with the Trust, their term of office and length of time served, a description of their principal
occupations during the past five years, the number of portfolios in the fund complex that the
Trustees oversee and any other directorships held by the Trustees of the Trust are listed in the
following tables. Except as shown, each Trustee’s and officer’s principal occupation and business
experience for the last five years have been with the employer(s) indicated, although in some cases
the Trustee may have held different positions with such employer(s). Unless otherwise indicated,
the business address of the persons listed below is 1633 Broadway, New York, NY 10019.
Independent Trustees(1)
Based on a review of the experience, qualifications, attributes and skills of each Trustee,
including those enumerated in the table below, the Board has determined that each of the Trustees
is qualified to serve as a Trustee of the Trust. With the exception of Messrs. Jacobson, Rappaport,
Gallagher and Ms. DeCotis, each Trustee has served as a Trustee of the Trust since its inception,
and has also served for several years as a Trustee for a number of investment companies affiliated
with the Trust. These qualifications, as well as other qualifications preceding the five-year
reporting period in the table below, support the conclusion that each individual should serve as a
Trustee in light of the Trust’s business and structure.
54
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Other
|
|
|
|
|
|
|
|
|
|
Portfolios
|
|
Directorships
|
|
|
|
|
|
|
|
|
|
in Fund
|
|
Held by
|
|
Name,
|
|
Position(s)
|
|
Term of Office
|
|
|
|
Complex(2)
|
|
Trustee/Nominee
|
|
Address* and
|
|
Held with
|
|
and Length of
|
|
Principal Occupation(s)
|
|
Overseen by
|
|
During the Past
|
|
Year of Birth
|
|
Trust
|
|
Time Served
|
|
During the Past 5 Years
|
|
Trustee/Nominee
|
|
5 Years
|
|
Independent Trustees/Nominees
|
|
|
|
|
|
|
|
|
|
Deborah A. DeCotis
1952
|
|
Trustee
|
|
Since March 7,
2011
|
|
Advisory Director,
Morgan Stanley & Co.,
Inc. (since 1996);
Co-Chair Special
Projects Committee,
Memorial Sloan
Kettering (since
2005); Board Member
and Member of the
Investment and Finance
Committees, Henry
Street Settlement
(since 2007); Trustee,
Stanford University
(since 2010).
Formerly, Director,
Helena Rubenstein
Foundation
(1997-2012); and
Advisory Council,
Stanford Business
School (2002-2008).
|
|
[66]
|
|
None
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bradford K.
Gallagher
1944
|
|
Trustee
|
|
Since September
2010
|
|
Retired. Chairman and
Trustee, Atlantic
Maritime Heritage
Foundation (since
2007); Chairman and
Trustee, The Common
Fund (since 2005);
Founder, Spyglass
Investments LLC, a
private investment
vehicle (since 2001);
and Founder, President
and CEO, Cypress
Holding Company and
Cypress Tree
Investment Management
Company (since 1995).
Formerly, Partner, New
Technology Ventures
Capital Management
LLC, a venture capital
fund (2011-2013).
|
|
[66]
|
|
Formerly, Chairman
and Trustee of
Grail Advisors ETF
Trust (2009-2010)
and Trustee of
Nicholas-Applegate
Institutional Funds
(2007-2010).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James A. Jacobson
1945
|
|
Trustee
|
|
Since December
2009
|
|
Retired. Formerly,
Vice Chairman and
Managing Director,
Spear, Leeds & Kellogg
Specialists, LLC, a
specialist firm on the
New York Stock
Exchange.
|
|
[66]
|
|
Trustee, Alpine
Mutual Funds
Complex consisting
of 17 funds.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hans W. Kertess
1939
|
|
Trustee, Chairman
of the Board
|
|
Since March
2008
|
|
President, H. Kertess
& Co., a financial
advisory company.
Formerly, Managing
Director, Royal Bank
of Canada Capital
Markets.
|
|
[66]
|
|
None
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William B.
Ogden, IV
1945
|
|
Trustee
|
|
Since March
2008
|
|
Asset Management
Industry Consultant.
Formerly, Managing
Director, Investment
Banking Division of
Citigroup Global
Markets Inc.
|
|
[66]
|
|
None
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alan Rappaport
1953
|
|
Trustee
|
|
Since June 22,
2010
|
|
Advisory Director
(formerly Vice
Chairman) (since
2009), Roundtable
Investment Partners;
Chairman (formerly
President), Private
Bank of Bank of
America; Vice
Chairman, US Trust
(2001-2008); Adjunct
Professor, New York
University Stern
School of Business
(since 2011);
Lecturer, Stanford
University Graduate
School of Business
(since 2013); Trustee,
American Museum of
Natural History (since
2005) and Trustee, NYU
Langone Medical Center
(since 2007).
|
|
[66]
|
|
None
|
55
Interested Trustees(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
Portfolios
|
|
|
|
|
|
|
|
|
|
|
|
in Fund
|
|
Other
|
|
Name,
|
|
Position(s)
|
|
Term of Office
|
|
|
|
Complex(2)
|
|
Directorships
|
|
Address and
|
|
Held with
|
|
and Length of
|
|
Principal Occupation(s)
|
|
Overseen
|
|
Held by
|
|
Year of Birth
|
|
Trust
|
|
Time Served
|
|
During the Past 5 Years
|
|
by Trustee
|
|
Trustee
|
|
John C. Maney(3)
680 Newport Center
Drive, Suite 250
Newport Beach, CA
92660
1959
|
|
Trustee
|
|
Since March 2008
|
|
Member of the
Management Board and a
Managing Director of
Allianz Global
Investors Fund
Management LLC;
Managing Director of
Allianz Asset
Management of America
L.P. (since January
2005) and a member of
the Management Board
and Chief Operating
Officer of Allianz
Asset Management of
America L.P. (since
November 2006).
|
|
[86]
|
|
None
|
|
|
|
|
|
*
|
|
Unless otherwise indicated, the business address of the persons listed above is c/o Allianz
Global Investors Fund Management LLC, 1633 Broadway, New York, New York 10019.
|
|
|
|
(1)
|
|
“Independent Trustees” are those Trustees who are not “Interested Persons” (as defined in
Section 2(a)(19) of the 1940 Act), and “Interested Trustees” are those Trustees who are
“Interested Persons” of the Funds. Mr. Maney is an “Interested Person” of the Funds due to his
affiliation with Allianz Asset Management of America L.P. and its affiliates.
|
|
|
|
(2)
|
|
The term “Fund Complex” as used herein includes each Fund of the Trust and the following
registered investment companies: each series of Allianz Funds, PIMCO Municipal Income Fund,
PIMCO Municipal Income Fund II, PIMCO Municipal Income Fund III, PIMCO California Municipal
Income Fund, PIMCO California Municipal Income Fund II, PIMCO California Municipal Income Fund
III, PIMCO New York Municipal Income Fund, PIMCO New York Municipal Income Fund II, PIMCO New
York Municipal Income Fund III, PIMCO Corporate & Income Strategy Fund, PIMCO Corporate &
Income Opportunity Fund, PIMCO High Income Fund, AllianzGI Convertible & Income Fund,
AllianzGI Convertible & Income Fund II, PIMCO Income Strategy Fund, PIMCO Income Strategy Fund
II, AllianzGI NFJ Dividend, Interest & Premium Strategy Fund, PIMCO Global
StocksPLUS
®
& Income Fund, AllianzGI Equity & Convertible Income Fund,
PCM Fund Inc., PIMCO Income Opportunity Fund, PIMCO Strategic Income Fund, Inc., PIMCO Dynamic
Income Fund, PIMCO Dynamic Credit Income Fund, each series of AllianzGI Managed Accounts
Trust, each series of Premier Multi-Series VIT, each series of USAllianz Variable Insurance
Products Trust and registered investment companies advised by Allianz Global Investors U.S.
LLC and NFJ Investment Group LLC.
|
|
|
|
(3)
|
|
Mr. Maney is an “interested person” of the Trust, as defined in Section 2(a)(19) of the 1940
Act, due to his affiliation with Allianz Asset Management of America L.P. and its affiliates.
|
Executive Officers
|
|
|
|
|
|
|
|
|
|
|
Position(s)
|
|
Term of Office
|
|
Principal
|
|
Name, Address
|
|
Held with
|
|
and Length of
|
|
Occupation(s)
|
|
and Year of Birth
|
|
Trust
|
|
Time Served
|
|
During the Past 5 Years
|
|
Julian F. Sluyters
1633 Broadway, 43rd Floor
New York, NY 10019
1961
|
|
President and Chief
Executive Officer
|
|
3/2014 to present
|
|
Chairman of the Management Board of Allianz
Global Investors Fund Management LLC (since
2013); Chief Operating Officer, Managing
Director, and member of the Executive
Committee of Allianz Global Investors U.S.
Holdings LLC (since 2012); President and
Chief Executive Officer of [86] funds in
the Fund Complex. Formerly, President and
Chief Executive Officer, Old Mutual Capital
Inc. (2008-2012).
|
56
|
|
|
|
|
|
|
|
|
|
|
Position(s)
|
|
Term of Office
|
|
Principal
|
|
Name, Address
|
|
Held with
|
|
and Length of
|
|
Occupation(s)
|
|
and Year of Birth
|
|
Trust
|
|
Time Served
|
|
During the Past 5 Years
|
|
Lawrence G. Altadonna
1633 Broadway, 43rd Floor
New York, NY 10019
1966
|
|
Treasurer,
Principal Financial
and Accounting
Officer
|
|
1/2011 to present
|
|
Director, Director of Fund Administration
of Allianz Global Investors Fund Management
LLC; Treasurer, Principal Financial and
Accounting Officer of [86] funds in the
Fund Complex and of The Korea Fund, Inc.
Formerly, Assistant Treasurer of numerous
funds in the Fund Complex (2005-2010).
|
|
|
|
|
|
|
|
|
|
Thomas J. Fuccillo
1633 Broadway, 41st Floor
New York, NY 10019
1968
|
|
Vice President,
Secretary and Chief
Legal Officer
|
|
3/2008 to present
|
|
Managing Director, Chief Legal Officer and
Secretary of Allianz Global Investors Fund
Management LLC and Allianz Global Investors
Distributors LLC; Managing Director and
Chief Regulatory Counsel of Allianz Global
Investors U.S. Holdings LLC; Vice
President, Secretary and Chief Legal
Officer of [86] funds in the Fund Complex;
and Secretary and Chief Legal Officer of
The Korea Fund, Inc.
|
|
|
|
|
|
|
|
|
|
Thomas L. Harter, CFA
680 Newport Center Drive,
Suite 250 Newport Beach,
CA 92660
1975
|
|
Chief Compliance
Officer
|
|
6/2013 to present
|
|
Director of Allianz Global Investors U.S.
Holdings LLC; and Chief Compliance Officer
of [84] funds in the Fund Complex and of
The Korea Fund, Inc. Formerly, Vice
President and Compliance Manager
(2005-2012).
|
|
|
|
|
|
|
|
|
|
Richard
J. Cochran
1633 Broadway, 43rd Floor
New York, NY 10019
1961
|
|
Assistant Treasurer
|
|
5/2008 to present
|
|
Vice President of Allianz Global Investors
Fund Management LLC; Assistant Treasurer of
[86] funds in the Fund Complex and of The
Korea Fund, Inc.
|
|
|
|
|
|
|
|
|
|
Scott Whisten
1633 Broadway, 43rd Floor
New York, NY 10019
1971
|
|
Assistant Treasurer
|
|
3/2008 to present
|
|
Director of Allianz Global Investors Fund
Management LLC; and Assistant Treasurer of
[86] funds in the Fund Complex.
|
|
|
|
|
|
|
|
|
|
Orhan Dzemaili
1633 Broadway, 43rd Floor
New York, NY 10019
1974
|
|
Assistant Treasurer
|
|
1/2011 to present
|
|
Vice President of Allianz Global Investors
Fund Management LLC; and Assistant
Treasurer of [86] funds in the Fund
Complex.
|
|
|
|
|
|
|
|
|
|
Lagan Srivastava
1633 Broadway, 41st Floor
New York, NY 10019
1977
|
|
Assistant Secretary
|
|
3/2008 to present
|
|
Vice President of Allianz Global Investors
U.S. Holdings LLC; Assistant Secretary of
[86] funds in the Fund Complex and of The
Korea Fund, Inc.
|
|
|
|
|
|
|
|
|
|
Richard H. Kirk
1633 Broadway, 41st Floor
New York, NY 10019
1961
|
|
Assistant Secretary
|
|
3/2008 to present
|
|
Director of Allianz Global Investors U.S.
Holdings LLC; Director and Associate
General Counsel, Allianz Global Investors
Distributors LLC. Assistant Secretary of
[56] funds in the Fund Complex.
|
|
|
|
|
|
|
|
|
|
Paul Koo(1)
555 Mission Street, Suite 1700
San Francisco, CA 94105
1964
|
|
Assistant Secretary
|
|
6/2013 to present
|
|
Director and Chief Compliance Officer of
Allianz Global Investors U.S. LLC; and
Assistant Secretary of [56] funds in the
Fund Complex. Formerly, Associate Chief
Compliance Officer, Dodge & Cox
(2010-2011).
|
|
|
|
|
|
|
|
|
|
Morley D. Campbell(1)
1633 Broadway
New York, NY 10019
1981
|
|
Assistant Secretary
|
|
12/2012 to present
|
|
Portfolio Manager and Managing Director of
NFJ Investment Group LLC. Assistant
Secretary of [36] funds in the Fund
Complex.
|
57
|
|
|
|
|
|
|
|
|
|
|
Position(s)
|
|
Term of Office
|
|
Principal
|
|
Name, Address
|
|
Held with
|
|
and Length of
|
|
Occupation(s)
|
|
and Year of Birth
|
|
Trust
|
|
Time Served
|
|
During the Past 5 Years
|
|
Thomas W. Oliver(1)
1633 Broadway
New York, NY 10019
1971
|
|
Assistant Secretary
|
|
12/2012 to present
|
|
Portfolio Manager and Managing Director of
NFJ Investment Group LLC. Assistant
Secretary of [36] funds in the Fund
Complex.
|
Each of the Trust’s executive officers is an “interested person” of the Trust (as defined in
Section 2(a)(19) of the 1940 Act) as a result of his or her position(s) set forth in the table
above.
|
|
|
|
|
(1)
|
|
Paul Koo, Morley D. Campbell and Thomas W. Oliver are Assistant Secretaries of the Trust with
a limited authority to open, maintain and close certain custodial and trading accounts for
AllianzGI NFJ Emerging Markets Value Fund.
|
Trustee Qualifications
— The Board has determined that each Trustee should continue to serve
as such based on several factors (none of which alone is decisive). With the exception of Mr.
Jacobson (who became a Board member in December 2009), Mr. Rappaport (who became a Board member in
June 2010), Mr. Gallagher (who became a Board member in September 2010) and Ms. DeCotis (who became
a Board member in March 2011), each Trustee has served in such role since the Trust’s inception and
is intimately familiar with the Trust’s business and service provider arrangements, and has also
served for several years as trustee/director to a number of other investment companies advised by
the Manager and its affiliates. Among the factors the Board considered when concluding that an
individual should serve on the Board were the following: (i) the individual’s business and
professional experience and accomplishments; (ii) the individual’s ability to work effectively with
other members of the Board; (iii) the individual’s prior experience, if any, serving on the boards
of public companies (including, where relevant, other investment companies) and other complex
enterprises and organizations; and (iv) how the individual’s skills, experiences and attributes
would contribute to an appropriate mix of relevant skills and experience on the Board.
In respect of each current Trustee, the individual’s substantial professional accomplishments
and prior experience, including, in some cases, in fields related to the operations of the Funds,
were a significant factor in the determination that the individual should serve as a Trustee of the
Trust. Following is a summary of various qualifications, experiences and skills of each Trustee (in
addition to business experience during the past five years set forth in the table above) that
contributed to the Board’s conclusion that an individual should serve on the Board. References to
qualifications, experiences and skills are not intended to hold out the Board or individual
Trustees as having any special expertise or experience, and shall not impose any greater
responsibility or liability on any such person or on the Board by reason thereof.
Deborah A. DeCotis
— Ms. DeCotis has substantial senior executive experience in the investment
banking industry, having served as a Managing Director for Morgan Stanley. She has extensive board
experience and/or experience in oversight of investment management functions through her experience
as a Director of the Helena Rubenstein Foundation, Stanford Graduate School of Business and Armor
Holdings.
Bradford K. Gallagher
— Mr. Gallagher has substantial executive and board experience in the
financial services and investment management industries. He has served as director to several other
investment companies. Having served on the Operating Committee of Fidelity Investments and as a
Managing Director and President of Fidelity Investments Institutional Services Company, he provides
the Trust with significant asset management industry expertise. He also brings significant
securities industry experience, having served as a developer and founder of several enterprises and
private investment vehicles.
James A. Jacobson
— Mr. Jacobson has substantial executive and board experience in the
financial services industry. He served for more than 15 years as a senior executive at an NYSE
specialist firm. He has also served on the NYSE Board of Directors, including terms as Vice Chair.
As such, he provides significant expertise on matters relating to portfolio brokerage and trade
execution. He also provides the Trust with significant financial expertise and serves as the Audit
Oversight Committee’s Chair and has been determined by the Board to be an “audit committee
financial expert.” He has expertise in investment company matters through his service as a trustee
of another fund family.
Hans W. Kertess
— Mr. Kertess has substantial executive experience in the investment
management industry. He is the president of a financial advisory company, H. Kertess & Co., and
formerly served as a Managing Director of Royal Bank of Canada Capital Markets. He has significant
expertise in the investment banking industry.
John C. Maney
— Mr. Maney has substantial executive and board experience in the investment
management industry. He has served in a variety of senior-level positions with investment advisory
firms affiliated with the Manager. Because of his familiarity with the Manager and affiliated
entities, he serves as an important information resource for the Independent Trustees and as a
facilitator of communication with the Manager.
58
William B. Ogden, IV
— Mr. Ogden has substantial senior executive experience in the investment
banking industry. He served as Managing Director at Citigroup, where he established and led the
firm’s efforts to raise capital for and provide mergers and acquisition advisory services to asset
managers and investment advisers. He also has significant expertise with fund products through his
senior-level responsibility for originating and underwriting a broad variety of such products.
Alan Rappaport
— Mr. Rappaport has substantial senior executive experience in the financial
services industry. He formerly served as Chairman and President of the private banking division of
Bank of America and as Vice Chairman of U.S. Trust. He is currently the Vice Chairman of an
investment banking firm.
Committees of the Board of Trustees
Audit Oversight Committee.
The Trust’s Board has established an Audit Oversight Committee in
accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”). The Trust’s Audit Oversight Committee is currently composed of Messrs. Gallagher,
Jacobson, Kertess, Ogden, Rappaport and Ms. DeCotis, each of whom is an Independent Trustee. Mr.
Jacobson is the current Chairman of the Trust’s Audit Oversight Committee.
The Trust’s Audit Oversight Committee provides oversight with respect to the internal and
external accounting and auditing procedures of each Fund and, among other things, determines the
selection of the independent registered public accounting firm for the Funds and considers the
scope of the audit, approves all audit and permitted non-audit services proposed to be performed by
the independent registered public accounting firm on behalf of the Funds, and approves non-audit
services to be performed by the independent registered public accounting firm for certain
affiliates, including the Manager, the applicable Sub-Adviser and entities in a control
relationship with the Manager or the Sub-Advisers, that provide services to the Funds where the
engagement relates directly to the operations and financial reporting of the Funds. The Audit
Oversight Committee considers the possible effect of those services on the independence of the
Funds’ independent registered public accounting firm. The Audit Oversight Committee convened one
time during the fiscal year ended November 30, 2013.
Nominating Committee.
The Trust has a Nominating Committee currently composed of Messrs.
Gallagher, Jacobson, Kertess, Ogden, Rappaport and Ms. DeCotis. The Nominating Committee is
responsible for reviewing and recommending qualified candidates to the Board in the event that a
position is vacated or created or when Trustees are to be re-elected. Each member of the Nominating
Committee is an Independent Trustee. The Nominating Committee convened one time during the fiscal
year ended November 30, 2013.
Qualifications, Evaluation and Identification of Director Nominees
. The Nominating Committee
of the Trust requires that Trustee candidates have a college degree or equivalent business
experience. When evaluating candidates, the Nominating Committee may take into account a wide
variety of factors including, but not limited to: (i) availability and commitment of a candidate to
attend meetings and perform his or her responsibilities on the Board, (ii) relevant industry and
related experience, (iii) educational background, (iv) financial expertise, (v) an assessment of
the candidate’s ability, judgment and expertise and (vi) overall Board composition. The process of
identifying nominees involves the consideration of candidates recommended by one or more of the
following sources: (i) the Trust’s current Trustees, (ii) the Trust’s officers, (iii) the Funds’
shareholders and (iv) any other source the Committee deems to be appropriate. The Nominating
Committee may, but is not required to, retain a third-party search firm at the Trust’s expense to
identify potential candidates.
Consideration of Candidates Recommended by Stockholders.
The Nominating Committee will review
and consider nominees recommended by shareholders to serve as Trustee, provided that the
recommending shareholder follows the Procedures for Shareholders to Submit Nominee Candidates,
which are set forth as Appendix A to the Trust’s Nominating Committee Charter and attached as
Appendix D to this Statement of Additional Information. Among other requirements, these procedures
provide that the recommending shareholder must submit any recommendation in writing to the Trust,
to the attention of the Trust’s Secretary, at the address of the principal executive offices of the
Trust and that such submission must be received at such offices not less than 45 days nor more than
75 days prior to the date of the Board or shareholder meeting at which the nominee would be
elected. Any recommendation must include certain biographical and other information regarding the
candidate and the recommending shareholder, and must include a written and signed consent of the
candidate to be named as a nominee and to serve as a Trustee if elected. The foregoing description
of the requirements is only a summary. Please refer to the Nominating Committee Charter, available
at http://us.allianzgi.com/ClosedEndFund/External%20Documents/nominating_committee_charter.pdf, and
the Procedures for Shareholders to Submit Nominee Candidates, attached as Appendix D to this
Statement of Additional Information.
The Nominating Committee has full discretion to reject nominees recommended by shareholders,
and there is no assurance that any such person properly recommended and considered by the Committee
will be nominated for election to the Board of Trustees.
Valuation Committee.
The Trust’s Valuation Committee is currently composed of Messrs.
Gallagher, Jacobson, Kertess, Ogden, Rappaport and Ms. DeCotis, each of whom is an Independent
Trustee. The Valuation Committee has been delegated responsibility by the Trust’s Board of Trustees
for overseeing determinations of the fair value of the Funds’ portfolio securities on behalf of the
Board
59
in accordance with the Funds’ valuation procedures. The Valuation Committee reviews and
approves procedures for the fair valuation of the Funds’ portfolio securities and periodically
reviews information from the Manager and the Sub-Advisers regarding fair value and liquidity
determinations made pursuant to Board-approved procedures, and makes related recommendations to the
full Board and assists the full Board in resolving particular fair valuation and other valuation
matters. The Valuation Committee convened four times separately during the fiscal year ended
November 30, 2013.
Compensation Committee.
The Trust’s Compensation Committee is currently composed of Messrs.
Gallagher, Jacobson, Kertess, Ogden, Rappaport and Ms. DeCotis, each of whom is an Independent
Trustee. The Compensation Committee meets as the Board deems necessary to review and make
recommendations regarding compensation payable to the Trustees of the Trust who are not directors,
officers, partners or employees of the Manager, the Sub-Advisers or any entity controlling,
controlled by or under common control with the Manager or the Sub-Advisers. The Compensation
Committee convened one time during the fiscal year ended November 30, 2013.
Securities Ownership
For each Trustee, the following table discloses the dollar range of equity securities
beneficially owned by the Trustee in the Trust, and, on an aggregate basis, in any registered
investment companies overseen by the Trustee within the Trust’s family of investment companies. The
dollar ranges used in the table are (i) None; (ii) $1-$10,000; (iii) $10,001-$50,000; (iv)
$50,001-$100,000; and (v) Over $100,000. The following table includes securities in which the
Trustees hold an economic interest through their deferred compensation plan. See “Trustees’
Compensation” below.
Securities Ownership as of December 31, 2013
|
|
|
|
|
|
|
|
|
|
|
Aggregate Dollar
|
|
|
|
|
|
Range of Equity
|
|
|
|
|
|
Securities in All
|
|
|
|
Dollar Range of Equity
|
|
Registered Investment
|
|
|
|
Securities in
|
|
Companies Overseen by
|
|
|
|
Each Fund or Series
|
|
Trustee in Family of
|
|
|
|
Overseen
|
|
Investment
|
|
Name of Trustee
|
|
by the Trustee
|
|
Companies(1)
|
|
Independent Trustees
(2)
|
|
|
|
|
|
Hans W. Kertess
|
|
Over $100,000
|
|
Over $100,000
|
|
Bradford K. Gallagher
|
|
Over $100,000
|
|
Over $100,000
|
|
James A. Jacobson
|
|
Over $100,000
|
|
Over $100,000
|
|
William B. Ogden IV
|
|
Over $100,000
|
|
Over $100,000
|
|
Alan Rappaport
|
|
$50,001-$100,000
|
|
Over $100,000
|
|
Deborah A. DeCotis
|
|
Over $100,000
|
|
Over $100,000
|
|
Interested Trustee
(2)
|
|
|
|
|
|
John C. Maney
|
|
Over $100,000
|
|
Over $100,000
|
|
|
|
|
|
(1)
|
|
The term “Family of Investment Companies” as used herein includes each Fund of the Trust and
the following registered investment companies: each series of Allianz Funds, PIMCO Municipal
Income Fund, PIMCO Municipal Income Fund II, PIMCO Municipal Income Fund III, PIMCO California
Municipal Income Fund, PIMCO California Municipal Income Fund II, PIMCO California Municipal
Income Fund III, PIMCO New York Municipal Income Fund, PIMCO New York Municipal Income Fund
II, PIMCO New York Municipal Income Fund III, PIMCO Corporate & Income Strategy Fund, PIMCO
Corporate & Income Opportunity Fund, PIMCO High Income Fund, PIMCO Income Opportunity Fund,
AllianzGI Convertible & Income Fund, AllianzGI Convertible & Income Fund II, PIMCO Income
Strategy Fund, PIMCO Income Strategy Fund II, AllianzGI NFJ Dividend, Interest & Premium
Strategy Fund, PIMCO Global StocksPLUS
®
& Income Fund, AllianzGI Equity
& Convertible Income Fund, PCM Fund Inc., PIMCO Strategic Income Fund, Inc. Series, PIMCO
Dynamic Income Fund, PIMCO Dynamic Credit Income Fund, each series of AllianzGI Managed
Accounts Trust, each series of Premier Multi-Series VIT and each series of USAllianz Variable
Insurance Products Trust.
|
|
|
|
(2)
|
|
“Independent Trustees” are those Trustees who are not “Interested Persons” (as defined in
Section 2(a)(19) of the 1940 Act), and “Interested Trustees” are those Trustees who are
“Interested Persons” of the Funds. Mr. Maney is an “Interested Person” of the Funds due to his
affiliation with Allianz Asset Management of America L.P. and its affiliates.
|
To the Trust’s knowledge, the Independent Trustees and their immediate family members do not
beneficially own any securities in an investment manager or principal underwriter of the Trust, or
a person (other than a registered investment company) directly or indirectly controlling,
controlled by, or under common control with an investment manager or principal underwriter of the
Trust, as of December 31, 2013.
60
Trustees’ Compensation
Each of the Independent Trustees also serves as a trustee of PIMCO Municipal Income Fund,
PIMCO California Municipal Income Fund, PIMCO New York Municipal Income Fund, PIMCO Municipal
Income Fund II, PIMCO California Municipal Income Fund II, PIMCO New York Municipal Income Fund II,
PIMCO Municipal Income Fund III, PIMCO California Municipal Income Fund III, PIMCO New York
Municipal Income Fund III, AllianzGI Convertible & Income Fund, AllianzGI Convertible & Income Fund
II, PIMCO Corporate & Income Opportunity Fund, PIMCO High Income Fund, PIMCO Corporate & Income
Strategy Fund, PIMCO Income Strategy Fund, PIMCO Income Strategy Fund II, AllianzGI NFJ Dividend,
Interest & Premium Strategy Fund, AllianzGI Equity & Convertible Income Fund, PIMCO Global
StocksPLUS & Income Fund, PIMCO Income Opportunity Fund, PCM Fund, Inc., PIMCO Strategic Income
Fund, Inc., PIMCO Dynamic Income Fund and PIMCO Dynamic Credit Income Fund, each a closed-end fund
for which the Manager serves as investment manager and affiliates of the Manager serve as
sub-adviser (together, the “Allianz Closed-End Funds”), as well as AllianzGI Managed Accounts Trust
(“AGIMAT”), an open-end investment company with multiple series for which the Manager serves as
investment manager and/or administrator and affiliates of the Manager serve as investment
sub-adviser, and Premier Multi-Series VIT, an open-end investment company with one series for which
the Manager serves as investment manager and an affiliate of the Manager serves as investment
sub-adviser. As indicated above, certain of the officers of the Trust are affiliated with the
Manager.
Each of the Allianz Closed-End Funds, AGIMAT, Premier Multi-Series VIT and the Trust is
expected to hold joint meetings of their Boards of Trustees whenever possible. Each Trustee, other
than any Trustee who is a director, officer, partner or employee of the Manager or any entity
controlling, controlled by or under common control with the Manager receives annual compensation of
$250,000, payable quarterly. The Independent Chairman of the Boards receives an additional $75,000
per year, payable quarterly. The Audit Oversight Committee Chairman receives an additional $50,000
annually, payable quarterly. Trustees will also be reimbursed for meeting-related expenses.
Each Trustee’s compensation and other costs in connection with joint meetings will be
allocated among the Allianz Closed-End Funds, AGIMAT, Premier Multi-Series VIT and the Trust, as
applicable, on the basis of fixed percentages as between each such group of funds. Trustee
compensation and other costs will then be further allocated pro rata among the individual funds
within each grouping (such as among the Funds) based on the complexity of issues relating to each
such fund and relative time spent by the Trustees in addressing them, and on each such fund’s
relative net assets.
Trustees do not currently receive any pension or retirement benefits from the Trust or the
Fund Complex (see below).
The following table sets forth information regarding compensation for the most recent fiscal
year (except as noted) received by those Trustees of the Trust who are not “interested persons” (as
defined in the 1940 Act) of the Trust. (Trustees who are interested persons of the Trust and
Officers of the Trust receive no compensation from the Trust).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Compensation
|
|
|
|
|
|
|
|
Pension or
|
|
|
|
|
|
from Trust and
|
|
|
|
|
|
|
|
Retirement
|
|
|
|
|
|
Fund Complex Paid
|
|
|
|
|
|
|
|
Benefits
|
|
|
|
|
|
to Trustees
|
|
|
|
Aggregate
|
|
Accrued as Part
|
|
Estimated Annual
|
|
for Calendar Year-
|
|
|
|
Compensation
|
|
of Trust
|
|
Benefits Upon
|
|
Ended
|
|
Name of Person
|
|
from Trust
|
|
Expenses
|
|
Retirement
|
|
December 31, 2013(1)
|
|
Bradford K. Gallagher
|
|
$
|
79,499
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
250,000
|
|
|
James A. Jacobson
|
|
$
|
95,399
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
300,000
|
|
|
Hans W. Kertess
|
|
$
|
103,349
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
325,000
|
|
|
William B. Ogden IV
|
|
$
|
79,499
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
250,000
|
|
|
Alan Rappaport
|
|
$
|
79,499
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
250,000
|
|
|
Deborah A. DeCotis
|
|
$
|
79,499
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
250,000
|
|
|
|
|
|
|
(1)
|
|
Each Trustee serves as trustee or director of several other closed-end and/or open-end
investment companies advised by the Manager. Messrs. Gallagher, Jacobson, Kertess, Ogden and
Rappaport and Ms. DeCotis serve as trustee or director of [30] such investment companies.
These investment companies are considered to be in the same Fund Complex as the Trust.
|
As disclosed in the section titled “Additional Information About Purchases, Exchanges and
Redemptions of Class A, Class B, Class C, Class R, Class R6 and Institutional Class Shares,” each
Fund may sell its Class A shares at net asset value without a sales charge to certain categories of
investors, including current or retired officers, trustees, directors or employees of either the
Trust, Allianz Global Fund Management, Pacific Investment Management Company or the Distributor,
and certain other affiliates of Allianz Global Fund Management, Pacific Investment Management
Company or the Distributor, a parent, brother or sister of any such officer, trustee, director or
employee or a spouse or child of any of the foregoing persons. The Trust believes that this
arrangement encourages affiliated persons of the Funds to invest in the Funds, which further aligns
the interests of the Funds and those persons affiliated with them.
61
Proxy Voting Policies
The policies and procedures that the Trust uses to determine how to vote proxies relating to
portfolio securities have been included as Appendix C. Summary descriptions of the proxy voting
policies and procedures of Allianz Global Fund Management and the Sub-Advisers are also included in
Appendix C. Information regarding how the Trust voted proxies relating to securities held by the
Funds during the most recent twelve-month period ended June 30 is available, without charge, upon
request by calling 1-800-988-8380 (retail classes) or 1-800-498-5413 (Class P, Institutional, Class
R6 and Administrative classes) and on the SEC’s website,
www.sec.gov
and on the Allianz
Global Investors website,
us.allianzgi.com
.
Investment Manager
Allianz Global Investors Fund Management LLC (“Allianz Global Fund Management” or the
“Manager”) serves as investment manager to each of the Funds pursuant to an investment management
agreement (“Management Agreement”) between Allianz Global Fund Management and the Trust. The
Manager is a wholly-owned indirect subsidiary of Allianz Asset Management of America L.P. (“AAMA”).
AAMA, acting through an investment management division, was the former investment adviser to the
Trust. AAMA was organized as a limited partnership under Delaware law in 1987. AAMA’s sole general
partner is Allianz Asset Management of America LLC. Allianz Asset Management of America LLC has
three members, Allianz of America, Inc. (“Allianz of America”), a Delaware corporation that owns a
99.8% non-managing interest, Allianz Asset Management Aktiengesellschaft, a German company that
owns a 0.1% non-managing interest, and Allianz Asset Management of America Holdings Inc., a
Delaware corporation that owns a 0.1% managing interest. Allianz of America is a wholly-owned
indirect subsidiary of Allianz SE. Allianz Asset Management of America Holdings Inc. is a
wholly-owned subsidiary of Allianz Asset Management Aktiengesellschaft, which is an indirect
subsidiary of Allianz SE. Allianz SE indirectly holds a controlling interest in AAMA. Allianz SE is
a European-based, multinational insurance and financial services holding company. The address for
AAMA, Allianz Asset Management of America LLC and Allianz Asset Management of America Holdings Inc.
is 680 Newport Center Drive, Suite 250, Newport Beach, California 92660. The address for Allianz
Asset Management Aktiengesellschaft is Seidlstrasse, 24-24a, D-80335, Munich, Germany. Allianz SE’s
address is Koeniginstrasse 28, D-80802, Munich, Germany.
The general partner of AAMA has substantially delegated its management and control of AAMA to
a Management Board.
The Manager is located at 1633 Broadway, New York, NY 10019. The Manager had approximately [
] of assets under management as of [ ].
As of the date of this Statement of Additional Information, there are no significant
institutional shareholders of Allianz SE.
Management Agreement
The Manager, subject to the supervision of the Board of Trustees, is responsible for providing
advice and guidance with respect to the Funds and for managing, either directly or through others
selected by the Manager, the investments of the Funds. The Manager also furnishes to the Board of
Trustees periodic reports on the investment performance of each Fund. As more fully discussed
below, the Manager has engaged various affiliates and non-affiliates to serve as Sub-Advisers. If a
Sub-Adviser ceases to manage the portfolio of a Fund, the Manager will either assume full
responsibility for the management of that Fund, or retain a new sub-adviser subject to the approval
of the Trustees and, if required, the Fund’s shareholders.
Under the terms of the Management Agreement, the Manager is obligated to manage the Fund in
accordance with applicable laws and regulations. The investment management services of the Manager
to the Trust are not exclusive under the terms of the Management Agreement. The Manager is free to,
and does, render investment management services to others.
The Management Agreement will continue in effect with respect to a Fund for two years from its
effective date, and thereafter on a yearly basis, provided such continuance is approved annually
(i) by the holders of a majority of the outstanding voting securities of the Fund, or by the Board
of Trustees, and (ii) by a majority of the Trustees who are not “interested persons” of the Trust
(as defined in the 1940 Act) and who have no direct or indirect financial interest in the
Management Agreement. The Management Agreement may be terminated without penalty by vote of the
Trustees or the vote of a majority of the outstanding voting shares of the Trust (or with respect
to a particular Fund, by the vote of a majority of the outstanding voting shares of such Fund), or
by the Manager, on 60 days’ written notice to the other party, and will terminate automatically in
the event of its assignment.
62
The Management Agreement provides that the Manager shall not be subject to any liability in
connection with the performance of its services thereunder in the absence of willful misfeasance,
bad faith, gross negligence or reckless disregard of its obligations and duties.
The Manager currently receives a monthly investment management fee from each Fund at the
following annual rates (based on the average daily net assets of the particular Funds):
|
|
|
|
|
|
|
|
|
Management
|
|
Fund
|
|
Fee Rate
|
|
Behavioral Advantage Large Cap Fund
|
|
|
0.40
|
%
|
|
Best Styles Global Equity Fund
|
|
|
0.30
|
%
|
|
China Equity Fund
|
|
|
1.10
|
%
|
|
Convertible Fund
|
|
|
0.57
|
%
|
|
Disciplined Equity Fund
|
|
|
0.60
|
%
|
|
Dynamic Emerging Multi-Asset Fund
|
|
|
0.90
|
%
|
|
Emerging Markets Debt Fund
|
|
|
[ ]
|
%
|
|
Global Allocation Fund
|
|
|
0.85
|
%
|
|
Global Fundamental Strategy Fund
|
|
|
0.75
|
%
|
|
Global Growth Allocation Fund
|
|
|
0.85
|
%
|
|
Global Managed Volatility Fund
|
|
|
0.40
|
%
|
|
Global Water Fund
|
|
|
0.95
|
%
|
|
High Yield Bond Fund
|
|
|
0.48
|
%
|
|
International Small-Cap Fund
|
|
|
1.00
|
%
|
|
Micro Cap Fund
|
|
|
1.25
|
%
|
|
Multi-Asset Real Return Fund
|
|
|
0.75
|
%
|
|
NFJ Emerging Markets Value Fund
|
|
|
1.00
|
%
|
|
NFJ Global Dividend Value Fund
|
|
|
0.80
|
%
|
|
NFJ International Small-Cap Value Fund
|
|
|
0.95
|
%
|
|
NFJ International Value II Fund
|
|
|
0.80
|
%
|
|
Redwood Fund
|
|
|
1.00
|
%
|
|
Retirement 2015 Fund
|
|
|
0.05
|
%
|
|
Retirement 2020 Fund
|
|
|
0.05
|
%
|
|
Retirement 2025 Fund
|
|
|
0.05
|
%
|
|
Retirement 2030 Fund
|
|
|
0.05
|
%
|
|
Retirement 2035 Fund
|
|
|
0.05
|
%
|
|
Retirement 2040 Fund
|
|
|
0.05
|
%
|
|
Retirement 2045 Fund
|
|
|
0.05
|
%
|
|
Retirement 2050 Fund
|
|
|
0.05
|
%
|
|
Retirement 2055 Fund
|
|
|
0.05
|
%
|
|
Retirement Income Fund
|
|
|
0.05
|
%
|
|
Short Duration High Income Fund
|
|
|
0.48
|
%
|
|
Structured Alpha Fund
|
|
|
1.25
|
%
|
|
Ultra Micro Cap Fund
|
|
|
1.50
|
%
|
|
U.S. Equity Hedged Fund
|
|
|
0.70
|
%
|
|
U.S. Small-Cap Growth Fund
|
|
|
0.90
|
%
|
Management Fee Waiver
Pursuant to a Management Fee Waiver Agreement, the Manager has agreed to waive a portion of
its fee with respect to investments by the
Global Allocation Fund
and the
Global Growth Allocation
Fund
in Underlying Funds to the extent it exceeds 0.15% of the portion of Fund assets attributable
to investments in Underlying Funds. Similarly, the Manager has agreed to waive, through at least
March 31, 2015, an additional portion of its fee with respect to investments by the
Global
Allocation Fund
and the
Global Growth Allocation Fund
in Other Acquired Funds to the extent it
exceeds 0.15% of the portion of Fund assets attributable to investments in Other Acquired Funds.
Notwithstanding the foregoing, the Manager will continue to receive its full fee on assets invested
by the
Global Allocation Fund
and the
Global Growth Allocation Fund
directly in investments other
than Underlying Funds or Other Acquired Funds.
Expense Limitation Agreements
With respect to certain Funds, the Manager has contractually agreed until the date indicated
in the applicable Fund’s “Annual Fund Operating Expenses” table in the Fund’s Fund Summary to
irrevocably waive its Management Fee or reimburse the Fund, to the extent that Total Annual Fund
Operating Expenses (after the application of the additional fee waiver described above) including
63
payment of organizational expenses, but excluding interest, tax and extraordinary expenses, and
certain credits and other expenses, exceed the amount specified for each share class of the Fund in
its “Annual Fund Operating Expenses” table, as a percentage of average net assets. Under the
Expense Limitation Agreement, the Manager may recoup waived or reimbursed amounts for three years,
provided total expenses, including such recoupment, do not exceed the annual expense limit. The
Expense Limitation Agreement is terminable by the Trust upon 90 days’ prior written notice to the
Manager or at any time by mutual agreement of the parties.
With respect to Dynamic Emerging Multi-Asset Fund and Multi-Asset Real Return Fund, the
Manager has contractually agreed until the date indicated in the applicable Fund’s “Annual Fund
Operating Expenses” table in the Fund’s Fund Summary to irrevocably waive its Management Fee or
reimburse the Fund, to the extent that Total Annual Fund Operating Expenses (after the application
of the additional fee waiver described above) including payment of organizational expenses, but
excluding interest, tax and extraordinary expenses, Underlying Fund expenses (as calculated in
accordance with the 1940 Act) and certain credits and other expenses, exceed the amount specified
for each share class of the Fund in its “Annual Fund Operating Expenses” table, as a percentage of
average net assets. Under the Expense Limitation Agreement, the Manager may recoup waived or
reimbursed amounts for three years, provided total expenses, including such recoupment, do not
exceed the annual expense limit.
The following table sets forth the amount of the management fee paid by the Trust to the
Manager for the last three fiscal years. Certain of the Funds are newly formed, and the Trust did
not pay any management fee amounts to the Manager during the periods noted for such Funds.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
Year Ended
|
|
Year Ended
|
|
Fund
|
|
11/30/13
|
|
11/30/12
|
|
11/30/11
|
|
Behavioral Advantage Large Cap Fund
|
|
$
|
144,433
|
|
|
$
|
53,066
|
|
|
$
|
9,345
|
|
|
Best Styles Global Equity Fund
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
China Equity Fund
|
|
|
46,056
|
|
|
|
43,440
|
|
|
|
51,924
|
|
|
Convertible Fund
|
|
|
9,173,653
|
|
|
|
4,755,095
|
|
|
|
3,684,452
|
|
|
Disciplined Equity Fund
|
|
|
295,744
|
|
|
|
298,258
|
|
|
|
302,403
|
|
|
Dynamic Emerging Multi-Asset Fund
|
|
|
41,957
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
Emerging Markets Debt Fund
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
Global Allocation Fund
|
|
|
1,774,487
|
|
|
|
1,787,109
|
|
|
|
2,008,026
|
|
|
Global Fundamental Strategy Fund
|
|
|
63,794
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
Global Growth Allocation Fund
|
|
|
68,215
|
|
|
|
60,753
|
|
|
|
77,977
|
|
|
Global Managed Volatility Fund
|
|
|
61,350
|
|
|
|
47,046
|
|
|
|
N/A
|
|
|
Global Water Fund
|
|
|
1,617,962
|
|
|
|
950,553
|
|
|
|
666,944
|
|
|
High Yield Bond Fund
|
|
|
1,891,256
|
|
|
|
1,269,056
|
|
|
|
529,046
|
|
|
International Small-Cap Fund
|
|
|
1,096,433
|
|
|
|
1,229,531
|
|
|
|
1,423,036
|
|
|
Micro Cap Fund
|
|
|
442,121
|
|
|
|
546,885
|
|
|
|
690,312
|
|
|
Multi-Asset Real Return Fund
|
|
|
37,466
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
NFJ Emerging Markets Value Fund
|
|
|
57,739
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
NFJ Global Dividend Value Fund
|
|
|
536,146
|
|
|
|
350,109
|
|
|
|
262,544
|
|
|
NFJ International Small-Cap Value Fund
|
|
|
82,593
|
|
|
|
16,468
|
|
|
|
N/A
|
|
|
NFJ International Value II Fund
|
|
|
33,331
|
|
|
|
26,939
|
|
|
|
N/A
|
|
|
Redwood Fund
|
|
|
79,296
|
|
|
|
98,433
|
|
|
|
65,257
|
|
|
Retirement 2015 Fund
|
|
|
11,053
|
|
|
|
5,804
|
|
|
|
58,408
|
|
|
Retirement 2020 Fund
|
|
|
15,228
|
|
|
|
4,183
|
|
|
|
36,906
|
|
|
Retirement 2025 Fund
|
|
|
13,991
|
|
|
|
2,332
|
|
|
|
N/A
|
|
|
Retirement 2030 Fund
|
|
|
17,497
|
|
|
|
5,818
|
|
|
|
47,119
|
|
|
Retirement 2035 Fund
|
|
|
11,179
|
|
|
|
2,212
|
|
|
|
N/A
|
|
|
Retirement 2040 Fund
|
|
|
11,212
|
|
|
|
3,869
|
|
|
|
38,540
|
|
|
Retirement 2045 Fund
|
|
|
5,185
|
|
|
|
1,818
|
|
|
|
N/A
|
|
|
Retirement 2050 Fund
|
|
|
5,556
|
|
|
|
3,324
|
|
|
|
37,584
|
|
|
Retirement 2055 Fund
|
|
|
2,135
|
|
|
|
1,608
|
|
|
|
N/A
|
|
|
Retirement Income Fund
|
|
|
14,953
|
|
|
|
10,231
|
|
|
|
55,160
|
|
|
Short Duration High Income Fund
|
|
|
1,847,192
|
|
|
|
346,101
|
|
|
|
5,462
|
|
|
Structured Alpha Fund
|
|
|
97,944
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
Ultra Micro Cap Fund
|
|
|
818,423
|
|
|
|
202,963
|
|
|
|
115,928
|
|
|
U.S. Equity Hedged Fund
|
|
|
33,074
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
U.S. Small-Cap Growth Fund
|
|
|
272,301
|
|
|
|
188,186
|
|
|
|
191,877
|
|
|
TOTAL
|
|
$
|
20,720,955
|
|
|
$
|
12,311,190
|
|
|
$
|
10,358,250
|
|
64
Additional Information about Services Provided by Allianz Global Fund Management
As noted above, Allianz Global Fund Management serves as investment manager to the Trust
pursuant to the Management Agreement. Allianz Fund Management, subject to the supervision of the
Board of Trustees, is responsible for managing the investments of the Funds either directly or
through others selected by the Manager.
In addition, Allianz Global Fund Management: (a) recommends and, subject to the approval of
the Board of Trustees, approves the funds to be offered by the Trust; (b) subject to the approval
of the Board of Trustees and, as applicable, Fund shareholders, selects Sub-Advisers to manage the
management of the Funds’ portfolios; (c) monitors, directly, and with the assistance of third
parties, the activities of such Sub-Advisers and evaluates the Sub-Advisers’ performance; and (d)
supervises Fund compliance, as discussed more fully below. Allianz Fund Management also furnishes
to the Board of Trustees periodic reports on the investment performance of each Fund and such other
matters as the Trustees may request.
Some of the objectives of Allianz Global Fund Management’s compliance program are to:
|
•
|
|
Continually work to enhance the compliance programs of all Allianz Asset Management of
America L.P. subsidiaries;
|
|
•
|
|
Assess the existing local compliance plans in relation to current business practices from a
risk-based perspective and work with local compliance to resolve major issues or gaps; and
|
|
•
|
|
Provide for the documentation of policies and procedures, with emphasis on incorporating
industry best practices.
|
In its capacity as Manager, in addition to its investment advisory services, Allianz Global
Fund Management provides administrative services to the Funds pursuant to the Management Agreement.
Such services include shareholder servicing, accounting, bookkeeping, internal audit services and
certain other services required by the Funds, and preparation of reports to Funds’ shareholders and
regulatory filings. Relatedly, as discussed above, the Manager (in some cases, together with its
affiliates or third parties) provides certain other services, including compliance related services
such as market timing monitoring and review of regulatory filings, management and coordination of
activities of third-party service providers to the Funds such as transfer agency and custodian,
maintenance and support services to intermediaries such as broker-dealers and retirement plan
administrators, and researching and responding to customer complaints and inquiries and regulatory
inquiries.
In addition, the Target Date Funds have entered into an Administration Agreement with the
Manager. In return for an administrative fee, the Manager arranges, at its own expense, for the
provision of legal, audit, custody, transfer agency and other services necessary for the ordinary
operation of the Target Date Funds. The Manager is also responsible for the preparation of
prospectus and shareholder reports for current shareholders and bears the costs of preparing,
printing and mailing such reports for the Target Date Funds. See “Fund Administrator” below.
The table below contains the business histories of members of the Management Board of Allianz
Global Fund Management. In addition to the individuals contained in the chart below, John C. Maney
and Julian F. Sluyters are also members of the Management Board. Information relating to Messrs.
Maney and Sluyters is contained above in “Management of the Trust—Trustees and Officers.”
65
|
|
|
|
|
|
|
|
|
Position with Allianz
|
|
|
|
|
|
Global Fund
|
|
|
|
Name
|
|
Management
|
|
Recent Professional Experience
|
|
John Carroll
|
|
Management Board
|
|
Mr. Carroll is a managing
director and Head of U.S.
Retail Distribution with
Allianz Global Investors,
which he joined in 2008. He
has overall accountability
for the operating results of
the firm’s U.S. retail
business, and his sales and
national accounts teams are
responsible for the placement
and distribution of the
firm’s asset-management
products offered through
broker-dealers, financial
advisors and platforms. Mr.
Carroll is also a member of
the firm’s U.S. Executive
Committee and U.S. Operating
Committee. He has 27 years of
investment-industry
experience. Before joining
the firm, he worked at
Merrill Lynch for more than
20 years, where he most
recently was a managing
director, co-head of the
Merrill Lynch Insurance Group
and head of insurance
distribution; prior to that,
he was head of relationship
management in the firm’s
Distribution and Business
Development Group. Mr.
Carroll has a B.A. in
economics from Rutgers
University and an M.B.A. from
the Rutgers Graduate School
of Business.
|
|
|
|
|
|
|
|
David Jobson
|
|
Management Board
|
|
Mr. Jobson is Head of Product
Management and Strategy and a
managing director with
Allianz Global Investors,
which he joined in 2007. He
oversees product development
and management efforts for
all of the firm’s investment
strategies managed and
distributed in the U.S., and
supports the firm’s U.S.
sales teams. He is a member
of the Global Product
Committee, which defines
product strategy for the
global organization, and the
U.S. Executive Committee. Mr.
Jobson has 25 years of
investment-industry
experience. He previously
worked at UBS Financial
Services Inc., where he
oversaw a
portfolio-construction team
that managed portfolio models
offered in various UBS
investment programs. Before
that, he was the director of
the UBS Investment Manager
Research group. He also
worked at Towers Perrin,
where he specialized in
researching investment
managers and provided
consultation on asset
allocation and
investment-manager selection.
Mr. Jobson has a B.S. with
honors in statistics from
Monash University in
Melbourne, Australia. He is a
CFA charterholder and a
fellow of the Institute of
Actuaries of Australia.
|
Sub-Advisory Agreements
The Manager employs Sub-Advisers to provide investment advisory services to each Fund pursuant
to sub-advisory agreements (each a “Sub-Advisory Agreement”) between the Manager and the particular
Sub-Adviser. The Manager currently has five investment management affiliates that are also indirect
subsidiaries of AAMA, two of which, NFJ Investment Group LLC (“NFJ”) and Allianz Global Investors
U.S. LLC (“AllianzGI U.S.”), manage one or more of the Funds. Fuller & Thaler Asset Management,
Inc. (“Fuller & Thaler”) manages one of the Funds and is not an affiliate of the Manager.
AllianzGI U.S.
Pursuant to an Amended and Restated Sub-Advisory Agreement between the Manager and AllianzGI
U.S. (the “AllianzGI U.S. Sub-Advisory Agreement”), AllianzGI U.S. is the Sub-Adviser and provides
investment advisory services to the AllianzGI U.S. Funds and the Target Funds. Pursuant to the
terms of the AllianzGI U.S. Sub-Advisory Agreement, AllianzGI U.S. is responsible for managing,
either directly or through others selected by it, the investment of the assets of the AllianzGI
U.S. Funds and the Target Funds, subject to the general oversight and supervision of the Manager
and the Board of Trustees. For the services provided to the AllianzGI U.S. Funds, the Manager (not
the Trust) pays AllianzGI U.S. a monthly fee for each Fund at the following annual rates (based on
the average daily net assets of the particular Fund): 0.37% for Convertible Fund, 0.26% for the
Global Managed Volatility Fund, 0.31% for the High Yield Bond Fund, 0.81% for the Micro Cap Fund,
0.8125% for the Structured Alpha Fund, 0.98% for the Ultra Micro Cap Fund, 0.59% for U.S. Small-Cap
Growth Fund, 0.455% for the U.S. Equity Hedged Fund, 0.715% for the China Equity Fund, 0.40% for
the Disciplined Equity Fund, 0.54% for the Dynamic Emerging Multi-Asset Fund, [ ]% for the
Emerging Markets Debt Fund, 0.20% for the Best Styles Global Equity Fund, 0.49% for the Global
Fundamental Strategy Fund, 0.54% for the Global Water Fund, 0.65% for the International Small-Cap
Fund, 0.45% for the Multi-Asset Real Return Fund, 0.65% for the Redwood Fund and 0.29% for Short
Duration High Income Fund. For the services provided to the Target Funds, the Manager (not the
Trust) pays AllianzGI U.S. a monthly fee for each Fund at the following annual rates (based on the
average daily net assets of the particular Fund): 0.05% for each of the Target Date Funds; and for
the Global Allocation Fund and Global Growth Allocation Fund 0.15% with respect to Fund assets
invested in other Funds of the Trust and other investment companies or series thereof, and 0.60%
with respect to assets invested directly in securities and other instruments.
66
On August 25, 2010, AllianzGI U.S. assumed the role of investment sub-adviser to certain of
the AllianzGI U.S. Funds from Nicholas-Applegate Capital Management LLC, its subsidiary, pursuant
to a Novation of Sub-Advisory Agreement. Please see the section titled “The Trust” for additional
information.
The Target Funds were previously managed by AGI Solutions, which merged into AllianzGI U.S. in
January 2013. AGI Solutions was organized in 2008 to manage discretionary accounts investing
primarily in certain affiliated mutual funds and exchange-traded funds (“ETFs”) sponsored by AAMA
and Pacific Investment Management Company (“PIMCO”) (the “Underlying Funds”).
Certain of the AllianzGI U.S. Funds, China Equity Fund, the Disciplined Equity Fund, the
Global Water Fund, the International Small-Cap Fund (formerly the AGIC International Growth
Opportunities Fund), the Redwood Fund and the Short Duration High Income Fund were previously
managed by RCM, which merged into AllianzGI U.S. in April 2013.
As of [ ], AllianzGI U.S. managed approximately [ ] in assets.
AllianzGI U.S. is registered as an investment adviser with the SEC and is organized as a
Delaware limited liability company. Its principal place of business is located at 1633 Broadway,
New York, New York 10019.
AllianzGI U.S. provides investment management services across a broad class of assets
including equity, fixed income, futures and options, convertibles and other securities and
derivative instruments. AllianzGI U.S.’s primary business is to provide discretionary advisory
services to institutional clients through its separate account management services. In addition,
AllianzGI U.S. provides discretionary investment advisory services to a variety of commingled funds
(including SEC registered open-end investment companies, SEC registered closed-end investment
companies and other commingled funds that are not registered with the SEC) which may be sponsored
or established by AllianzGI U.S., its affiliates or by unaffiliated third parties. AllianzGI U.S.
also participates as a non-discretionary investment adviser providing investment models to
unaffiliated third parties.
In addition to the advisory-related services noted above, AllianzGI U.S. also provides
administration and legal/compliance oversight services, as well as global client service, marketing
and sales support to NFJ Investment Group LLC.
Fuller & Thaler
Pursuant to a Sub-Advisory Agreement between the Manager and Fuller & Thaler (the “Fuller &
Thaler Sub-Advisory Agreement”), Fuller & Thaler serves as the Sub-Adviser and provides investment
advisory services to the
Behavioral Advantage Large Cap Fund
. Pursuant to the terms of the Fuller &
Thaler Sub-Advisory Agreement, Fuller & Thaler is responsible for managing, either directly or
through others selected by it, the investment of the Fund’s assets, subject to the general
oversight and supervision of the Manager and the Board of Trustees. For the services provided, the
Manager (not the Trust) pays Fuller & Thaler a monthly fee for the
Behavioral Advantage Large Cap
Fund
at the annual rate (based on the average daily net assets of the
Behavioral Advantage Large
Cap Fund
) of 0.16%.
Fuller & Thaler is an investment management firm organized as a California corporation. Fuller
& Thaler is located at 411 Borel Avenue, Suite 300, San Mateo, CA 94402. Fuller & Thaler provides
investment management services primarily in long only and long-short equity strategies. Fuller &
Thaler’s primary business is to provide discretionary advisory services to institutional clients
such as pension plans, pooled funds, and foundations. As of December 31, 2013, Fuller & Thaler had
assets under management of approximately $2.05 billion. Fuller & Thaler is not an affiliate of
AAMA.
NFJ
Pursuant to a Sub-Advisory Agreement between the Manager and NFJ (the “NFJ Sub-Advisory
Agreement”), NFJ serves as the Sub-Adviser and provides investment advisory services to the NFJ
Funds. Pursuant to the terms of the NFJ Sub-Advisory Agreement, NFJ is responsible for managing,
either directly or through others selected by it, the investment of the NFJ Funds’ assets, subject
to the general oversight and supervision of the Manager and the Board of Trustees. For the services
provided, the Manager (not the Trust) pays NFJ a monthly fee for each Fund at the following annual
rates (based on the average daily net assets of the particular Fund): 0.65% for the NFJ Emerging
Markets Value Fund, 0.50% for the NFJ Global Dividend Value Fund, 0.65% for the NFJ International
Small-Cap Value Fund and 0.50% for the NFJ International Value II Fund.
NFJ is an investment management firm organized as a Delaware limited liability company and is
wholly-owned subsidiary of AllianzGI U.S., which, in turn is indirectly owned by Allianz SE.
AllianzGI U.S. is the sole managing member of NFJ. NFJ is the successor investment adviser to NFJ
Investment Group, Inc., which commenced operations in 1989. NFJ is located at 2100 Ross Avenue,
Suite 700, Dallas, Texas 75201. AllianzGI U.S. is located at 1633 Broadway, New York, New York
10019. NFJ provides investment management services to institutional accounts. Accounts managed and
advised by NFJ (including both discretionary and non-discretionary accounts) had combined assets,
as of December 31, 2013, of approximately $43.4 billion.
67
The following table sets forth the amount of portfolio management fees paid by the Manager to
the applicable Sub-Adviser for each of the Funds for the last three fiscal years. Because certain
of the Funds are newly formed, the Manager did not pay any sub-advisory fee amounts to Sub-Advisers
during the periods noted for such Funds.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
Year Ended
|
|
Year Ended
|
|
Fund
|
|
11/30/13
|
|
11/30/12
|
|
11/30/11
|
|
Behavioral Advantage Large Cap Fund
|
|
$
|
28,888
|
|
|
$
|
21,226
|
|
|
$
|
3,738
|
|
|
Best Styles Global Equity Fund
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
China Equity Fund
|
|
|
29,937
|
|
|
|
28,236
|
|
|
|
33,751
|
|
|
Convertible Fund
|
|
|
5,954,827
|
|
|
|
3,086,641
|
|
|
|
2,391,662
|
|
|
Disciplined Equity Fund
|
|
|
199,293
|
|
|
|
170,433
|
|
|
|
172,802
|
|
|
Dynamic Emerging Multi-Asset Fund
|
|
|
25,174
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
Emerging Markets Debt Fund
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
Global Allocation Fund
|
|
|
313,145
|
|
|
|
315,372
|
|
|
|
354,357
|
|
|
Global Fundamental Strategy Fund
|
|
|
41,679
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
Global Growth Allocation Fund
|
|
|
12,038
|
|
|
|
10,721
|
|
|
|
13,761
|
|
|
Global Managed Volatility Fund
|
|
|
39,877
|
|
|
|
29,416
|
|
|
|
N/A
|
|
|
Global Water Fund
|
|
|
919,684
|
|
|
|
540,314
|
|
|
|
379,105
|
|
|
High Yield Bond Fund
|
|
|
1,221,436
|
|
|
|
819,599
|
|
|
|
341,675
|
|
|
International Small-Cap Fund
|
|
|
712,682
|
|
|
|
736,408
|
|
|
|
924,973
|
|
|
Micro Cap Fund
|
|
|
286,494
|
|
|
|
354,382
|
|
|
|
447,323
|
|
|
Multi-Asset Real Return Fund
|
|
|
22,480
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
NFJ Emerging Markets Value Fund
|
|
|
37,530
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
NFJ Global Dividend Value Fund
|
|
|
344,111
|
|
|
|
205,946
|
|
|
|
154,438
|
|
|
NFJ International Small-Cap Value Fund
|
|
|
56,511
|
|
|
|
11,268
|
|
|
|
N/A
|
|
|
NFJ International Value II Fund
|
|
|
20,832
|
|
|
|
15,537
|
|
|
|
N/A
|
|
|
Redwood Fund
|
|
|
51,542
|
|
|
|
63,982
|
|
|
|
42,417
|
|
|
Retirement 2015 Fund
|
|
|
11,053
|
|
|
|
5,804
|
|
|
|
12,012
|
|
|
Retirement 2020 Fund
|
|
|
15,228
|
|
|
|
4,183
|
|
|
|
7,547
|
|
|
Retirement 2025 Fund
|
|
|
13,991
|
|
|
|
2,332
|
|
|
|
N/A
|
|
|
Retirement 2030 Fund
|
|
|
17,497
|
|
|
|
5,818
|
|
|
|
9,050
|
|
|
Retirement 2035 Fund
|
|
|
11,179
|
|
|
|
2,212
|
|
|
|
N/A
|
|
|
Retirement 2040 Fund
|
|
|
11,212
|
|
|
|
3,869
|
|
|
|
7,379
|
|
|
Retirement 2045 Fund
|
|
|
5,185
|
|
|
|
1,818
|
|
|
|
N/A
|
|
|
Retirement 2050 Fund
|
|
|
5,556
|
|
|
|
3,324
|
|
|
|
7,185
|
|
|
Retirement 2055 Fund
|
|
|
2,135
|
|
|
|
1,608
|
|
|
|
N/A
|
|
|
Retirement Income Fund
|
|
|
14,953
|
|
|
|
10,231
|
|
|
|
12,527
|
|
|
Short Duration High Income Fund
|
|
|
1,116,012
|
|
|
|
209,103
|
|
|
|
3,300
|
|
|
Structured Alpha Fund
|
|
|
76,129
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
Ultra Micro Cap Fund
|
|
|
534,703
|
|
|
|
132,602
|
|
|
|
75,739
|
|
|
U.S. Equity Hedged Fund
|
|
|
24,881
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
U.S. Small-Cap Growth Fund
|
|
|
178,509
|
|
|
|
123,367
|
|
|
|
125,786
|
|
|
TOTAL
|
|
$
|
12,356,380
|
|
|
$
|
6,915,752
|
|
|
$
|
5,520,527
|
|
Portfolio Manager Compensation, Other Accounts Managed, Conflicts of Interest and Corporate Culture
Fuller & Thaler
Compensation
The following explains the compensation structure of each individual (as listed in the
applicable Prospectus) who shares primary responsibility for day-to-day portfolio management of the
Fund.
Portfolio managers are compensated with base salaries and annual bonuses that are generally in
line with or above industry averages. The bonuses correlate highly with overall firm revenues, are
subjective in nature, and not tied to performance in a given year, as Fuller & Thaler believes
objective bonuses tied to benchmarks create poor incentives for portfolio managers as opposed to
encouraging them to follow a disciplined investment process. Bonuses and equity distribution are
determined by the compensation and stock committees with input from various managers throughout the
organization.
68
The firm has Executive Stock Purchase and Deferred Compensation plans that allow key
professionals to acquire equity in the firm and receive deferred compensation at retirement. For a
key professional who has been with the firm for 5 years or more, the value of these benefits may be
a large part of his/her net worth.
All employees also participate in an employee benefit plan. The employee benefit plan includes
a health care plan, an employee 401K plan which includes (up to the legal limit) a 50% match by the
firm that is immediately fully-vested for the employee, and discretionary profit sharing subject to
the profitability of the firm.
Other Accounts Managed
The following summarizes information regarding each of the accounts, excluding the Fund’s
portfolio, including amounts managed by a team, committee, or other group that includes the
portfolio manager. Except as noted below, the information is as of November 30, 2013.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Pooled
|
|
|
|
|
|
|
|
|
|
Other Registered
|
|
|
|
Vehicles
|
|
Other Accounts
|
|
Investment Companies
|
|
Portfolio Manager
|
|
#
|
|
AUM ($ million)
|
|
#
|
|
AUM ($ million)
|
|
#
|
|
AUM ($ million)
|
|
Raife Giovinazzo
|
|
|
0
|
|
|
|
0
|
|
|
|
1
|
|
|
|
97
|
|
|
|
0
|
|
|
|
0
|
|
|
Russell J. Fuller
|
|
|
0
|
|
|
|
0
|
|
|
|
1
|
|
|
|
97
|
|
|
|
1
|
|
|
|
627
|
|
The following table provides information regarding other accounts managed for which management
fees are based on the performance of the pooled vehicle:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Pooled
|
|
|
|
|
|
|
|
|
|
Other Registered
|
|
|
|
Vehicles
|
|
Other Accounts
|
|
Investment Companies
|
|
Portfolio Manager
|
|
#
|
|
AUM ($ million)
|
|
#
|
|
AUM ($ million)
|
|
#
|
|
AUM ($ million)
|
|
Raife Giovinazzo
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Russell J. Fuller
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Potential Conflicts of Interest
Responsibility for managing Fuller & Thaler’s investment strategies is organized according to
investment styles (growth, value or blend) and market capitalization (micro-cap, small-cap,
mid-cap, or large-cap). Generally, a portfolio manager is responsible for managing all the client
portfolios with a certain investment style and market capitalization. Therefore, portfolio
holdings, relative position sizes and industry and sector exposures tend to be similar across
portfolios in the same strategy, which minimizes the potential for conflicts of interest.
Another potential conflict of interest may be perceived with respect to compensation. Fuller &
Thaler may receive more compensation with respect to certain accounts than that received with
respect to the Fund. Such greater compensation may be attributable to the fact that some accounts
may be larger than the Fund, some accounts may pay a higher management fee rate than the Fund, or
some accounts may also pay a performance fee unlike the Fund. This may create a potential conflict
of interest for Fuller & Thaler or its portfolio managers by providing an incentive to favor these
other accounts when, for example, placing securities transactions. Fuller & Thaler may have an
incentive to allocate securities that are expected to increase in value to favored accounts. To
address this, Fuller & Thaler has established policies designed to achieve fair and equitable
allocation of investment opportunities among its clients over time. As a matter of general policy,
Fuller & Thaler aggregates orders for the same equity security placed at around the same time. When
aggregated trades are executed, accounts participating in the trade will be allocated their pro
rata share on an average price basis, subject to certain limited exceptions. In the event pro rata
allocation may not be feasible or in the best interest of its clients, Fuller & Thaler will seek to
allocate transactions in a fair and equitable manner over time.
Another potential conflict of interest may be perceived to arise if transactions in one
account closely follow related transactions in a different account, such as when a purchase
increases the cost of securities subsequently purchased by another account, or when a sale in one
account lowers the sale price received in a sale by a second account. If Fuller & Thaler manages
accounts that engage in short sales of securities of the type in which the Fund invests, Fuller &
Thaler could be seen as harming the performance of the Fund for the benefit of the accounts
engaging in short sales if the short sales cause the market value of the securities to fall.
69
A Fund’s portfolio managers may face other potential conflicts of interest in managing a Fund,
and the description above is not a complete description of every conflict that could be deemed to
exist in managing both the Fund and other accounts.
Fuller & Thaler believes it has adopted policies and procedures to address actual and
potential conflicts of interest; however, there is no guarantee that such policies and procedures
will detect each and every situation in which a conflict may arise.
Securities Ownership
The following table discloses the dollar range of equity securities beneficially owned by each
portfolio manager in the Fund the portfolio manager manages. Except as noted below, the information
is as of November 30, 2013.
|
|
|
|
|
|
|
Dollar Range of Equity Securities
|
|
Raife Giovinazzo
|
|
$100,001 - $500,000
|
|
Russell J. Fuller
|
|
$500,001 - $1,000,000
|
Corporate Culture of Fuller & Thaler
Fuller & Thaler’s corporate culture reflects the values of placing the best interest of our
clients and prospective clients first while conducting ourselves with the highest level of
professionalism and integrity. The firm encourages employee team work in considering unique points
of view, as well as supports continued learning through ongoing education with the belief that
these values are critical to maintaining an uncompromising pursuit of quality and knowledge which
will benefit our clients and contribute to the growth and success of our firm.
AllianzGI U.S.
Compensation Structure for AllianzGI U.S. (including NFJ)
Our compensation system is designed to support our corporate values and culture. While we
acknowledge the importance of financial incentives and seek to pay top quartile compensation for
top quartile performance, we also believe that compensation is only one of a number of critically
important elements that allow the emergence of a strong, winning culture that attracts, retains and
motivates talented investors and teams. Our compensation system supports our belief that investment
professionals are a key element of the company’s success in meeting clients’ objectives. To the
extent that there are regional experts located in other AllianzGI U.S.-affiliated offices worldwide
who are “associated persons” of AllianzGI U.S. and who serve as portfolio managers for Funds, this
compensation strategy is applied independently by the AllianzGI U.S.-affiliated company that
employs such a portfolio manager. In such cases, AllianzGI U.S. compensates the employing company
through an affiliated transfer pricing arrangement that takes into account the value placed by
AllianzGI U.S. on the shared service of the portfolio manager.
The primary components of compensation are the base salary and an annual discretionary
variable compensation payment. This variable compensation component typically comprises a cash
bonus that pays out immediately as well as a deferred component, for members of staff whose
variable compensation exceeds a certain threshold. The deferred component for most recipients would
be a notional award of the Long Term Incentive Program (“LTIP”); for members of staff whose
variable compensation exceeds an additional threshold, the deferred compensation is itself split
50%/50% between the LTIP and a Deferral into Funds program (“DIF”). Currently, the marginal rate of
deferral of the variable compensation can reach 42% for those in the highest variable compensation
bracket. Overall awards, splits and components are regularly reviewed to ensure they meet industry
best practice and, where applicable, at a minimum comply with regulatory standards.
Base salary typically reflects scope, responsibilities and experience required in a particular
role, be it on the investment side or any other function in our company. Base compensation is
regularly reviewed against peers with the help of compensation survey data. Base compensation is
typically a greater percentage of total compensation for more junior positions, while for the most
senior roles it will be a comparatively small component, often capped and only adjusted every few
years.
Discretionary variable compensation is primarily designed to reflect the achievements of an
individual against set goals, over a certain time period. For an investment professional these
goals will typically be 70% quantitative and 30% qualitative. The former will reflect a weighted
average of investment performance over a three-year rolling time period (one-year (25%) and three
year (75%) results) and the latter reflects contributions to broader team goals, contributions made
to client review meetings, product development or product refinement initiatives. Portfolio
managers have their performance metric aligned with the benchmarks of the client portfolios they
manage.
70
The LTIP element of the variable compensation cliff vests three years after each (typically
annual) award. Its value is directly tied to the operating result of Allianz Global Investors over
the three year period of the award.
The DIF element of the variable compensation cliff vests three years after each (typically
annual) award and enables these members of staff to invest in a range of Allianz Global Investors
funds (investment professionals are encouraged to invest into their own funds or funds where they
may be influential from a research or product group relationship perspective). Again, the value of
the DIF awards is determined by the growth of the fund(s) value over the three year period covering
each award.
Assuming an annual deferral of 33% over a three year period, a typical member of staff will
have roughly one year’s variable compensation (3x33%) as a deferred component ‘in the bank’. Three
years after the first award, and for as long as deferred components were awarded without break,
cash payments in each year will consist of the annual cash bonus for that current year’s
performance as well as a payout from LTIP/DIF commensurate with the prior cumulative three-year
performance.
There are a small number of revenue sharing arrangements that generate variable compensation
for specialist investment teams, as well as commission payments for a limited number of members of
staff in distribution. These payments are subject to the same deferral rules and deferred
instruments as described above for the discretionary compensation element.
In addition to competitive compensation, the firm’s approach to retention includes providing a
challenging career path for each professional, a supportive culture to ensure each employee’s
progress and a full benefits package.
Other Accounts Managed
The following summarizes information regarding each of the accounts, excluding portfolios of
the Funds that were managed by portfolio managers, including amounts managed by a team, committee,
or other group that includes the portfolio manager. Except as noted below, the information is as of
November 30, 2013.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Pooled
|
|
|
|
|
|
|
|
|
|
Other Registered
|
|
|
|
Vehicles
|
|
Other Accounts
|
|
Investment Companies
|
|
Portfolio Manager
|
|
#
|
|
AUM ($ million)
|
|
#
|
|
AUM ($ million)
|
|
#
|
|
AUM ($ million)
|
|
K. Mathew Axline
|
|
|
5
|
|
|
|
673.4
|
|
|
|
15
|
|
|
|
1,075.7
|
|
|
|
2
|
|
|
|
33.3
|
|
|
Zeke Diwan**
|
|
|
[ ]
|
|
|
|
[ ]
|
|
|
|
[ ]
|
|
|
|
[ ]
|
|
|
|
[ ]
|
|
|
|
[ ]
|
|
|
James Dudnick, CFA*
|
|
|
2
|
|
|
|
344.4
|
|
|
|
6
|
|
|
|
467.1
|
|
|
|
0
|
|
|
|
0
|
|
|
Douglas G. Forsyth, CFA
|
|
|
8
|
|
|
|
12,026.9
|
|
|
|
17
|
|
|
|
2,698.3
|
|
|
|
1
|
|
|
|
1,737.7
|
|
|
Kunal Ghosh
|
|
|
4
|
|
|
|
883.8
|
|
|
|
10
|
|
|
|
260.3
|
|
|
|
5
|
|
|
|
328.3
|
|
|
Steven Gish, CFA*
|
|
|
2
|
|
|
|
344.4
|
|
|
|
6
|
|
|
|
467.1
|
|
|
|
0
|
|
|
|
0
|
|
|
Justin Kass, CFA
|
|
|
8
|
|
|
|
12,026.9
|
|
|
|
17
|
|
|
|
2,698.3
|
|
|
|
1
|
|
|
|
1,737.7
|
|
|
Robert S. Marren
|
|
|
5
|
|
|
|
673.4
|
|
|
|
15
|
|
|
|
1,075.7
|
|
|
|
2
|
|
|
|
33.3
|
|
|
John C. McCraw
|
|
|
5
|
|
|
|
673.4
|
|
|
|
15
|
|
|
|
1,075.7
|
|
|
|
2
|
|
|
|
33.3
|
|
|
Greg Saichin**
|
|
|
[ ]
|
|
|
|
[ ]
|
|
|
|
[ ]
|
|
|
|
[ ]
|
|
|
|
[ ]
|
|
|
|
[ ]
|
|
|
William L. Stickney
|
|
|
8
|
|
|
|
12,026.9
|
|
|
|
17
|
|
|
|
2,698.3
|
|
|
|
1
|
|
|
|
1,737.7
|
|
|
Greg P. Tournant
|
|
|
7
|
|
|
|
1,666.1
|
|
|
|
3
|
|
|
|
12.2
|
|
|
|
1
|
|
|
|
0.5
|
|
|
Steven G. Bond-Nelson
|
|
|
7
|
|
|
|
1,666.1
|
|
|
|
3
|
|
|
|
12.2
|
|
|
|
1
|
|
|
|
0.5
|
|
|
Trevor Taylor
|
|
|
7
|
|
|
|
1,666.1
|
|
|
|
3
|
|
|
|
12.2
|
|
|
|
1
|
|
|
|
0.5
|
|
|
Mark P. Roemer
|
|
|
4
|
|
|
|
883.8
|
|
|
|
10
|
|
|
|
260.3
|
|
|
|
5
|
|
|
|
328.3
|
|
|
Steven Tael, PhD, CFA
|
|
|
4
|
|
|
|
883.8
|
|
|
|
10
|
|
|
|
260.3
|
|
|
|
5
|
|
|
|
328.3
|
|
|
Paul Pietranico
|
|
|
4
|
|
|
|
1,182.5
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Stephen Sexauer
|
|
|
4
|
|
|
|
1,182.5
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
James Macey, CFA, CAIA
|
|
|
4
|
|
|
|
1,182.5
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Rahul Malhotra
|
|
|
4
|
|
|
|
1,182.5
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Andreas Fruschki
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Christina Chung
|
|
|
9
|
|
|
|
2,055.5
|
|
|
|
12
|
|
|
|
1,530.1
|
|
|
|
1
|
|
|
|
415.6
|
|
|
Raphael L. Edelman
|
|
|
1
|
|
|
|
15.0
|
|
|
|
9
|
|
|
|
3,069.0
|
|
|
|
1
|
|
|
|
469.0
|
|
|
Eric Scholl
|
|
|
3
|
|
|
|
834.3
|
|
|
|
29
|
|
|
|
1,126.5
|
|
|
|
0
|
|
|
|
0
|
|
|
Andrew Neville
|
|
|
6
|
|
|
|
2,832.1
|
|
|
|
24
|
|
|
|
5,020.4
|
|
|
|
3
|
|
|
|
295.5
|
|
|
Dennis Lai
|
|
|
6
|
|
|
|
694.7
|
|
|
|
2
|
|
|
|
62.4
|
|
|
|
0
|
|
|
|
0
|
|
|
Koji Nakatsuka
|
|
|
1
|
|
|
|
24.3
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Frank Hansen
|
|
|
6
|
|
|
|
2,832.1
|
|
|
|
24
|
|
|
|
5,020.4
|
|
|
|
3
|
|
|
|
295.5
|
|
|
Bjoern Mehrmann
|
|
|
6
|
|
|
|
2,832.1
|
|
|
|
24
|
|
|
|
5,020.4
|
|
|
|
3
|
|
|
|
295.5
|
|
|
Stefan Nixel
|
|
|
14
|
|
|
|
1,919.3
|
|
|
|
10
|
|
|
|
1,429.6
|
|
|
|
0
|
|
|
|
0
|
|
|
Zijian Yang
|
|
|
14
|
|
|
|
1,919.3
|
|
|
|
10
|
|
|
|
1,429.6
|
|
|
|
0
|
|
|
|
0
|
|
71
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Pooled
|
|
|
|
|
|
|
|
|
|
Other Registered
|
|
|
|
Vehicles
|
|
Other Accounts
|
|
Investment Companies
|
|
Portfolio Manager
|
|
#
|
|
AUM ($ million)
|
|
#
|
|
AUM ($ million)
|
|
#
|
|
AUM ($ million)
|
|
Michael Stamos
|
|
|
10
|
|
|
|
362.8
|
|
|
|
15
|
|
|
|
2,102.9
|
|
|
|
3
|
|
|
|
4,408.7
|
|
|
Giorgio Carlino
|
|
|
10
|
|
|
|
362.8
|
|
|
|
15
|
|
|
|
2,102.9
|
|
|
|
3
|
|
|
|
4,408.7
|
|
|
Stephen Lyford
|
|
|
5
|
|
|
|
673.4
|
|
|
|
15
|
|
|
|
1,075.7
|
|
|
|
2
|
|
|
|
33.3
|
|
|
Andreas E. F. Utermann
|
|
|
25
|
|
|
|
7,323.8
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Armin Kayser
|
|
|
25
|
|
|
|
7,323.8
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Eric Boess, CFA
|
|
|
26
|
|
|
|
7,330.0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Karl Happe
|
|
|
25
|
|
|
|
7,323.8
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Steven J. Berexa, CFA
|
|
|
8
|
|
|
|
1,627.0
|
|
|
|
3
|
|
|
|
93.0
|
|
|
|
1
|
|
|
|
4,392.0
|
|
|
Dr. Klaus Teloeken
|
|
|
3
|
|
|
|
915.2
|
|
|
|
2
|
|
|
|
540.2
|
|
|
|
0
|
|
|
|
0
|
|
|
Dr. Rainer Tafelmayer
|
|
|
3
|
|
|
|
915.2
|
|
|
|
2
|
|
|
|
540.2
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
*
|
|
Information provided as of February 28, 2014.
|
|
|
|
**
|
|
Information provided as of [ ], 2014.
|
The following table provides information regarding other accounts managed for which management fees
are based on the performance of the pooled vehicle:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Pooled
|
|
|
|
|
|
|
|
|
|
Other Registered
|
|
|
|
Vehicles
|
|
Other Accounts
|
|
Investment Companies
|
|
Portfolio Manager
|
|
#
|
|
AUM ($ million)
|
|
#
|
|
AUM ($ million)
|
|
#
|
|
AUM ($ million)
|
|
K. Mathew Axline
|
|
|
1
|
|
|
|
51.4
|
|
|
|
2
|
|
|
|
160.2
|
|
|
|
0
|
|
|
|
0
|
|
|
Zeke Diwan**
|
|
|
[ ]
|
|
|
|
[ ]
|
|
|
|
[ ]
|
|
|
|
[ ]
|
|
|
|
[ ]
|
|
|
|
[ ]
|
|
|
James Dudnick, CFA*
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Douglas G. Forsyth, CFA
|
|
|
2
|
|
|
|
587.2
|
|
|
|
1
|
|
|
|
215.6
|
|
|
|
0
|
|
|
|
0
|
|
|
Kunal Ghosh
|
|
|
1
|
|
|
|
320.4
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Steven Gish, CFA*
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Justin Kass, CFA
|
|
|
2
|
|
|
|
587.2
|
|
|
|
1
|
|
|
|
215.6
|
|
|
|
0
|
|
|
|
0
|
|
|
Robert S. Marren
|
|
|
1
|
|
|
|
51.4
|
|
|
|
2
|
|
|
|
160.2
|
|
|
|
0
|
|
|
|
0
|
|
|
John C. McCraw
|
|
|
1
|
|
|
|
51.4
|
|
|
|
2
|
|
|
|
160.2
|
|
|
|
0
|
|
|
|
0
|
|
|
Greg Saichin**
|
|
|
[ ]
|
|
|
|
[ ]
|
|
|
|
[ ]
|
|
|
|
[ ]
|
|
|
|
[ ]
|
|
|
|
[ ]
|
|
|
William L. Stickney
|
|
|
2
|
|
|
|
587.2
|
|
|
|
1
|
|
|
|
215.6
|
|
|
|
0
|
|
|
|
0
|
|
|
Greg P. Tournant
|
|
|
7
|
|
|
|
1,666.1
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Steven G. Bond-Nelson
|
|
|
7
|
|
|
|
1,666.1
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Trevor Taylor
|
|
|
7
|
|
|
|
1,666.1
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Mark P. Roemer
|
|
|
1
|
|
|
|
320.4
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Steven Tael, PhD, CFA
|
|
|
1
|
|
|
|
320.4
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Paul Pietranico
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Stephen Sexauer
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
James Macey, CFA, CAIA
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Rahul Malhotra
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Andreas Fruschki
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Christina Chung
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Raphael L. Edelman
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Eric Scholl
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Andrew Neville
|
|
|
2
|
|
|
|
1,345.5
|
|
|
|
7
|
|
|
|
932.4
|
|
|
|
0
|
|
|
|
0
|
|
|
Dennis Lai
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Koji Nakatsuka
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Frank Hansen
|
|
|
2
|
|
|
|
1,345.5
|
|
|
|
7
|
|
|
|
932.4
|
|
|
|
0
|
|
|
|
0
|
|
|
Bjoern Mehrmann
|
|
|
2
|
|
|
|
1,345.5
|
|
|
|
7
|
|
|
|
932.4
|
|
|
|
0
|
|
|
|
0
|
|
|
Stefan Nixel
|
|
|
0
|
|
|
|
0
|
|
|
|
2
|
|
|
|
233.9
|
|
|
|
0
|
|
|
|
0
|
|
|
Zijian Yang
|
|
|
0
|
|
|
|
0
|
|
|
|
2
|
|
|
|
238.9
|
|
|
|
0
|
|
|
|
0
|
|
|
Michael Stamos
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Giorgio Carlino
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Stephen Lyford
|
|
|
1
|
|
|
|
51.4
|
|
|
|
2
|
|
|
|
160.2
|
|
|
|
0
|
|
|
|
0
|
|
|
Andreas E. F. Utermann
|
|
|
4
|
|
|
|
1,221.5
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Armin Kayser
|
|
|
4
|
|
|
|
1,221.5
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Eric Boess, CFA
|
|
|
4
|
|
|
|
1,231.0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Karl Happe
|
|
|
4
|
|
|
|
1,221.5
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
72
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Pooled
|
|
|
|
|
|
|
|
|
|
Other Registered
|
|
|
|
Vehicles
|
|
Other Accounts
|
|
Investment Companies
|
|
Portfolio Manager
|
|
#
|
|
AUM ($ million)
|
|
#
|
|
AUM ($ million)
|
|
#
|
|
AUM ($ million)
|
|
Steven J. Berexa, CFA
|
|
|
1
|
|
|
|
235.0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Dr. Klaus Teloeken
|
|
|
3
|
|
|
|
915.2
|
|
|
|
2
|
|
|
|
540.2
|
|
|
|
0
|
|
|
|
0
|
|
|
Dr. Rainer Tafelmayer
|
|
|
3
|
|
|
|
915.2
|
|
|
|
2
|
|
|
|
540.2
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
*
|
|
Information provided as of February 28, 2014.
|
|
|
|
**
|
|
Information provided as of [ ], 2014.
|
Potential Conflicts of Interest
Like other investment professionals with multiple clients, a portfolio manager for a Fund may
face certain potential conflicts of interest in connection with managing both the Fund and other
accounts at the same time. The paragraphs below describe some of these potential conflicts, which
AllianzGI U.S. believes are faced by investment professionals at most major financial firms.
AllianzGI U.S. has adopted compliance policies and procedures that address certain of these
potential conflicts. The management of accounts with different advisory fee rates and/or fee
structures, including accounts that pay advisory fees based on account performance (“performance
fee accounts”), may raise potential conflicts of interest by creating an incentive to favor
higher-fee accounts. These potential conflicts may include, among others:
|
|
•
|
|
The most attractive investments could be allocated to higher-fee accounts or performance
fee accounts.
|
|
|
|
|
•
|
|
The trading of higher-fee accounts could be favored as to timing and/or execution price.
For example, higher -fee accounts could be permitted to sell securities earlier than other
accounts when a prompt sale is desirable or to buy securities at an earlier and more
opportune time.
|
|
|
|
|
•
|
|
The investment management team could focus their time and efforts primarily on higher-fee
accounts due to a personal stake in compensation.
|
When AllianzGI U.S. considers the purchase or sale of a security to be in the best interests
of a Fund as well as other accounts, AllianzGI U.S.’s trading desk may, to the extent permitted by
applicable laws and regulations, aggregate the securities to be sold or purchased. Aggregation of
trades may create the potential for unfairness to a Fund or another account if one account is
favored over another in allocating the securities purchased or sold—for example, by allocating a
disproportionate amount of a security that is likely to increase in value to a favored account.
AllianzGI U.S. considers many factors when allocating securities among accounts, including the
account’s investment style, applicable investment restrictions, availability of securities,
available cash and other current holdings. AllianzGI U.S. attempts to allocate investment
opportunities among accounts in a fair and equitable manner. However, accounts are not assured of
participating equally or at all in particular investment allocations due to such factors as noted
above.
“Cross trades,” in which one AllianzGI U.S. account sells a particular security to another
account (potentially saving transaction costs for both accounts), may also pose a potential
conflict of interest when cross trades are effected in a manner perceived to favor one client over
another. For example, AllianzGI U.S. may cross a trade between performance fee account and a fixed
fee account that results in a benefit to the performance fee account and a detriment to the fixed
fee account. AllianzGI U.S. has adopted compliance procedures that provide that all cross trades
are to be made at an independent current market price, as required by law.
Another potential conflict of interest may arise from the different investment objectives and
strategies of a Fund and other accounts. For example, another account may have a shorter-term
investment horizon or different investment objectives, policies or restrictions than a Fund.
Depending on another account’s objectives or other factors, a portfolio manager may give advice and
make decisions that may differ from advice given, or the timing or nature of decisions made, with
respect to a Fund. In addition, investment decisions are subject to suitability for the particular
account involved. Thus, a particular security may not be bought or sold for certain accounts even
though it was bought or sold for other accounts at the same time. More rarely, a particular
security may be bought for one or more accounts managed by a portfolio manager when one or more
other accounts are selling the security (including short sales). There may be circumstances when
purchases or sales of portfolio securities for one or more accounts may have an adverse effect on
other accounts. AllianzGI U.S. maintains trading policies designed to provide portfolio managers an
opportunity to minimize the effect that short sales in one portfolio may have on holdings in other
portfolios.
A portfolio manager who is responsible for managing multiple funds and/or accounts may devote
unequal time and attention to the management of those funds and/or accounts. As a result, the
portfolio manager may not be able to formulate as complete a strategy or identify equally
attractive investment opportunities for each of those accounts as might be the case if he or she
were to devote substantially more attention to the management of a single fund. The effects of this
potential conflict may be more pronounced where funds and/or accounts overseen by a particular
portfolio manager have different investment strategies.
73
A Fund’s portfolio manager(s) may be able to select or influence the selection of the
broker/dealers that are used to execute securities transactions for the Fund. In addition to
executing trades, some brokers and dealers provide AllianzGI U.S. with brokerage and research
services (as those terms are defined in Section 28(e) of the Securities Exchange Act of 1934),
which may result in the payment of higher brokerage fees than might have otherwise be available.
These services may be more beneficial to certain funds or accounts than to others. In order to be
assured of continuing to receive services considered of value to its clients, AllianzGI U.S. has
adopted a brokerage allocation policy embodying the concepts of Section 28(e) of the Securities
Exchange Act of 1934. Although the payment of brokerage commissions is subject to the requirement
that the portfolio manager determine in good faith that the commissions are reasonable in relation
to the value of the brokerage and research services provided to the Fund and the Sub-Adviser’s
other clients, a portfolio manager’s decision as to the selection of brokers and dealers could
yield disproportionate costs and benefits among the funds and/or accounts that he or she manages.
A Fund’s portfolio manager(s) may also face other potential conflicts of interest in managing
a Fund, and the description above is not a complete description of every conflict that could be
deemed to exist in managing both the Funds and other accounts. In addition, a Fund’s portfolio
manager may also manage other accounts (including their personal assets or the assets of family
members) in their personal capacity.
AllianzGI U.S.’s investment personnel, including each Fund’s portfolio manager, are subject to
restrictions on engaging in personal securities transactions pursuant to AllianzGI U.S.’s Code of
Business Conduct and Code of Ethics (the “Code”), which contain provisions and requirements
designed to identify and address conflicts of interest between personal investment activities and
the interests of the Funds. The Code is designed to ensure that the personal securities
transactions, activities and interests of the employees of AllianzGI U.S. will not interfere with
(i) making decisions in the best interest of advisory clients (including the Funds) or (ii)
implementing such decisions while, at the same time, allowing employees to invest for their own
accounts.
Although the Target Funds utilize a primarily fund-of-funds strategy, from time to time,
potential conflicts of interest may arise between the portfolio managers’ management of the
investments of the Funds, on the one hand, and the management of other accounts, on the other. The
other accounts might have similar investment objectives or strategies as a Fund, track the same
index as a Fund tracks or otherwise hold, purchase or sell securities that are eligible to be held,
purchased or sold by a Fund. The other accounts might also have different investment objectives or
strategies than a Fund.
Pallas Investment Partners, L.P. (“Pallas”) and Related Entities
. Pallas is an investment
adviser registered with the SEC. Pallas is owned by Walter Price, a portfolio manager of a fund
that is part of the same fund complex as the Trust (namely, Allianz Funds). Mr. Price is dually
employed by Pallas and by AllianzGI U.S.
Pallas serves as investment manager to two unregistered investment companies (the “Pallas
Hedge Funds”) — Pallas Global Technology Hedge Fund, L.P. and Pallas Investments II, L.P., each a
Delaware limited partnership. The general partner of Pallas Investments II, L.P. and Pallas Global
Technology Hedge Fund, L.P. is Pallas Investments, LLC, a Delaware limited liability company (the
“General Partner”). Mr. Price owns a majority of the interests in the General Partner. AllianzGI
U.S. has the right to a minority percentage of the profits of Pallas that are derived from the
Pallas Hedge Funds. AllianzGI U.S. has a minority ownership interest in the General Partner.
Each of the Pallas Hedge Funds pays a management fee and an incentive fee (based on a
percentage of profits) to either Pallas or the General Partner. The management fee is 1.25% for
Pallas Investments II, L.P. and 1.50% for Pallas Global Technology Hedge Fund, L.P.
Mr. Price acts as portfolio manager for certain AllianzGI U.S. client accounts including,
among others, the AllianzGI Technology Fund, a series of Allianz Funds.
AllianzGI U.S. and Pallas share common employees, facilities, and systems. Pallas may act as
investment adviser to one or more of AllianzGI U.S.’s affiliates, and may serve as sub-adviser for
accounts or clients for which AllianzGI U.S. or one of its affiliates serves as investment manager
or investment adviser. AllianzGI U.S. also may provide other services, including but not limited to
investment advisory services or administrative services, to Pallas.
AllianzGI U.S., Pallas, and the Allianz Advisory Affiliates all engage in proprietary research
and all acquire investment information and research services from broker-dealers. AllianzGI U.S.
and the Allianz Advisory Affiliates share such research and investment information.
In addition, trades entered into by Pallas on behalf of Pallas’ clients are executed through
AllianzGI U.S.’s equity trading desk, and trades by Pallas on behalf of Pallas’ clients (including
the Pallas Hedge Funds) are aggregated with trades by AllianzGI U.S. on behalf of AllianzGI U.S.’s
clients. All trades on behalf of Pallas’ clients that are executed through AllianzGI U.S.’s equity
trading desk will be executed pursuant to procedures designed to ensure that all clients of both
AllianzGI U.S. and Pallas (including the Pallas Hedge Funds) are treated fairly and equitably over
time.
74
The General Partner and/or Pallas receive a participation in the profits of the Pallas Hedge
Funds. Mr. Price also invested personally in one or more of the Pallas Hedge Funds. As a result,
Mr. Price has a conflict of interest with respect to the management of the Pallas Hedge Funds and
the other accounts that he manages, including the AllianzGI Technology Fund, and he may have an
incentive to favor the Pallas Hedge Funds over other accounts that he manages. AllianzGI U.S. has
adopted procedures reasonably designed to ensure that Mr. Price meets his fiduciary obligations to
all clients for whom he acts as portfolio manager and treats all such clients fairly and equitably
over time.
Securities Ownership
The following table discloses the dollar range of equity securities beneficially owned by each
portfolio manager in the Fund(s) the portfolio manager manages. Except as noted below, the
information is as of November 30, 2013. Because the Emerging Markets Debt Fund is newly formed, no
portfolio manager beneficially owned any securities in the Fund as of the date of this Statement of
Additional Information.
|
|
|
|
|
|
|
Dollar Range of Equity Securities
|
|
Best Styles Global Equity Fund
|
|
|
|
Dr. Klaus Teloeken*
|
|
$0
|
|
Dr. Rainer Tafelmayer*
|
|
$0
|
|
Convertible Fund
|
|
|
|
Douglas G. Forsyth, CFA
|
|
Over $1,000,000
|
|
Justin Kass, CFA
|
|
Over $1,000,000
|
|
Dynamic Emerging Multi-Asset Fund
|
|
|
|
Stefan Nixel
|
|
$0
|
|
Dr. Zijian Yang
|
|
$0
|
|
Giorgio Carlino
|
|
$0
|
|
Global Fundamental Strategy Fund
|
|
|
|
Andreas E. F. Utermann
|
|
$0
|
|
Armin Kayser
|
|
$0
|
|
Eric Boess, CFA
|
|
$0
|
|
Karl Happe
|
|
$0
|
|
Steven J. Berexa, CFA
|
|
$0
|
|
Global Allocation Fund
|
|
|
|
Paul Pietranico
|
|
$0
|
|
Stephen Sexauer
|
|
$0
|
|
James Macey, CFA, CAIA
|
|
$100,001 - $500,000
|
|
Rahul Malhotra
|
|
$10,001 - $50,000
|
|
Global Growth Allocation Fund
|
|
|
|
Paul Pietranico
|
|
$50,001 - $100,000
|
|
Stephen Sexauer
|
|
$0
|
|
James Macey, CFA, CAIA
|
|
$0
|
|
Global Managed Volatility
|
|
|
|
Kunal Ghosh
|
|
$10,001 - $50,000
|
|
Mark P. Roemer
|
|
$0
|
|
Steven Tael, PhD, CFA
|
|
$0
|
|
High Yield Bond Fund
|
|
|
|
Douglas G. Forsyth, CFA
|
|
Over $1,000,000
|
|
William L. Stickney
|
|
Over $1,000,000
|
|
Micro Cap Fund
|
|
|
|
K. Mathew Axline
|
|
$100,001 - $500,000
|
|
John C. McCraw
|
|
$100,001 - $500,000
|
|
Robert S. Marren
|
|
$100,001 - $500,000
|
|
Stephen Lyford
|
|
$50,001 - $100,000
|
|
Multi-Asset Real Return Fund
|
|
|
|
Dr. Michael Stamos
|
|
$0
|
|
James Macey, CFA, CAIA*
|
|
$0
|
|
Giorgio Carlino
|
|
$0
|
75
|
|
|
|
|
|
|
Dollar Range of Equity Securities
|
|
Retirement 2015 Fund
|
|
|
|
Paul Pietranico
|
|
$0
|
|
Stephen Sexauer
|
|
$0
|
|
James Macey, CFA, CAIA
|
|
$0
|
|
Retirement 2020 Fund
|
|
|
|
Paul Pietranico
|
|
$0
|
|
Stephen Sexauer
|
|
$500,001 - $1,000,000
|
|
James Macey, CFA, CAIA
|
|
$0
|
|
Retirement 2025 Fund
|
|
|
|
Paul Pietranico
|
|
$0
|
|
Stephen Sexauer
|
|
$0
|
|
James Macey, CFA, CAIA
|
|
$0
|
|
Retirement 2030 Fund
|
|
|
|
Paul Pietranico
|
|
$100,001 - $500,000
|
|
Stephen Sexauer
|
|
$100,001 - $500,000
|
|
James Macey, CFA, CAIA
|
|
$0
|
|
Retirement 2035 Fund
|
|
|
|
Paul Pietranico
|
|
$0
|
|
Stephen Sexauer
|
|
$0
|
|
James Macey, CFA, CAIA
|
|
$0
|
|
Retirement 2040 Fund
|
|
|
|
Paul Pietranico
|
|
$0
|
|
Stephen Sexauer
|
|
$0
|
|
James Macey, CFA, CAIA
|
|
$100,001 - $500,000
|
|
Retirement 2045 Fund
|
|
|
|
Paul Pietranico
|
|
$0
|
|
Stephen Sexauer
|
|
$0
|
|
James Macey, CFA, CAIA
|
|
$0
|
|
Retirement 2050 Fund
|
|
|
|
Paul Pietranico
|
|
$100,001 - $500,000
|
|
Stephen Sexauer
|
|
$0
|
|
James Macey, CFA, CAIA
|
|
$0
|
|
Retirement 2055 Fund
|
|
|
|
Paul Pietranico
|
|
$0
|
|
Stephen Sexauer
|
|
$0
|
|
James Macey, CFA, CAIA
|
|
$0
|
|
Retirement Income Fund
|
|
|
|
Paul Pietranico
|
|
$0
|
|
Stephen Sexauer
|
|
$0
|
|
James Macey, CFA, CAIA
|
|
$10,001 - $50,000
|
|
Rahul Malhotra
|
|
$0
|
|
Structured Alpha Fund
|
|
|
|
Greg P. Tournant
|
|
$100,001 - $500,000
|
|
Stephen G. Bond-Nelson
|
|
$10,001 - $50,000
|
|
Trevor Taylor
|
|
$100,001 - $500,000
|
|
Ultra Micro Cap Fund
|
|
|
|
K. Mathew Axline
|
|
$50,001 - $100,000
|
|
John C. McCraw
|
|
Over $1,000,000
|
|
Robert S. Marren
|
|
$500,001 - $1,000,000
|
|
Stephen Lyford
|
|
$100,001 - $500,000
|
|
U.S. Small-Cap Growth Fund
|
|
|
|
K. Mathew Axline
|
|
$100,001 - $500,000
|
|
John C. McCraw
|
|
$100,001 - $500,000
|
|
Robert S. Marren
|
|
$100,001 - $500,000
|
|
Stephen Lyford
|
|
$100,001 - $500,000
|
|
U.S. Equity Hedged Fund
|
|
|
|
Greg P. Tournant
|
|
$100,001 - $500,000
|
|
Stephen G. Bond-Nelson
|
|
$10,001 - $50,000
|
|
Trevor Taylor
|
|
$100,001 - $500,000
|
|
China Equity Fund
|
|
|
|
Christina Chung
|
|
$0
|
76
|
|
|
|
|
|
|
Dollar Range of Equity Securities
|
|
Disciplined Equity Fund
|
|
|
|
Steven J. Berexa, CFA
|
|
$0
|
|
Global Water Fund
|
|
|
|
Andreas Fruschki
|
|
$0
|
|
International Small-Cap Fund
|
|
|
|
Andrew Neville
|
|
$0
|
|
Dennis Lai
|
|
$0
|
|
Koji Nakatsuka
|
|
$0
|
|
Frank Hansen
|
|
$0
|
|
Bjoern Mehrmann
|
|
$0
|
|
Redwood Fund
|
|
|
|
Raphael L. Edelman
|
|
$100,001 - $500,000
|
|
Short Duration High Income Fund
|
|
|
|
James Dudnick, CFA*
|
|
$50,001 - $100,000
|
|
Douglas G. Forsyth, CFA
|
|
$0
|
|
Steven Gish, CFA*
|
|
$100,001 - $500,000
|
|
Eric Scholl
|
|
Over $1,000,000
|
|
|
|
|
|
*
|
|
Information provided as of February 28, 2014.
|
NFJ
Compensation Structure
See “AllianzGI U.S.—Compensation Structure for AllianzGI U.S. (including NFJ)” above.
Other Accounts Managed
The following summarizes information regarding each of the accounts, excluding portfolios of
the NFJ Global Dividend Value Fund that were managed by portfolio managers, including amounts
managed by a team, committee, or other group that includes the portfolio manager. Except as noted
below, the information is as of November 30, 2013.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Pooled
|
|
|
|
|
|
|
|
|
|
Other Registered
|
|
|
|
Vehicles
|
|
Other Accounts
|
|
Investment Companies
|
|
Portfolio Manager
|
|
#
|
|
AUM ($ million)
|
|
#
|
|
AUM ($ million)
|
|
#
|
|
AUM ($ million)
|
|
R. Burns McKinney
|
|
|
2
|
|
|
|
317.8
|
|
|
|
51
|
|
|
|
11,846.7
|
|
|
|
15
|
|
|
|
19,279.5
|
|
|
Benno J. Fischer
|
|
|
4
|
|
|
|
411.3
|
|
|
|
65
|
|
|
|
12,932.9
|
|
|
|
23
|
|
|
|
29,787.8
|
|
|
L. Baxter Hines
|
|
|
2
|
|
|
|
317.8
|
|
|
|
49
|
|
|
|
11,642.3
|
|
|
|
13
|
|
|
|
18,437.2
|
|
|
Thomas W. Oliver
|
|
|
2
|
|
|
|
317.8
|
|
|
|
54
|
|
|
|
12,191.8
|
|
|
|
17
|
|
|
|
19,347.9
|
|
|
Paul A. Magnuson
|
|
|
4
|
|
|
|
411.2
|
|
|
|
60
|
|
|
|
12,269.9
|
|
|
|
21
|
|
|
|
29,719.4
|
|
|
Morley D. Campbell
|
|
|
2
|
|
|
|
93.5
|
|
|
|
38
|
|
|
|
7,734.3
|
|
|
|
13
|
|
|
|
22,198.2
|
|
|
John R. Mowrey
|
|
|
4
|
|
|
|
411.2
|
|
|
|
31
|
|
|
|
5,357.5
|
|
|
|
9
|
|
|
|
6,055.8
|
|
The following table provides information regarding other accounts managed for which management fees
are based on the performance of the pooled vehicle:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Pooled
|
|
|
|
|
|
|
|
|
|
Other Registered
|
|
|
|
Vehicles
|
|
Other Accounts
|
|
Investment Companies
|
|
Portfolio Manager
|
|
#
|
|
AUM ($ million)
|
|
#
|
|
AUM ($ million)
|
|
#
|
|
AUM ($ million)
|
|
R. Burns McKinney
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Benno J. Fischer
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
L. Baxter Hines
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Thomas W. Oliver
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Paul A. Magnuson
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Morley D. Campbell
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
John R. Mowrey
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
77
Potential Conflicts of Interest
Like other investment professionals with multiple clients, a portfolio manager for a Fund may
face certain potential conflicts of interest in connection with managing both the Fund and other
accounts at the same time. The paragraphs below describe some of these potential conflicts, which
NFJ believes are faced by investment professionals at most major financial firms. NFJ, the Manager
and the Trustees have adopted compliance policies and procedures that attempt to address certain of
these potential conflicts. The management of accounts with different advisory fee rates and/or fee
structures, including accounts that pay advisory fees based on account performance (“performance
fee accounts”), may raise potential conflicts of interest by creating an incentive to favor
higher-fee accounts. These potential conflicts may include, among others:
|
|
•
|
|
The most attractive investments could be allocated to higher-fee accounts or performance
fee accounts.
|
|
|
|
|
•
|
|
The trading of higher-fee accounts could be favored as to timing and/or execution price.
For example, higher fee accounts could be permitted to sell securities earlier than other
accounts when a prompt sale is desirable or to buy securities at an earlier and more
opportune time.
|
|
|
|
|
•
|
|
The investment management team could focus their time and efforts primarily on higher-fee
accounts due to a personal stake in compensation.
|
A potential conflict of interest may arise when a Fund and other accounts purchase or sell the
same securities. On occasions when a portfolio manager considers the purchase or sale of a security
to be in the best interest of a Fund as well as other accounts, the NFJ’s trading desk may, to the
extent by applicable laws and regulations, aggregate the securities to be sold or purchased in
order to obtain the best execution and lower brokerage commissions, if any. Aggregation of trades
may create the potential for unfairness to a Fund or another account if one account is favored over
another in allocating securities purchased or sold — for example, by allocating a disproportionate
amount of a security that is likely to increase in value to a favored account.
Another potential conflict of interest may arise based on the different investment objectives
and strategies of a Fund and other accounts. For example, another account may have a shorter-term
investment horizon or different investment objective, policies or restrictions than a Fund.
Depending on another account’s objectives or other factors, a portfolio manager may give advice and
make decisions that may differ from advice given, or the timing or nature of decision made, with
respect to a Fund. In addition, investment decisions are the product of many factors in addition to
basic suitability for the particular account involved. Thus, a particular security may be bought or
sold for certain accounts even though it could have been bought or sold for other accounts at the
same time. More rarely, a particular security may be bought for one or more accounts managed by a
portfolio manager when one or more other accounts are selling the security. There may be
circumstances when purchased or sales of portfolio securities for one or more accounts may have an
adverse effect on other accounts.
A Fund’s portfolio manager who is responsible for managing multiple funds and/or accounts may
allocate unequal time and attention to the management of those funds and/or accounts. As a result,
the portfolio manager may not be able to formulate as complete a strategy or identify equally
attractive investment opportunities for each of those accounts as might be the case if he or she
were to devote substantially more attention to the management of a single fund. The effects of this
potential conflict may be more pronounced where funds and/or accounts overseen by a particular
portfolio manager have different investment strategies.
A Fund’s portfolio managers may be able to select or influence the selection of the brokers
and dealers that are used to execute securities transactions for the Funds. In addition to
executing trades, some brokers and dealers provide portfolio managers with brokerage an research
services (as those terms are defined in Section 28(e) of the Securities Exchange Act of 1934),
which may result in the payment of higher brokerage fees than might have otherwise been available.
These services may be more beneficial to certain funs or accounts than to others. Although the
payment of brokerage commissions is subject to the requirement that the portfolio manager determine
in good faith and the commissions are reasonable in relation to the value of the brokerage and
research services provided to the Fund and NFJ’s other clients, a portfolio manager’s decision as
to the selection of brokers and dealers could yield disproportionate costs and benefits among the
funds and/or accounts that he or she managers.
A Fund’s portfolio managers may also face other potential conflicts of interest in managing a
Fund, and the description above is not complete description of every conflict that could be deemed
to exist in managing both the Funds and other accounts. In addition, a Fund’s portfolio manger may
also manage other accounts (including their personal assets or the assets of family members) in
their personal capacity. The management of these accounts may also involve certain of the potential
conflicts described above. Front-running could also exist if a portfolio manager transacted in his
own account prior to placing an order for a Fund or other clients. NFJ’s investment personnel,
including each Fund’s portfolio manager, are subject to restrictions on engaging in personal
securities transactions, pursuant to a Code of Ethics adopted by NFJ, which contain provisions and
requirements designed to identify and address certain conflicts of interest between personal
investments activities and the interest of the Funds.
As part of NFJ’s Compliance Program, NFJ has established a Compliance Committee, a Best
Execution Committee, a Proxy Voting Committee, a Performance Measurement Committee and a Pricing
Committee to help develop policies and procedures that help NFJ avoid, mitigate, monitor and
oversee areas that could present potential conflicts of interest.
78
Securities Ownership
The following table discloses the dollar range of equity securities beneficially owned by each
portfolio manager in the Fund(s) the portfolio manager manages. Except as noted below, the
information is as of November 30, 2013.
|
|
|
|
|
|
|
Dollar Range of Equity Securities
|
|
NFJ Emerging Markets Value Fund
|
|
|
|
Morley D. Campbell, CFA
|
|
$100,001 - $500,000
|
|
L. Baxter Hines, CFA
|
|
$1 - $10,000
|
|
R. Burns McKinney, CFA
|
|
$10,001 - $50,000
|
|
Thomas W. Oliver, CFA, CPA
|
|
$50,001 - $100,000
|
|
John R. Mowrey, CFA
|
|
$10,001 - $50,000
|
|
NFJ Global Dividend Value Fund
|
|
|
|
R. Burns McKinney, CFA
|
|
$100,001 - $500,000
|
|
Benno J. Fischer, CFA
|
|
$0
|
|
L. Baxter Hines, CFA
|
|
$1 - $10,000
|
|
John R. Mowrey, CFA
|
|
$0
|
|
Thomas W. Oliver, CFA, CPA
|
|
$50,001 - $100,000
|
|
NFJ International Small-Cap Value Fund
|
|
|
|
L. Baxter Hines, CFA
|
|
$50,001 - $100,000
|
|
Benno J. Fischer, CFA
|
|
$500,001 - $1,000,000
|
|
Paul A. Maguson
|
|
$500,001 - $1,000,000
|
|
John R. Mowrey, CFA
|
|
$10,001 - $50,000
|
|
Morley D. Campbell, CFA
|
|
$100,001 - $500,000
|
|
NFJ International Value II Fund
|
|
|
|
L. Baxter Hines, CFA
|
|
$10,001 - $50,000
|
|
Benno J. Fischer, CFA
|
|
$100,001 - $500,000
|
|
Paul A. Maguson
|
|
$0
|
|
R. Burns McKinney, CFA
|
|
$10,001 - $50,000
|
|
John R. Mowrey, CFA
|
|
$0
|
|
Thomas W. Oliver, CFA, CPA
|
|
$0
|
Codes of Ethics
The Trust, the Manager, the Sub-Advisers and the Distributor have adopted Codes of Ethics
pursuant to the requirements of Rule 17j-1 of the 1940 Act. These Codes of Ethics permit personnel
subject to the Codes to invest in securities, including securities that may be purchased or held by
the Fund.
Fund Administrator
In addition to its investment advisory services, Allianz Global Fund Management serves as
administrator to the Target Date Funds pursuant to an administration agreement (the “Administration
Agreement”) with the Trust on behalf of the Target Date Funds. The Manager provides or procures
administrative services to the Target Date Funds, which include clerical help and accounting,
bookkeeping, internal audit services and certain other services they require, and preparation of
reports to the Trust’s shareholders and regulatory filings. Allianz Global Fund Management has, at
its own expense, retained State Street Bank & Trust Company to perform certain administrative
services and may retain affiliates to provide other administrative services. In addition, the
Manager arranges at its own expense for the provision of legal, audit, custody, transfer agency and
other services necessary for the ordinary operation of the Target Date Funds and is responsible for
the costs of registration of the Target Date Funds’ shares and the printing of prospectus and
shareholder reports for current shareholders. Under the Administration Agreement, the Manager has
agreed to provide or procure these services, and to bear these expenses, at the annual rates for
each Target Date Fund (each expressed as a percentage of the Fund’s average daily net assets
attributable to the indicated class or classes of shares on an annual basis) in the table below:
|
|
|
|
|
|
|
Share Class
|
|
Total
|
|
Classes A, C, D and R
|
|
|
0.30
|
%
|
|
Class R6
|
|
|
0.05
|
%
|
|
Class P and Administrative Class
|
|
|
0.15
|
%
|
The Administration Agreement may be terminated by the Trust on behalf of a Target Date Fund or
share class at any time by vote of (1) a majority of the Trustees or (2) a majority of the
outstanding voting securities of a Target Date Fund or share class, on 60 days’ written notice to
Allianz Global Fund Management.
79
The arrangements under which the administrative fees are paid became effective as of September
1, 2011. The following table sets forth the amount paid by the Trust to service providers pursuant
to the Administration Agreement in the last two fiscal years.
|
|
|
|
|
|
|
|
|
|
|
Fund
|
|
Year Ended 11/30/2013
|
Year Ended 11/30/2012
|
|
Retirement 2015 Fund
|
|
$
|
38,410
|
|
|
$
|
20,257
|
|
|
Retirement 2020 Fund
|
|
|
56,066
|
|
|
|
11,741
|
|
|
Retirement 2025 Fund
|
|
|
57,312
|
|
|
|
5,626
|
|
|
Retirement 2030 Fund
|
|
|
61,591
|
|
|
|
19,438
|
|
|
Retirement 2035 Fund
|
|
|
38,037
|
|
|
|
5,189
|
|
|
Retirement 2040 Fund
|
|
|
35,439
|
|
|
|
10,065
|
|
|
Retirement 2045 Fund
|
|
|
17,020
|
|
|
|
3,988
|
|
|
Retirement 2050 Fund
|
|
|
12,286
|
|
|
|
8,046
|
|
|
Retirement 2055 Fund
|
|
|
3,296
|
|
|
|
3,281
|
|
|
Retirement Income Fund
|
|
|
55,055
|
|
|
|
46,567
|
|
The Manager currently estimates that it and/or its affiliates generally expect to pay up to
0.10% per annum (on top of any 12b-1 and/or “shelf space” fees) of the value of assets in the
relevant accounts out of the Class P administrative fees paid under the Administration Agreement to
service agents for providing administrative, sub-transfer agency, sub-accounting and other
shareholder services to Class P shareholders of the Target Date Funds. The rate of such payments
with regard to Class P shares may vary from service agent to service agent and, in certain
circumstances, may exceed 0.10% per annum for any individual service agent. Such administrative
services may include, but are not limited to, the following functions: receiving, aggregating and
processing purchase, redemption and exchange orders at the service agent level; providing and
maintaining elective services with respect to Class P shares such as check writing and wire
transfer services; providing and maintaining pre-authorized investment plans; communicating
periodically with shareholders; acting as the sole shareholder of record and nominee for holders of
Class P shares; maintaining account records for shareholders; answering questions and handling
correspondence from shareholders about their accounts; issuing confirmations for transactions by
shareholders; collecting and posting distributions to shareholder accounts; capturing and
processing tax data; processing and mailing trade confirmations, monthly statements, prospectus,
shareholder reports and other SEC-required communications; and performing similar account
administrative services. These payments are made to service agents selected by the Manager and/or
its affiliates. The actual services provided, and the payments made for such services, vary from
firm to firm.
DISTRIBUTION OF TRUST SHARES
Distributor and Multi-Class Plan
Allianz Global Investors Distributors LLC (the “Distributor”) serves as the principal
underwriter of each class of the Trust’s shares pursuant to a distribution contract (the
“Distribution Contract”) with the Trust. The Distributor is an indirect, wholly-owned subsidiary of
Allianz Asset Management of America L.P. The Distributor, located at 1633 Broadway, New York, NY
10019, is a broker-dealer registered with the SEC. The Distribution Contract is terminable with
respect to a Fund or class of shares without penalty, at any time, by a Fund or class upon 60 days’
written notice to the Distributor, or by the Distributor upon 60 days’ written notice to the Trust.
The Distributor is not obligated to sell any specific amount of Trust shares.
The Distribution Contract will continue in effect with respect to each Fund, and each class of
shares thereof, for successive one-year periods, provided that each such continuance is
specifically approved (i) by the vote of a majority of the entire Board of Trustees or by the
majority of the outstanding shares of the Fund or class, and (ii) by a majority of the Trustees who
are not interested persons (as defined in the 1940 Act) of the Trust and who have no direct or
indirect interest financial interest in the Distribution Contract or the Distribution and/or
Servicing Plans described below, by vote cast in person at a meeting called for such purpose. If
the Distribution Contract is terminated (or not renewed) with respect to one or more Funds or
classes, it may continue in effect with respect to any Fund or class as to which it has not been
terminated (or has been renewed).
The Trust currently offers up to nine classes of shares of each of the Funds: Class A, Class
B, Class C, Class D, Class P, Class R, Institutional Class, Class R6 and Administrative Class
shares.
Effective November 1, 2009, Class B shares of the Funds are no longer available for
purchase except through exchanges and dividend reinvestments, as discussed in the applicable
Prospectus. Disclosure throughout the Statement of Additional Information regarding the “purchase”
of Class B shares only relates to such exchanges and dividend reinvestments.
Class A, Class B and Class C shares of the Trust are offered through financial institutions
that have dealer agreements with the Distributor, or that have agreed to act as introducing brokers
for the Distributor (“introducing brokers”).
80
Class D shares are generally offered to clients of financial service firms, such as
broker-dealers or registered investment managers, with which the Distributor has an agreement for
the use of the Trust’s Funds in particular investment products, programs or accounts for which a
fee may be charged.
Class P shares are offered primarily through certain asset allocation, wrap fee and other
similar programs offered by broker-dealers and other intermediaries (“service agents”) that have
established a shareholder servicing relationship with the Trust on behalf of their customers. Class
P shares may also be offered for direct investment by other investors such as pension and profit
sharing plans, employee benefit trusts and plan alliances, endowments, foundations, corporations
and high net worth individuals.
Class R shares are eligible for investment only by certain “Class R Eligible Plans,” as
defined in “Additional Information About Purchases, Exchanges and Redemptions of Class A, Class B,
Class C, Class R, Class R6 and Institutional Class Shares” below.
Class R6 shares are offered for “Class R6 Eligible Plans,” as defined in “Additional
Information About Purchases, Exchanges and Redemptions of Class A, Class B, Class C, Class R, Class
R6 and Institutional Class Shares” below. Class R6 shares are also available for investment by
registered funds and 529 portfolios that are advised or sub-advised by Allianz Global Fund
Management, AllianzGI U.S., NFJ or their affiliates. Class R6 shares may also be available for
investment by Trustees, officers and current and former employees of the Trust, Allianz Funds,
Allianz Global Fund Management and the Distributor and certain of their affiliates and their
immediate family members, and trusts or plans primarily for the benefit of such persons.
Institutional Class shares are offered primarily for direct investment by investors such as
pension and profit sharing plans, employee benefit trusts, endowments, foundations, corporations,
and high net worth individuals (Institutional Class shares may also be offered through certain
financial intermediaries that charge their customers transaction or other fees with respect to the
customers’ investments in the Funds).
Administrative Class shares are offered primarily through employee benefit plan alliances,
broker-dealers and other intermediaries, and each Fund pays service or distribution fees to such
entities for services they provide to Administrative Class shareholders.
Under the Trust’s Multi-Class Plan adopted pursuant to Rule 18f-3 under the 1940 Act, shares
of each class of each Fund represent an equal pro rata interest in the Fund and, generally, have
identical voting, dividend, liquidation, and other rights preferences, powers, restrictions,
limitations, qualifications and terms and conditions, except that: (a) each class has a different
designation; (b) each class has exclusive voting rights on any matter submitted to shareholders
that relates solely to its distribution or service arrangements; and (c) each class has separate
voting rights on any matter submitted to shareholders in which the interests of one class differ
from the interests of any other class.
Each class of shares bears any class specific expenses allocated to such class, such as
expenses related to the distribution and/or shareholder servicing of such class. In addition, each
class may, at the Trustees’ discretion, also pay a different share of other expenses, not including
management or custodial fees or other expenses related to the management of the Trust’s assets, if
these expenses are actually incurred in a different amount by that class, or if the class receives
services of a different kind or to a different degree than the other classes. For instance, the
various classes pay different fees under the Management Agreement based on the different levels of
administrative services provided to each Class. All other expenses are allocated to each class on
the basis of the net asset value of that class in relation to the net asset value of the particular
Fund. Each class may have a differing sales charge structure, and differing exchange and conversion
features.
Contingent Deferred Sales Charge and Initial Sales Charge
As described in the applicable Prospectus under the caption “Classes of Shares,” a contingent
deferred sales charge is imposed upon certain redemptions of Class A, Class B and Class C shares.
No contingent deferred sales charge is currently imposed upon redemptions of Class D, Class R,
Class P, Class R6, Institutional Class or Administrative Class shares. Because contingent deferred
sales charges are calculated on a series-by-series basis, shareholders should consider whether to
exchange shares of one Fund for shares of another series of the Trust or series of Allianz Funds
prior to redeeming an investment if such an exchange would reduce the contingent deferred sales
charge applicable to such redemption.
The following table sets forth the amount of contingent deferred sales charges paid to the
Distributor for the last three fiscal years.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
Year Ended
|
|
Year Ended
|
|
Class
|
|
11/30/13
|
|
11/30/12
|
|
11/30/11
|
|
Class A
|
|
$
|
96,824
|
|
|
$
|
45,363
|
|
|
$
|
6,438
|
|
|
Class B
|
|
|
3,817
|
|
|
|
5,688
|
|
|
|
10,579
|
|
|
Class C
|
|
|
55,026
|
|
|
|
32,429
|
|
|
|
47,097
|
|
|
Total
|
|
|
155,667
|
|
|
|
83,480
|
|
|
|
64,114
|
|
81
As described in the applicable Prospectus under the caption “Classes of Shares,” Class A
shares of the Trust are sold pursuant to an initial sales charge, which declines as the amount of
the purchase reaches certain defined levels. The following table sets forth the amount of initial
sales charges received by the Distributor for the last three fiscal years.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
Year Ended
|
|
Year Ended
|
|
Class
|
|
11/30/13
|
|
11/30/12
|
|
11/30/11
|
|
Class A
|
|
$
|
315,941
|
|
|
$
|
125,011
|
|
|
$
|
153,382
|
|
Distribution and Servicing Plans for Class A, Class B, Class C and Class R Shares
As stated in the applicable Prospectus under the captions “Classes of Shares” and “How to Buy
and Sell Shares,” Class A, Class B, Class C and Class R shares of the Trust are continuously
offered through participating brokers that are members of the Financial Industry Regulatory
Authority Inc. (“FINRA” ) and which have dealer agreements with the Distributor, or that have
agreed to act as introducing brokers.
Pursuant to separate Distribution and Servicing Plans for Class A, Class B, Class C and Class
R shares (the “Retail Plans”), the Distributor receives (i) in connection with the distribution of
Class B, Class C and Class R shares of the Trust, certain distribution fees from the Trust, and
(ii) in connection with personal services rendered to Class A, Class B, Class C and Class R
shareholders of the Trust and the maintenance of shareholder accounts, certain servicing fees from
the Trust. Subject to the percentage limitations on these distribution and servicing fees set forth
below, the distribution and servicing fees may be paid with respect to services rendered and
expenses borne in the past with respect to Class A, Class B, Class C and Class R shares as to which
no distribution and servicing fees were paid on account of such limitations.
The Distributor makes distribution and servicing payments to participating brokers and
servicing payments to certain banks and other financial intermediaries (including certain benefit
plans, their service providers and their sponsors) in connection with the sale of Class B, Class C
and Class R shares and servicing payments to participating brokers, certain banks and other
financial intermediaries in connection with the sale of Class A shares. In the case of Class A
shares, these parties are also compensated based on the amount of the front-end sales charge
reallowed by the Distributor, except in cases where Class A shares are sold without a front-end
sales charge (although the Distributor may pay brokers additional compensation in connection with
sales of Class A shares without a sales charge). In the case of Class B shares, participating
brokers and other financial intermediaries are compensated by an advance of a sales commission by
the Distributor. In the case of Class C shares, part or all of the first year’s distribution and
servicing fee is generally paid at the time of sale. In the case of Class R shares, distribution
and servicing fees are paid periodically on a trail-flow basis, either monthly or quarterly.
Pursuant to the Distribution Agreement, with respect to each Fund’s Class A, Class B, Class C and
Class R shares, the Distributor bears various other promotional and sales related expenses,
including the cost of printing and mailing prospectus to persons other than current shareholders.
Class A Servicing Fees
As compensation for services rendered and expenses borne by the Distributor in connection with
personal services rendered to Class A shareholders of the Trust and the maintenance of Class A
shareholder accounts, the Trust pays the Distributor servicing fees up to the annual rate of 0.25%
(calculated as a percentage of each Fund’s average daily net assets attributable to Class A
shares).
Class B, Class C and Class R Distribution and Servicing Fees
As compensation for services rendered and expenses borne by the Distributor in connection with
the distribution of Class B, Class C and Class R shares of the Trust, and in connection with
personal services rendered to Class B, Class C and Class R shareholders of the Trust and the
maintenance of Class B, Class C and Class R shareholder accounts (including in each case the
accounts of plan participants where shares are held by a benefit plan or its financial service firm
through an omnibus account), the Trust pays the Distributor servicing and distribution fees up to
the annual rates set forth below (calculated as a percentage of each Fund’s average daily net
assets attributable to Class B, Class C and Class R shares, respectively):
|
|
|
|
|
|
|
|
|
|
|
Class
|
|
Servicing Fee
|
|
Distribution Fee
|
|
Class B
|
|
|
0.25
|
%
|
|
|
0.75
|
%
|
|
Class C
|
|
|
0.25
|
%
|
|
|
0.75
|
%
|
|
Class R
|
|
|
0.25
|
%
|
|
|
0.25
|
%
|
The Retail Plans were adopted pursuant to Rule 12b-1 under the 1940 Act and are of the type
known as “compensation” plans. This means that, although the Trustees of the Trust are expected to
take into account the expenses of the Distributor and its predecessors in their periodic review of
the Retail Plans, the fees are payable to compensate the Distributor for services rendered even if
the amount paid exceeds the Distributor’s expenses.
82
The distribution fee applicable to Class B, Class C and Class R shares may be spent by the
Distributor on any activities or expenses primarily intended to result in the sale of Class B,
Class C or Class R shares, respectively, including compensation to, and expenses (including
overhead and telephone expenses) of, financial consultants or other employees of the Distributor or
of participating or introducing brokers who engage in distribution of Class B, Class C or Class R
shares, printing of prospectus and reports for other than existing Class B, Class C or Class R
shareholders, advertising, and preparation, printing and distributions of sales literature. The
servicing fee, which is applicable to Class A, Class B, Class C and Class R shares of the Trust,
may be spent by the Distributor on personal services rendered to shareholders of the Trust and the
maintenance of shareholder accounts, including compensation to, and expenses (including telephone
and overhead expenses) of, financial consultants or other employees of participating or introducing
brokers, certain banks and other financial intermediaries (including certain benefit plans, their
service providers and their sponsors who provide services to plan participants) who aid in the
processing of purchase or redemption requests or the processing of dividend payments, who provide
information periodically to shareholders showing their positions in a Fund’s shares, who forward
communications from the Trust to shareholders, who render ongoing advice concerning the suitability
of particular investment opportunities offered by the Trust in light of the shareholders’ needs,
who respond to inquiries from shareholders relating to such services, or who train personnel in the
provision of such services. Distribution and servicing fees may also be spent on interest relating
to unreimbursed distribution or servicing expenses from prior years.
Many of the Distributor’s sales and servicing efforts involve the Trust as a whole, so that
fees paid by Class A, Class B, Class C, Class R or Administrative Class shares of any Fund may
indirectly support sales and servicing efforts relating to the other share classes of the same Fund
or the other Funds’ shares of the same or different classes. In reporting its expenses to the
Trustees, the Distributor itemizes expenses that relate to the distribution and/or servicing of a
single Fund’s shares, and allocates other expenses among the Funds, based on their relative net
assets. Expenses allocated to each Fund are further allocated among its classes of shares annually
based on the relative sales of each class, except for any expenses that relate only to the sale or
servicing of a single class. The Distributor may make payments to brokers and other financial
intermediaries of up to the following percentages annually of the average daily net assets
attributable to shares in the accounts of their customers or clients:
|
|
|
|
|
|
|
|
|
|
|
Class
|
|
Servicing Fee
|
|
Distribution Fee
|
|
Class A
|
|
|
0.25
|
%
|
|
|
N/A
|
|
|
Class B
|
|
|
0.25
|
%
|
|
|
0.75
|
%
|
|
Class C
|
|
|
0.25
|
%
|
|
|
0.75
|
%
|
|
Class R
|
|
|
0.25
|
%
|
|
|
0.25
|
%
|
Some or all of the sales charges, distribution fees and servicing fees described above are
paid or “reallowed” to the broker, dealer or financial advisor (collectively, “financial firms”)
through which an investor purchases shares. With respect to Class B and Class C shares, the
financial firms are also paid at the time of a purchase a commission equal to 4.00% and 1.00%,
respectively, of an investment in such share classes. A financial firm is one that, in exchange for
compensation, sells, among other products, mutual fund shares (including shares of the Trust) or
provides services for mutual fund shareholders. Financial firms include brokers, dealers, insurance
companies and banks. Financial firms that receive distribution and/or servicing fees may in certain
circumstances pay and/or reimburse all or a portion of those fees to their customers, although
neither the Trust nor the Distributor is involved in establishing any such arrangements and may not
be aware of their existence.
In addition, the Distributor, Allianz Global Fund Management and their affiliates (for
purposes of the discussion in this paragraph, the previous paragraph, and the following three
paragraphs only, collectively, the “Distributor”) from time to time make additional payments such
as cash bonuses or provide other incentives to selected participating brokers and other financial
firms as compensation for the sale or servicing of the Funds, including, without limitation,
providing the Funds with “shelf space” or a higher profile for the financial firms’ financial
consultants and their customers, placing the Funds on the financial firms’ preferred or recommended
fund list or otherwise identifying the Funds as being part of a complex to be accorded a higher
degree of marketing support than complexes not making such payments, granting the Distributor
access to the financial firms’ financial consultants (including through the firms’ intranet
websites) in order to promote the Funds, promotions in communications with financial firms’
customers such as in the firms’ internet websites or in customer newsletters, providing assistance
in training and educating the financial firms’ personnel, and furnishing marketing support and
other specified services. The actual services provided, and the payments made for such services,
vary from firm to firm. These payments may be significant to the financial firms and may also take
the form of sponsorship of seminars or informational meetings or payment for attendance by persons
associated with the financial firms at seminars or informational meetings, or payments to financial
firms to help offset the cost associated with processing transactions in Fund shares.
A number of factors will be considered in determining the amount of these additional payments
to financial firms. On some occasions, such payments are conditioned upon levels of sales,
including the sale of a specified minimum dollar amount of the shares of a Fund, all other series
of the Trust, other funds sponsored by the Distributor and/or a particular class of shares, during
a specified period of time. The Distributor also makes payments to certain participating financial
firms based upon factors such as the amount of assets a financial firm’s clients have invested in
the Funds and the quality of the financial firm’s relationship with the Distributor.
The additional payments described above are from the Distributor’s own assets pursuant to
agreements with brokers and do not change the price paid by investors for the purchase of a Fund’s
shares or the amount a Fund will receive as proceeds from such sales. These payments are made to
financial firms selected by the Distributor, generally to the firms that have sold significant
amounts of
83
shares of the Funds or other Allianz-sponsored funds. The level of payments made to a
financial firm in any given year will vary and, in the case of most financial firms, will not
exceed the sum of (a) 0.10% of such year’s sales by that financial firm of shares of the Trust and
Allianz Funds, (b) 0.06% of the assets attributable to that financial firm invested in equity funds
of the Trust and Allianz Funds, and (c) 0.03% of the assets attributable to that financial firm
invested in fixed income funds of the Trust and Allianz Funds. In certain cases, the payments
described in the preceding sentence are subject to minimum payment levels. In lieu of payments
pursuant to the foregoing formulae, the Distributor makes payments pursuant to an alternative
formula or of an agreed-upon amount that, in the case of most financial firms, will not exceed the
amount that would have been payable pursuant to the formulae. Notwithstanding the foregoing, the
Distributor has entered, and may continue to enter, into arrangements with a small number of
financial firms that result in payments in excess of what would have been payable under the
formulae outlined above (“Alternative Arrangements”). The Distributor may select financial firms
for Alternative Arrangements based on the factors described above, in particular due to large
amounts of assets a financial firm’s clients have invested in the funds of the Trust and Allianz
Funds and the exclusivity of the financial firm’s partnership with the Distributor. The level of
payments under an Alternative Arrangement may be calculated based on the assets invested in the
Trust and Allianz Funds by the financial firm’s clients and/or the annual sales by the financial
firm of shares of the Trust or Allianz Funds, or using another methodology. Because financial firms
may be selected for Alternative Arrangements in part because they have significant client assets
invested in the Trust and Allianz Funds, payments under Alternative Arrangements represent a
significant percentage of the Distributor’s overall payments to financial firms. Currently, the
payments described above are not generally made with respect to Class R, Administrative Class or
Institutional Class shares. The payments described are also not made with respect to Class R6
shares.
In addition to or separate from the “shelf space” arrangements described above, in some cases,
the Distributor will make payments, at its own expense, for special events such as a conference or
seminar sponsored by one of the financial firms, which in some cases could represent a significant
dollar amount. In certain instances, these special events will be attended by clients of such
financial firms. The Distributor may make such payments upon the request of a financial firm and
not pursuant to any agreement or commitment by the firm to provide “shelf space” or related
services or in return for any level of sales of shares of the Trust or Allianz Funds or other
products offered by the Distributor.
If investment advisers, distributors or affiliates of mutual funds pay bonuses and incentives
in differing amounts, financial firms and their financial consultants may have financial incentives
for recommending a particular mutual fund over other mutual funds. In addition, depending on the
arrangements in place at any particular time, a financial firm and its financial consultants may
also have a financial incentive for recommending a particular share class over other share classes.
You should consult with your financial advisor or plan administrator and review carefully any
disclosure by the financial firm as to compensation received by your financial advisor.
As of the date of this Statement of Additional Information, the Distributor anticipates that the
firms that will receive the additional payments described above for distribution services and/or
educational support include:
|
|
|
American Portfolios Financial Services Inc.
|
|
Ameriprise Financial Services, Inc.
|
|
Associated Securities Corp.
|
|
AXA Advisors, LLC
|
|
Banc of America Investment Services, Inc.
|
|
Banc One Securities Investment
|
|
CCO Investment Services
|
|
Chase Investment Services Corp.
|
|
Comerica Securities
|
|
Commonwealth Financial Network
|
|
Cuna Brokerage Services
|
|
E*TRADE Clearing LLC
|
|
First Allied Securities, Inc.
|
|
FSC Securities Corp.
|
|
ING Companies:
|
|
ING Financial Partners, Inc.
|
|
Financial Network Investment Corp.
|
|
Multi-Financial Securities Corp.
|
|
PrimeVest Financial Services, Inc.
|
|
Janney, Montgomery, Scott
|
|
Lincoln Financial Securities
|
|
Linsco/Private Ledger Corporation
|
|
McDonald Investments
|
|
Merrill Lynch, Pierce, Fenner & Smith Inc.
|
|
ML Stern & Co.
|
|
Morgan Stanley Smith Barney LLC/Citigroup Global Markets Inc.
|
84
|
|
|
Mutual Service Corporation
|
|
NatCity Investments
|
|
National Planning Holdings, Inc.
|
|
Invest Financial Corp.
|
|
Investment Centers of America
|
|
National Planning Corp.
|
|
SII Investments Inc.
|
|
Northwestern Mutual Investment Services LLC
|
|
Oppenheimer & Co., Inc.
|
|
Piper Jaffray (1)
|
|
Questar Capital
|
|
Raymond James & Associates Inc.
|
|
Raymond James Financial Services, Inc.
|
|
RBC Capital Markets Corp.
|
|
Robert W. Baird
|
|
Royal Alliance Associates Inc.
|
|
SagePoint Financial, Inc. (f/k/a AIG Financial Advisors, Inc.)
|
|
Securities America, Inc.
|
|
Stifel, Nicolaus & Company, Incorporated
|
|
Sterne Agee Summit Brokerage Services Inc.
|
|
SunTrust Investment Services
|
|
UBS Financial Services Inc.
|
|
United Planners’ Financial Services of America
|
|
US Bancorp Investments, Inc.
|
|
Waterstone Financial Group
|
|
Wells Fargo (2)
|
|
WM Financial Services Inc.
|
|
|
|
|
|
(1)
|
|
Subsequently acquired by UBS
|
|
|
|
(2)
|
|
Includes arrangements with Wachovia Capital Markets, LLC (f/k/a Wachovia Securities, LLC),
which was acquired by Wells Fargo
|
The Distributor expects that additional firms may be added to this list from time to time, and
firms may be removed. Wholesale representatives of the Distributor visit brokerage firms on a
regular basis to educate financial advisors about the Funds and to encourage the sale of Fund
shares to their clients. The costs and expenses associated with these efforts may include travel,
lodging, sponsorship at educational seminars and conferences, entertainment and meals to the extent
permitted by law.
Although the Funds use financial firms that sell Fund shares to effect transactions for the
Funds’ portfolio, the Funds, Allianz Global Fund Management and the Sub-Advisers will not consider
the sale of Fund shares as a factor when choosing financial firms to make those transactions.
If in any year the Distributor’s expenses incurred in connection with the distribution of
Class B, Class C and Class R shares and, for Class A, Class B, Class C and Class R shares, in
connection with the servicing of shareholders and the maintenance of shareholder accounts, exceed
the distribution and/or servicing fees paid by the Trust, the Distributor would recover such excess
only if the Retail Plan with respect to such class of shares continues to be in effect in some
later year when such distribution and/or servicing fees exceed the Distributor’s expenses. The
Trust is not obligated to repay any unreimbursed expenses that may exist at such time, if any, as
the relevant Retail Plan terminates.
Each Retail Plan may be terminated with respect to any Fund to which the Plan relates by vote
of a majority of the Trustees who are not interested persons of the Trust (as defined in the 1940
Act) and who have no direct or indirect financial interest in the operation of the Plan or the
Distribution Contract (“disinterested Retail Plan Trustees”), or by vote of a majority of the
outstanding voting securities of the relevant class of that Fund. Any change in any Retail Plan
that would materially increase the cost to the class of shares of any Fund to which the Plan
relates requires approval by the affected class of shareholders of that Fund. The Trustees review
quarterly written reports of such costs and the purposes for which such costs have been incurred.
Each Retail Plan may be amended by vote of the Trustees, including a majority of the disinterested
Retail Plan Trustees, cast in person at a meeting called for such purpose. As long as the Retail
Plans are in effect, selection and nomination of those Trustees who are not interested persons of
the Trust shall be committed to the discretion of such disinterested Trustees.
The Retail Plans will continue in effect with respect to each Fund, and each class of shares
thereof, for successive one-year periods, provided that each such continuance is specifically
approved (i) by the vote of a majority of the disinterested Retail Plan Trustees and (ii) by the
vote of a majority of the entire Board of Trustees cast in person at a meeting called for the
purpose of voting on such approval.
85
If a Retail Plan is terminated (or not renewed) with respect to one or more Funds or classes
thereof, it may continue in effect with respect to any class of any Fund as to which it has not
been terminated (or has been renewed).
The Trustees believe that the Retail Plans will provide benefits to the Trust. In this regard,
the Trustees believe that the Retail Plans will result in greater sales and/or fewer redemptions of
Trust shares, although it is impossible to know for certain the level of sales and redemptions of
Trust shares that would occur in the absence of the Retail Plans or under alternative distribution
schemes. Although the expenses of the Funds are essentially fixed, the Trustees believe that the
effect of the Retail Plans on sales and/or redemptions may benefit the Trust by allowing the Funds
to take advantage of “break points” in the Funds’ management fees and/or by affording greater
flexibility to the Sub-Adviser. From time to time, expenses of the Distributor incurred in
connection with the sale of Class B, Class C and Class R shares of the Trust, and in connection
with the servicing of Class A, Class B, Class C and Class R shareholders and the maintenance of
shareholder accounts, may exceed the distribution and servicing fees collected by the Distributor.
The Trustees consider such unreimbursed amounts, among other factors, in determining whether to
cause the Funds to continue payments of distribution and servicing fees in the future with respect
to Class A, Class B, Class C and Class R shares.
Payments Pursuant to Class A Plans
The following table sets forth the amount paid by the Trust pursuant to the Class A Retail
Plan for the last three fiscal years. Because certain of the Funds are newly formed, the Trust did
not pay any amount pursuant to the Class A Retail Plan during the periods noted for such Funds.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
Year Ended
|
|
Year Ended
|
|
Fund
|
|
11/30/13
|
|
11/30/12
|
|
11/30/11
|
|
Behavioral Advantage Large Cap Fund
|
|
$
|
3,262
|
|
|
$
|
125
|
|
|
$
|
6
|
|
|
China Equity Fund
|
|
|
324
|
|
|
|
441
|
|
|
|
1,027
|
|
|
Convertible Fund
|
|
|
424,026
|
|
|
|
208,144
|
|
|
|
134,742
|
|
|
Disciplined Equity Fund
|
|
|
22,813
|
|
|
|
18,325
|
|
|
|
9,767
|
|
|
Dynamic Emerging Multi-Asset Fund
|
|
|
23
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
Emerging Markets Debt Fund
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
Global Allocation Fund
|
|
|
175,715
|
|
|
|
181,872
|
|
|
|
198,276
|
|
|
Global Fundamental Strategy Fund
|
|
|
11
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
Global Growth Allocation Fund
|
|
|
2,747
|
|
|
|
2,563
|
|
|
|
8,105
|
|
|
Global Managed Volatility Fund
|
|
|
239
|
|
|
|
91
|
|
|
|
N/A
|
|
|
Global Water Fund
|
|
|
213,138
|
|
|
|
130,614
|
|
|
|
66,294
|
|
|
High Yield Bond Fund
|
|
|
235,021
|
|
|
|
236,534
|
|
|
|
34,544
|
|
|
International Small-Cap Fund
|
|
|
8,927
|
|
|
|
10,744
|
|
|
|
3,737
|
|
|
Micro Cap Fund
|
|
|
1,156
|
|
|
|
168
|
|
|
|
N/A
|
|
|
Multi-Asset Real Return Fund
|
|
|
81
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
NFJ Emerging Markets Value Fund
|
|
|
39
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
NFJ Global Dividend Value Fund
|
|
|
23,699
|
|
|
|
14,030
|
|
|
|
15,966
|
|
|
NFJ International Small-Cap Value Fund
|
|
|
3,479
|
|
|
|
226
|
|
|
|
N/A
|
|
|
NFJ International Value II Fund
|
|
|
160
|
|
|
|
31
|
|
|
|
N/A
|
|
|
Redwood Fund
|
|
|
2,887
|
|
|
|
4,135
|
|
|
|
2,241
|
|
|
Retirement 2015 Fund
|
|
|
13,096
|
|
|
|
3,730
|
|
|
|
4,177
|
|
|
Retirement 2020 Fund
|
|
|
23,126
|
|
|
|
1,118
|
|
|
|
677
|
|
|
Retirement 2025 Fund
|
|
|
29,987
|
|
|
|
173
|
|
|
|
N/A
|
|
|
Retirement 2030 Fund
|
|
|
23,250
|
|
|
|
5,888
|
|
|
|
1,024
|
|
|
Retirement 2035 Fund
|
|
|
12,910
|
|
|
|
70
|
|
|
|
N/A
|
|
|
Retirement 2040 Fund
|
|
|
12,010
|
|
|
|
1,237
|
|
|
|
368
|
|
|
Retirement 2045 Fund
|
|
|
7,466
|
|
|
|
69
|
|
|
|
N/A
|
|
|
Retirement 2050 Fund
|
|
|
1,915
|
|
|
|
768
|
|
|
|
171
|
|
|
Retirement 2055 Fund
|
|
|
192
|
|
|
|
26
|
|
|
|
N/A
|
|
|
Retirement Income Fund
|
|
|
12,249
|
|
|
|
11,634
|
|
|
|
5,672
|
|
|
Short Duration High Income Fund
|
|
|
316,433
|
|
|
|
52,936
|
|
|
|
52
|
|
|
Structured Alpha Fund
|
|
|
106
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
Ultra Micro Cap Fund
|
|
|
59,954
|
|
|
|
5,871
|
|
|
|
N/A
|
|
|
U.S. Equity Hedged Fund
|
|
|
1,260
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
U.S. Small-Cap Growth Fund
|
|
|
7,234
|
|
|
|
2,875
|
|
|
|
477
|
|
|
Total
|
|
$
|
1,638,932
|
|
|
$
|
894,438
|
|
|
$
|
487,323
|
|
86
The amounts collected pursuant to the Class A Retail Plan are to be used for the following
purposes by the Distributor: sales commissions and other compensation to sales personnel;
preparing, printing and distributing sales material and advertising (including preparing, printing
and distributing prospectuses to non-shareholders) and other expenses (including data processing,
legal, operations and financing charges and expenses). Based on a number of factors, the
Distributor analyzes costs on an annual basis and applies a fixed formula in order to allocate
amounts collected pursuant to the Class A Retail Plan to compensation and to sales material and
other expenses. Because certain of the Funds are newly formed, the Distributor did not use any
amounts collected pursuant to the Class A Retail Plan for these purposes during the periods noted
for such Funds.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales Material and
|
|
|
|
Fund
|
|
Compensation
|
|
Other Expenses
|
|
Total
|
|
Behavioral Advantage Large Cap Fund
|
|
$
|
2,218
|
|
|
$
|
1,044
|
|
|
$
|
3,262
|
|
|
China Equity Fund
|
|
|
220
|
|
|
|
104
|
|
|
|
324
|
|
|
Convertible Fund
|
|
|
288,338
|
|
|
|
135,688
|
|
|
|
424,026
|
|
|
Disciplined Equity Fund
|
|
|
15,513
|
|
|
|
7,300
|
|
|
|
22,813
|
|
|
Dynamic Emerging Multi-Asset Fund
|
|
|
15
|
|
|
|
8
|
|
|
|
23
|
|
|
Emerging Markets Debt Fund
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
Global Allocation Fund
|
|
|
119,486
|
|
|
|
56,229
|
|
|
|
175,715
|
|
|
Global Fundamental Strategy Fund
|
|
|
7
|
|
|
|
4
|
|
|
|
11
|
|
|
Global Growth Allocation Fund
|
|
|
1,868
|
|
|
|
879
|
|
|
|
2,747
|
|
|
Global Managed Volatility Fund
|
|
|
163
|
|
|
|
76
|
|
|
|
239
|
|
|
Global Water Fund
|
|
|
144,934
|
|
|
|
68,204
|
|
|
|
213,138
|
|
|
High Yield Bond Fund
|
|
|
159,814
|
|
|
|
75,207
|
|
|
|
235,021
|
|
|
International Small-Cap Fund
|
|
|
6,070
|
|
|
|
2,857
|
|
|
|
8,927
|
|
|
Micro Cap Fund
|
|
|
786
|
|
|
|
370
|
|
|
|
1,156
|
|
|
Multi-Asset Real Return Fund
|
|
|
55
|
|
|
|
26
|
|
|
|
81
|
|
|
NFJ Emerging Markets Value Fund
|
|
|
27
|
|
|
|
12
|
|
|
|
39
|
|
|
NFJ Global Dividend Value Fund
|
|
|
16,115
|
|
|
|
7,584
|
|
|
|
23,699
|
|
|
NFJ International Small-Cap Value Fund
|
|
|
2,366
|
|
|
|
1,113
|
|
|
|
3,479
|
|
|
NFJ International Value II Fund
|
|
|
109
|
|
|
|
51
|
|
|
|
160
|
|
|
Redwood Fund
|
|
|
1,963
|
|
|
|
924
|
|
|
|
2,887
|
|
|
Retirement 2015 Fund
|
|
|
8,905
|
|
|
|
4,191
|
|
|
|
13,096
|
|
|
Retirement 2020 Fund
|
|
|
15,726
|
|
|
|
7,400
|
|
|
|
23,126
|
|
|
Retirement 2025 Fund
|
|
|
20,391
|
|
|
|
9,596
|
|
|
|
29,987
|
|
|
Retirement 2030 Fund
|
|
|
15,810
|
|
|
|
7,440
|
|
|
|
23,250
|
|
|
Retirement 2035 Fund
|
|
|
8,779
|
|
|
|
4,131
|
|
|
|
12,910
|
|
|
Retirement 2040 Fund
|
|
|
8,167
|
|
|
|
3,843
|
|
|
|
12,010
|
|
|
Retirement 2045 Fund
|
|
|
5,077
|
|
|
|
2,389
|
|
|
|
7,466
|
|
|
Retirement 2050 Fund
|
|
|
1,302
|
|
|
|
613
|
|
|
|
1,915
|
|
|
Retirement 2055 Fund
|
|
|
130
|
|
|
|
62
|
|
|
|
192
|
|
|
Retirement Income Fund
|
|
|
8,329
|
|
|
|
3,920
|
|
|
|
12,249
|
|
|
Short Duration High Income Fund
|
|
|
215,174
|
|
|
|
101,259
|
|
|
|
316,433
|
|
|
Structured Alpha Fund
|
|
|
72
|
|
|
|
34
|
|
|
|
106
|
|
|
Ultra Micro Cap Fund
|
|
|
40,769
|
|
|
|
19,185
|
|
|
|
59,954
|
|
|
U.S. Equity Hedged Fund
|
|
|
857
|
|
|
|
403
|
|
|
|
1,260
|
|
|
U.S. Small-Cap Growth Fund
|
|
|
4,919
|
|
|
|
2,315
|
|
|
|
7,234
|
|
|
Total
|
|
$
|
1,114,474
|
|
|
$
|
524,458
|
|
|
$
|
1,638,932
|
|
Payments Pursuant to Class B Plans
The following table sets forth the amount paid by the Trust pursuant to the Class B Retail
Plan for the last three fiscal years.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
Year Ended
|
|
Year Ended
|
|
Fund
|
|
11/30/13
|
|
11/30/12
|
|
11/30/11
|
|
Global Allocation Fund
|
|
$
|
35,700
|
|
|
$
|
64,544
|
|
|
$
|
138,864
|
|
The amounts collected pursuant to the Class B Retail Plan will be used for the following
purposes by the Distributor: sales commissions and other compensation to sales personnel;
preparing, printing and distributing sales material and advertising (including preparing, printing
and distributing the prospectus to non-shareholders) and other expenses (including data processing,
legal,
87
operations and financing charges and expenses). Based on a number of factors, the
Distributor analyzes costs on an annual basis and applies a fixed formula in order to allocate
amounts collected pursuant to the Class B Retail Plan to compensation and to sales material and
other expenses. Because certain of the Funds are newly formed and have not yet commenced
operations, the Trust has not paid any amount pursuant to the Class B Retail Plan during the
periods noted.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales Material and
|
|
|
|
Fund
|
|
Compensation
|
|
Other Expenses
|
|
Total
|
|
Global Allocation Fund
|
|
$
|
24,276
|
|
|
$
|
11,424
|
|
|
$
|
35,700
|
|
Payments Pursuant to Class C Plans
The following table sets forth the amount paid by the Trust pursuant to the Class C Retail
Plan for the last three fiscal years. Because certain of the Funds are newly formed, the Trust did
not pay any amount pursuant to the Class C Retail Plan during the periods noted for such Funds.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
Year Ended
|
|
Year Ended
|
|
Fund
|
|
11/30/13
|
|
11/30/12
|
|
11/30/11
|
|
Behavioral Advantage Large Cap Fund
|
|
$
|
1,059
|
|
|
$
|
316
|
|
|
$
|
23
|
|
|
China Equity Fund
|
|
|
563
|
|
|
|
905
|
|
|
|
2,291
|
|
|
Convertible Fund
|
|
|
614,025
|
|
|
|
309,347
|
|
|
|
157,809
|
|
|
Disciplined Equity Fund
|
|
|
9,918
|
|
|
|
12,203
|
|
|
|
11,548
|
|
|
Dynamic Emerging Multi-Asset Fund
|
|
|
271
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
Emerging Markets Debt Fund
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
Global Allocation Fund
|
|
|
695,745
|
|
|
|
743,817
|
|
|
|
888,334
|
|
|
Global Fundamental Strategy Fund
|
|
|
42
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
Global Growth Allocation Fund
|
|
|
13,460
|
|
|
|
12,237
|
|
|
|
11,008
|
|
|
Global Managed Volatility Fund
|
|
|
1,102
|
|
|
|
100
|
|
|
|
N/A
|
|
|
Global Water Fund
|
|
|
364,382
|
|
|
|
238,680
|
|
|
|
229,304
|
|
|
High Yield Bond Fund
|
|
|
294,583
|
|
|
|
239,068
|
|
|
|
39,011
|
|
|
International Small-Cap Fund
|
|
|
5,926
|
|
|
|
5,090
|
|
|
|
4,121
|
|
|
Multi-Asset Real Return Fund
|
|
|
411
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
NFJ Emerging Markets Value Fund
|
|
|
135
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
NFJ Global Dividend Value Fund
|
|
|
47,153
|
|
|
|
36,036
|
|
|
|
24,495
|
|
|
NFJ International Small-Cap Value Fund
|
|
|
2,039
|
|
|
|
53
|
|
|
|
N/A
|
|
|
NFJ International Value II Fund
|
|
|
231
|
|
|
|
104
|
|
|
|
N/A
|
|
|
Redwood Fund
|
|
|
514
|
|
|
|
379
|
|
|
|
800
|
|
|
Retirement 2015 Fund
|
|
|
16,923
|
|
|
|
21,503
|
|
|
|
20,143
|
|
|
Retirement 2020 Fund
|
|
|
4,666
|
|
|
|
6,513
|
|
|
|
4,904
|
|
|
Retirement 2030 Fund
|
|
|
7,309
|
|
|
|
6,339
|
|
|
|
6,884
|
|
|
Retirement 2040 Fund
|
|
|
2,587
|
|
|
|
1,207
|
|
|
|
727
|
|
|
Retirement 2050 Fund
|
|
|
744
|
|
|
|
684
|
|
|
|
488
|
|
|
Retirement Income Fund
|
|
|
56,728
|
|
|
|
69,783
|
|
|
|
33,556
|
|
|
Short Duration High Income Fund
|
|
|
229,876
|
|
|
|
57,438
|
|
|
|
765
|
|
|
Structured Alpha Fund
|
|
|
118
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
U.S. Equity Hedged Fund
|
|
|
198
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
U.S. Small-Cap Growth Fund
|
|
|
3,663
|
|
|
|
2,056
|
|
|
|
1,100
|
|
|
Total
|
|
$
|
2,374,371
|
|
|
$
|
1,763,858
|
|
|
$
|
1,437,311
|
|
The amounts collected pursuant to the Class C Retail Plan will be used for the following
purposes by the Distributor: sales commissions and other compensation to sales personnel;
preparing, printing and distributing sales material and advertising (including preparing, printing
and distributing the prospectuses to non-shareholders) and other expenses (including data
processing, legal, operations and financing charges and expenses). Based on a number of factors,
the Distributor analyzes costs on an annual basis and applies a fixed formula in order to allocate
amounts collected pursuant to the Class C Retail Plan to compensation and to sales material and
other expenses. Because certain of the Funds are newly formed, the Distributor did not use any
amounts collected pursuant to the Class C Retail Plan for these purposes during the periods noted
for such Funds.
88
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales Material and
|
|
|
|
Fund
|
|
Compensation
|
|
Other Expenses
|
|
Total
|
|
Behavioral Advantage Large Cap Fund
|
|
$
|
720
|
|
|
$
|
339
|
|
|
$
|
1,059
|
|
|
China Equity Fund
|
|
|
383
|
|
|
|
180
|
|
|
|
563
|
|
|
Convertible Fund
|
|
|
417,537
|
|
|
|
196,488
|
|
|
|
614,025
|
|
|
Disciplined Equity Fund
|
|
|
6,745
|
|
|
|
3,173
|
|
|
|
9,918
|
|
|
Dynamic Emerging Multi-Asset Fund
|
|
|
184
|
|
|
|
87
|
|
|
|
271
|
|
|
Emerging Markets Debt Fund
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
Global Allocation Fund
|
|
|
473,106
|
|
|
|
222,639
|
|
|
|
695,745
|
|
|
Global Fundamental Strategy Fund
|
|
|
29
|
|
|
|
13
|
|
|
|
42
|
|
|
Global Growth Allocation Fund
|
|
|
9,153
|
|
|
|
4,307
|
|
|
|
13,460
|
|
|
Global Managed Volatility Fund
|
|
|
750
|
|
|
|
352
|
|
|
|
1,102
|
|
|
Global Water Fund
|
|
|
247,780
|
|
|
|
116,602
|
|
|
|
364,382
|
|
|
High Yield Bond Fund
|
|
|
200,317
|
|
|
|
94,266
|
|
|
|
294,583
|
|
|
International Small-Cap Fund
|
|
|
4,030
|
|
|
|
1,896
|
|
|
|
5,926
|
|
|
Multi-Asset Real Return Fund
|
|
|
279
|
|
|
|
132
|
|
|
|
411
|
|
|
NFJ Emerging Markets Value Fund
|
|
|
91
|
|
|
|
44
|
|
|
|
135
|
|
|
NFJ Global Dividend Value Fund
|
|
|
32,064
|
|
|
|
15,089
|
|
|
|
47,153
|
|
|
NFJ International Small-Cap Value Fund
|
|
|
1,386
|
|
|
|
653
|
|
|
|
2,039
|
|
|
NFJ International Value II Fund
|
|
|
157
|
|
|
|
74
|
|
|
|
231
|
|
|
Redwood Fund
|
|
|
349
|
|
|
|
165
|
|
|
|
514
|
|
|
Retirement 2015 Fund
|
|
|
11,508
|
|
|
|
5,415
|
|
|
|
16,923
|
|
|
Retirement 2020 Fund
|
|
|
3,173
|
|
|
|
1,493
|
|
|
|
4,666
|
|
|
Retirement 2030 Fund
|
|
|
4,970
|
|
|
|
2,339
|
|
|
|
7,309
|
|
|
Retirement 2040 Fund
|
|
|
1,759
|
|
|
|
828
|
|
|
|
2,587
|
|
|
Retirement 2050 Fund
|
|
|
506
|
|
|
|
238
|
|
|
|
744
|
|
|
Retirement Income Fund
|
|
|
38,575
|
|
|
|
18,153
|
|
|
|
56,728
|
|
|
Short Duration High Income Fund
|
|
|
156,316
|
|
|
|
73,560
|
|
|
|
229,876
|
|
|
Structured Alpha Fund
|
|
|
81
|
|
|
|
37
|
|
|
|
118
|
|
|
U.S. Equity Hedged Fund
|
|
|
135
|
|
|
|
63
|
|
|
|
198
|
|
|
U.S. Small-Cap Growth Fund
|
|
|
2,491
|
|
|
|
1,172
|
|
|
|
3,663
|
|
|
Total
|
|
$
|
1,614,574
|
|
|
$
|
759,797
|
|
|
$
|
2,374,371
|
|
Payments Pursuant to Class R Plans
The following table sets forth the amount paid by the Trust pursuant to the Class R Retail
Plan for the last three fiscal years. Because certain of the Funds that currently offer Class R
Shares are newly formed, the Trust did not pay any amount pursuant to the Class R Retail Plan
during the periods noted.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
Year Ended
|
|
Year Ended
|
|
Fund
|
|
11/30/13
|
|
11/30/12
|
|
11/30/11
|
|
China Equity Fund
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
Convertible Fund
|
|
$
|
1,686
|
|
|
$
|
772
|
|
|
$
|
108
|
|
|
Global Allocation Fund
|
|
|
80
|
|
|
|
72
|
|
|
|
70
|
|
|
Global Growth Allocation Fund
|
|
|
238
|
|
|
|
194
|
|
|
|
112
|
|
|
High Yield Bond Fund
|
|
|
12,208
|
|
|
|
6,966
|
|
|
|
518
|
|
|
International Small-Cap Fund
|
|
|
82
|
|
|
|
54
|
|
|
|
58
|
|
|
Retirement 2015 Fund
|
|
|
1,974
|
|
|
|
464
|
|
|
|
68
|
|
|
Retirement 2020 Fund
|
|
|
5,048
|
|
|
|
746
|
|
|
|
70
|
|
|
Retirement 2025 Fund
|
|
|
4,484
|
|
|
|
994
|
|
|
|
N/A
|
|
|
Retirement 2030 Fund
|
|
|
6,148
|
|
|
|
990
|
|
|
|
74
|
|
|
Retirement 2035 Fund
|
|
|
4,590
|
|
|
|
690
|
|
|
|
N/A
|
|
|
Retirement 2040 Fund
|
|
|
5,132
|
|
|
|
602
|
|
|
|
78
|
|
|
Retirement 2045 Fund
|
|
|
1,636
|
|
|
|
312
|
|
|
|
N/A
|
|
|
Retirement 2050 Fund
|
|
|
2,338
|
|
|
|
336
|
|
|
|
90
|
|
|
Retirement 2055 Fund
|
|
|
276
|
|
|
|
74
|
|
|
|
N/A
|
|
|
Retirement Income Fund
|
|
|
714
|
|
|
|
242
|
|
|
|
78
|
|
|
U.S. Small-Cap Growth Fund
|
|
|
84
|
|
|
|
52
|
|
|
|
48
|
|
|
Total
|
|
$
|
46,718
|
|
|
$
|
13,560
|
|
|
$
|
1,372
|
|
89
The amounts collected pursuant to the Class R Retail Plan will be used for the following
purposes by the Distributor: sales commissions and other compensation to sales personnel;
preparing, printing and distributing sales material and advertising (including preparing, printing
and distributing the prospectuses to non-shareholders) and other expenses (including data
processing, legal, operations and financing charges and expenses). Based on a number of factors,
the Distributor analyzes costs on an annual basis and applies a fixed formula in order to allocate
amounts collected pursuant to the Class R Retail Plan to compensation and to sales material and
other expenses. Because certain of the Funds that currently offer Class R Shares were newly formed
during the period, the Distributor has not used any amounts collected pursuant to the Class R
Retail Plan for these purposes during the periods noted.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales Materials and
|
|
|
|
Fund
|
|
Compensation
|
|
Other Expenses
|
|
Total
|
|
Convertible Fund
|
|
$
|
1,147
|
|
|
$
|
540
|
|
|
$
|
1,687
|
|
|
Global Allocation Fund
|
|
|
54
|
|
|
|
25
|
|
|
|
79
|
|
|
Global Growth Allocation Fund
|
|
|
162
|
|
|
|
77
|
|
|
|
239
|
|
|
High Yield Bond Fund
|
|
|
8,301
|
|
|
|
3,907
|
|
|
|
12,208
|
|
|
International Small-Cap Fund
|
|
|
56
|
|
|
|
26
|
|
|
|
82
|
|
|
Retirement 2015 Fund
|
|
|
1,343
|
|
|
|
632
|
|
|
|
1,975
|
|
|
Retirement 2020 Fund
|
|
|
3,433
|
|
|
|
1,615
|
|
|
|
5,048
|
|
|
Retirement 2025 Fund
|
|
|
3,048
|
|
|
|
1,435
|
|
|
|
4,483
|
|
|
Retirement 2030 Fund
|
|
|
4,181
|
|
|
|
1,967
|
|
|
|
6,148
|
|
|
Retirement 2035 Fund
|
|
|
3,121
|
|
|
|
1,468
|
|
|
|
4,589
|
|
|
Retirement 2040 Fund
|
|
|
3,490
|
|
|
|
1,643
|
|
|
|
5,133
|
|
|
Retirement 2045 Fund
|
|
|
1,113
|
|
|
|
523
|
|
|
|
1,636
|
|
|
Retirement 2050 Fund
|
|
|
1,590
|
|
|
|
748
|
|
|
|
2,338
|
|
|
Retirement 2055 Fund
|
|
|
188
|
|
|
|
89
|
|
|
|
277
|
|
|
Retirement Income Fund
|
|
|
486
|
|
|
|
229
|
|
|
|
715
|
|
|
U.S. Small-Cap Growth Fund
|
|
|
57
|
|
|
|
27
|
|
|
|
84
|
|
|
Total
|
|
$
|
31,770
|
|
|
$
|
14,950
|
|
|
$
|
46,718
|
|
From time to time, expenses of principal underwriters incurred in connection with the
distribution of Class B, Class C and Class R shares of the Fund, and in connection with the
servicing of Class A, Class B, Class C and Class R shareholders of the Fund and the maintenance of
Class A, Class B, Class C and Class R shareholder accounts, may exceed the distribution and/or
servicing fees collected by the Distributor. The allocation of such excess amounts as of November
30, 2013 is as follows. Because certain of the Funds were newly formed during the period, no such
excess expenses have been incurred during the periods noted for such Funds.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fund
|
|
Class A
|
|
Class B
|
|
Class C
|
|
Class R
|
|
Behavioral Advantage Large Cap Fund
|
|
$
|
231
|
|
|
|
N/A
|
|
|
$
|
354
|
|
|
|
N/A
|
|
|
China Equity Fund
|
|
|
83
|
|
|
|
N/A
|
|
|
|
177
|
|
|
|
N/A
|
|
|
Convertible Fund
|
|
|
28,808
|
|
|
|
N/A
|
|
|
|
344,821
|
|
|
$
|
126
|
|
|
Disciplined Equity Fund
|
|
|
1,382
|
|
|
|
N/A
|
|
|
|
1,245
|
|
|
|
N/A
|
|
|
Dynamic Emerging Multi-Asset Fund
|
|
|
23
|
|
|
|
N/A
|
|
|
|
134
|
|
|
|
N/A
|
|
|
Emerging Markets Debt Fund
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
Global Allocation Fund
|
|
|
15,850
|
|
|
$
|
27,800
|
|
|
|
100,994
|
|
|
|
79
|
|
|
Global Fundamental Strategy Fund
|
|
|
11
|
|
|
|
N/A
|
|
|
|
42
|
|
|
|
N/A
|
|
|
Global Growth Allocation Fund
|
|
|
164
|
|
|
|
N/A
|
|
|
|
1,526
|
|
|
|
120
|
|
|
Global Managed Volatility Fund
|
|
|
31
|
|
|
|
N/A
|
|
|
|
126
|
|
|
|
N/A
|
|
|
Global Water Fund
|
|
|
15,106
|
|
|
|
N/A
|
|
|
|
146,677
|
|
|
|
N/A
|
|
|
High Yield Bond Fund
|
|
|
29,012
|
|
|
|
N/A
|
|
|
|
105,296
|
|
|
|
1,156
|
|
|
International Small-Cap Fund
|
|
|
136
|
|
|
|
N/A
|
|
|
|
682
|
|
|
|
69
|
|
|
Micro Cap Fund
|
|
|
(38,173
|
)
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
Multi-Asset Real Return Fund
|
|
|
23
|
|
|
|
N/A
|
|
|
|
74
|
|
|
|
N/A
|
|
|
NFJ Emerging Markets Value Fund
|
|
|
24
|
|
|
|
N/A
|
|
|
|
118
|
|
|
|
N/A
|
|
|
NFJ Global Dividend Value Fund
|
|
|
3,121
|
|
|
|
N/A
|
|
|
|
13,455
|
|
|
|
N/A
|
|
|
NFJ International Small-Cap Value Fund
|
|
|
3,188
|
|
|
|
N/A
|
|
|
|
2,028
|
|
|
|
N/A
|
|
|
NFJ International Value II Fund
|
|
|
35
|
|
|
|
N/A
|
|
|
|
231
|
|
|
|
N/A
|
|
|
Redwood Fund
|
|
|
367
|
|
|
|
N/A
|
|
|
|
146
|
|
|
|
N/A
|
|
|
Retirement 2015 Fund
|
|
|
892
|
|
|
|
N/A
|
|
|
|
1,736
|
|
|
|
200
|
|
|
Retirement 2020 Fund
|
|
|
1,378
|
|
|
|
N/A
|
|
|
|
1,118
|
|
|
|
443
|
|
|
Retirement 2025 Fund
|
|
|
1,721
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
497
|
|
|
Retirement 2030 Fund
|
|
|
1,868
|
|
|
|
N/A
|
|
|
|
1,204
|
|
|
|
474
|
|
|
Retirement 2035 Fund
|
|
|
961
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
438
|
|
|
Retirement 2040 Fund
|
|
|
821
|
|
|
|
N/A
|
|
|
|
637
|
|
|
|
461
|
|
90
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fund
|
|
Class A
|
|
Class B
|
|
Class C
|
|
Class R
|
|
Retirement 2045 Fund
|
|
|
634
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
188
|
|
|
Retirement 2050 Fund
|
|
|
225
|
|
|
|
N/A
|
|
|
|
340
|
|
|
|
210
|
|
|
Retirement 2055 Fund
|
|
|
41
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
77
|
|
|
Retirement Income Fund
|
|
|
1,094
|
|
|
|
N/A
|
|
|
|
7,811
|
|
|
|
145
|
|
|
Short Duration High Income Fund
|
|
|
68,101
|
|
|
|
N/A
|
|
|
|
148,238
|
|
|
|
N/A
|
|
|
Structured Alpha Fund
|
|
|
37
|
|
|
|
N/A
|
|
|
|
118
|
|
|
|
N/A
|
|
|
Ultra Micro Cap Fund
|
|
|
46,301
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
U.S. Small-Cap Growth Fund
|
|
|
457
|
|
|
|
N/A
|
|
|
|
1,069
|
|
|
|
60
|
|
|
U.S. Equity Hedged Fund
|
|
|
560
|
|
|
|
N/A
|
|
|
|
198
|
|
|
|
N/A
|
|
|
Total
|
|
$
|
184,513
|
|
|
$
|
27,800
|
|
|
$
|
880,595
|
|
|
$
|
4,744
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fund
|
|
Class A
|
|
Class B
|
|
Class C
|
|
Class R
|
|
Behavioral Advantage Large Cap Fund
|
|
|
0.00
|
%
|
|
|
N/A
|
|
|
|
0.17
|
%
|
|
|
N/A
|
|
|
China Equity Fund
|
|
|
0.06
|
%
|
|
|
N/A
|
|
|
|
0.34
|
%
|
|
|
N/A
|
|
|
Convertible Fund
|
|
|
0.01
|
%
|
|
|
N/A
|
|
|
|
0.30
|
%
|
|
|
0.03
|
%
|
|
Disciplined Equity Fund
|
|
|
0.06
|
%
|
|
|
N/A
|
|
|
|
0.13
|
%
|
|
|
N/A
|
|
|
Dynamic Emerging Multi-Asset Fund
|
|
|
0.25
|
%
|
|
|
N/A
|
|
|
|
0.22
|
%
|
|
|
N/A
|
|
|
Emerging Markets Debt Fund
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
Global Allocation Fund
|
|
|
0.02
|
%
|
|
|
0.97
|
%
|
|
|
0.15
|
%
|
|
|
0.48
|
%
|
|
Global Fundamental Strategy Fund
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
Global Growth Allocation Fund
|
|
|
0.01
|
%
|
|
|
N/A
|
|
|
|
0.10
|
%
|
|
|
0.11
|
%
|
|
Global Managed Volatility Fund
|
|
|
0.03
|
%
|
|
|
N/A
|
|
|
|
0.07
|
%
|
|
|
N/A
|
|
|
Global Water Fund
|
|
|
0.01
|
%
|
|
|
N/A
|
|
|
|
0.28
|
%
|
|
|
N/A
|
|
|
High Yield Bond Fund
|
|
|
0.04
|
%
|
|
|
N/A
|
|
|
|
0.38
|
%
|
|
|
0.04
|
%
|
|
International Small-Cap Fund
|
|
|
0.00
|
%
|
|
|
N/A
|
|
|
|
0.10
|
%
|
|
|
0.25
|
%
|
|
Micro Cap Fund
|
|
|
-3.59
|
%
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
Multi-Asset Real Return Fund
|
|
|
0.05
|
%
|
|
|
N/A
|
|
|
|
0.09
|
%
|
|
|
N/A
|
|
|
NFJ Emerging Markets Value Fund
|
|
|
0.13
|
%
|
|
|
N/A
|
|
|
|
0.47
|
%
|
|
|
N/A
|
|
|
NFJ Global Dividend Value Fund
|
|
|
0.03
|
%
|
|
|
N/A
|
|
|
|
0.24
|
%
|
|
|
N/A
|
|
|
NFJ International Small-Cap Value Fund
|
|
|
0.14
|
%
|
|
|
N/A
|
|
|
|
0.39
|
%
|
|
|
N/A
|
|
|
NFJ International Value II Fund
|
|
|
0.05
|
%
|
|
|
N/A
|
|
|
|
0.49
|
%
|
|
|
N/A
|
|
|
Redwood Fund
|
|
|
0.04
|
%
|
|
|
N/A
|
|
|
|
0.21
|
%
|
|
|
N/A
|
|
|
Retirement 2015 Fund
|
|
|
0.02
|
%
|
|
|
N/A
|
|
|
|
0.12
|
%
|
|
|
0.09
|
%
|
|
Retirement 2020 Fund
|
|
|
0.02
|
%
|
|
|
N/A
|
|
|
|
0.26
|
%
|
|
|
0.04
|
%
|
|
Retirement 2025 Fund
|
|
|
0.01
|
%
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
0.07
|
%
|
|
Retirement 2030 Fund
|
|
|
0.02
|
%
|
|
|
N/A
|
|
|
|
0.16
|
%
|
|
|
0.04
|
%
|
|
Retirement 2035 Fund
|
|
|
0.01
|
%
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
0.05
|
%
|
|
Retirement 2040 Fund
|
|
|
0.01
|
%
|
|
|
N/A
|
|
|
|
0.20
|
%
|
|
|
0.04
|
%
|
|
Retirement 2045 Fund
|
|
|
0.01
|
%
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
0.05
|
%
|
|
Retirement 2050 Fund
|
|
|
0.02
|
%
|
|
|
N/A
|
|
|
|
0.29
|
%
|
|
|
0.04
|
%
|
|
Retirement 2055 Fund
|
|
|
0.03
|
%
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
0.11
|
%
|
|
Retirement Income Fund
|
|
|
0.03
|
%
|
|
|
N/A
|
|
|
|
0.18
|
%
|
|
|
0.10
|
%
|
|
Short Duration High Income Fund
|
|
|
0.04
|
%
|
|
|
N/A
|
|
|
|
0.23
|
%
|
|
|
N/A
|
|
|
Structured Alpha Fund
|
|
|
0.01
|
%
|
|
|
N/A
|
|
|
|
0.16
|
%
|
|
|
N/A
|
|
|
Ultra Micro Cap Fund
|
|
|
0.08
|
%
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
U.S. Small-Cap Growth Fund
|
|
|
0.01
|
%
|
|
|
N/A
|
|
|
|
0.18
|
%
|
|
|
0.23
|
%
|
|
U.S. Equity Hedged Fund
|
|
|
0.04
|
%
|
|
|
N/A
|
|
|
|
0.16
|
%
|
|
|
N/A
|
|
Distribution and Administrative Services Plans for Administrative Class Shares
The Trust has adopted an Administrative Services Plan with respect to the Administrative Class
shares of each Fund. The Trust also has adopted an Administrative Distribution Plan (together with
the Administrative Services Plan, the “Administrative Plans”) with respect to the Administrative
Class shares of each Fund.
Under the terms of the Administrative Distribution Plan, the Trust is permitted to reimburse,
out of the assets attributable to the Administrative Class shares of each applicable Fund, in an
amount up to 0.25% on an annual basis of the average daily net assets of that class, financial
intermediaries for costs and expenses incurred in connection with the distribution and marketing of
Administrative Class shares and/or the provision of certain shareholder services to its customers
that invest in Administrative Class shares of the Funds. Such services may include, but are not
limited to, the following: providing facilities to answer questions from prospective investors
about a Fund; receiving and answering correspondence, including requests for prospectuses and
statements of additional information; preparing, printing and delivering the prospectus and
shareholder reports to prospective shareholders; complying with federal and state securities laws
pertaining to the sale of Administrative Class shares; and assisting investors in completing
application forms and selecting dividend and other account options.
91
Under the terms of the Administrative Services Plan, the Trust is permitted to reimburse, out
of the assets attributable to the Administrative Class shares of each Fund, in an amount up to
0.25% on an annual basis of the average daily net assets of that class, financial intermediaries
that provide certain administrative services for Administrative Class shareholders. Such services
may include, but are not limited to, the following: receiving, aggregating and processing
shareholder orders; furnishing shareholder sub-accounting; providing and maintaining elective
shareholder services such as check writing and wire transfer services; providing and maintaining
pre-authorized investment plans; communicating periodically with shareholders; acting as the sole
shareholder of record and nominee for shareholders; maintaining accounting records for
shareholders; answering questions and handling correspondence from shareholders about their
accounts; and performing similar account administrative services.
In addition, financial intermediaries that receive fees under the Administrative Distribution
Plan or the Administrative Services Plan may in turn pay and/or reimburse all or a portion of those
fees to their customers.
The same entity may be the recipient of fees under both the Administrative Distribution Plan
and the Administrative Services Plan, but may not receive fees under both plans with respect to the
same assets. Fees paid pursuant to either Plan may be paid for shareholder services and the
maintenance of shareholder accounts, and therefore may constitute “service fees” for purposes of
applicable rules of FINRA. The Administrative Distribution Plan has been adopted in accordance with
the requirements of Rule 12b-1 under the 1940 Act and will be administered in accordance with the
provisions of that rule.
Each Administrative Plan provides that it may not be amended to increase materially the costs
that Administrative Class shareholders may bear under the Plan without the approval of a majority
of the outstanding voting securities of the Administrative Class, and by vote of a majority of both
(i) the Trustees of the Trust and (ii) those Trustees (“disinterested Administrative Plan
Trustees”) who are not “interested persons” of the Trust (as defined in the 1940 Act) and who have
no direct or indirect financial interest in the operation of the Plan or any agreements related to
it, cast in person at a meeting called for the purpose of voting on the Plan and any related
amendments.
Each Administrative Plan provides that it shall continue in effect so long as such continuance
is specifically approved at least annually by the Trustees and the disinterested Administrative
Plan Trustees. Each Administrative Plan provides that any person authorized to direct the
disposition of monies paid or payable by a class pursuant to the Plan or any related agreement
shall provide to the Trustees, and the Board shall review at least quarterly, a written report of
the amounts so expended and the purposes for which such expenditures were made.
Each Administrative Plan is a “reimbursement plan,” which means that fees are payable to the
relevant financial intermediary only to the extent necessary to reimburse expenses incurred
pursuant to such plan. Each Administrative Plan provides that expenses payable under the Plan may
be carried forward for reimbursement for up to twelve months beyond the date in which the expense
is incurred, subject to the limit that not more than 0.25% of the average daily net assets of
Administrative Class shares may be used in any month to pay expenses under the Plan. Each
Administrative Plan requires that Administrative Class shares incur no interest or carrying
charges.
Rules of FINRA limit the amount of distribution fees that may be paid by mutual funds.
“Service fees,” defined to mean fees paid for providing shareholder services or the maintenance of
accounts (but not transfer agency services) are not subject to the limits. The Trust believes that
some, if not all, of the fees paid pursuant to both Administrative Plans will qualify as “service
fees” and therefore will not be limited by FINRA rules.
Payments Pursuant to the Administrative Plans
The following table sets forth the amount paid by the Trust to service providers pursuant to
the Administrative Services Plan and the Administrative Distribution Plan for the last three fiscal
years. Because certain of the Funds that currently offer Administrative Class Shares are newly
formed, the Trust did not pay any amount pursuant to the Administrative Services Plan and the
Administrative Distribution Plan during the periods noted for such Funds.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
Year Ended
|
|
Year Ended
|
|
Fund
|
|
11/30/13
|
|
11/30/12
|
|
11/30/11
|
|
China Equity Fund
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
Convertible Fund
|
|
$
|
19,401
|
|
|
$
|
4,818
|
|
|
$
|
2,635
|
|
|
Global Allocation Fund
|
|
|
2,538
|
|
|
|
4,094
|
|
|
|
4,021
|
|
|
Global Growth Allocation Fund
|
|
|
45
|
|
|
|
40
|
|
|
|
40
|
|
|
High Yield Bond Fund
|
|
|
74,979
|
|
|
|
2,234
|
|
|
|
29
|
|
92
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
Year Ended
|
|
Year Ended
|
|
Fund
|
|
11/30/13
|
|
11/30/12
|
|
11/30/11
|
|
International Small-Cap Fund
|
|
|
34
|
|
|
|
181
|
|
|
|
29
|
|
|
Retirement 2015 Fund
|
|
|
6,020
|
|
|
|
36
|
|
|
|
35
|
|
|
Retirement 2020 Fund
|
|
|
11,142
|
|
|
|
36
|
|
|
|
35
|
|
|
Retirement 2025 Fund
|
|
|
15,002
|
|
|
|
25
|
|
|
|
N/A
|
|
|
Retirement 2030 Fund
|
|
|
13,085
|
|
|
|
39
|
|
|
|
38
|
|
|
Retirement 2035 Fund
|
|
|
14,577
|
|
|
|
26
|
|
|
|
N/A
|
|
|
Retirement 2040 Fund
|
|
|
7,411
|
|
|
|
40
|
|
|
|
40
|
|
|
Retirement 2045 Fund
|
|
|
2,163
|
|
|
|
28
|
|
|
|
N/A
|
|
|
Retirement 2050 Fund
|
|
|
1,342
|
|
|
|
41
|
|
|
|
40
|
|
|
Retirement 2055 Fund
|
|
|
209
|
|
|
|
26
|
|
|
|
N/A
|
|
|
Retirement Income Fund
|
|
|
3,595
|
|
|
|
36
|
|
|
|
34
|
|
|
Total
|
|
$
|
171,543
|
|
|
$
|
11,700
|
|
|
$
|
6,976
|
|
Plan for Class D Shares
Each Fund pays fees to the Distributor on an ongoing basis as compensation for the services
the Distributor renders and the expenses it bears in connection with the sale and distribution of
each Fund’s shares (“distribution fees”) and/or in connection with personal services rendered to a
Fund’s shareholders and the maintenance of shareholder accounts (“servicing fees”). These payments
are made pursuant to a Distribution and Servicing Plan (“12b-1 Plan”) adopted by the Funds pursuant
to Rule 12b-1 under the Investment Company Act of 1940. Under the 12b-1 Plan for Class D shares pay
distribution and/or servicing fees (calculated as a percentage of a Fund’s average daily net assets
attributable to the particular class of shares) not to exceed 0.25%. Because 12b-1 fees are paid
out of a Fund’s assets on an ongoing basis, over time these fees will increase the cost of your
investment and may cost you more than other types of sales charges.
In accordance with Rule 12b-1 under the 1940 Act, the Class D Plan may not be amended to
increase materially the costs that Class D shareholders may bear under the Plan without the
approval of a majority of the outstanding Class D shares, and by vote of a majority of both (i) the
Trustees of the Trust and (ii) those Trustees (“disinterested Class D Plan Trustees”) who are not
“interested persons” of the Trust (as defined in the 1940 Act) and who have no direct or indirect
financial interest in the operation of the Plan or any agreements related to it, cast in person at
a meeting called for the purpose of voting on the Plan and any related amendments. The Class D Plan
may not take effect until approved by vote of a majority of both (i) the Trustees of the Trust and
(ii) the disinterested Class D Plan Trustees. In addition, the Class D Plan may not take effect
unless it is approved by the vote of a majority of the outstanding Class D shares and it shall
continue in effect only so long as such continuance is specifically approved at least annually by
the Trustees and the disinterested Class D Plan Trustees.
Rules of FINRA limit the amount of distribution fees that may be paid by mutual funds.
“Service fees,” defined to mean fees paid for providing shareholder services or the maintenance of
accounts (but not transfer agency services) are not subject to the limits. The Trust believes that
most, if not all, of the fees paid pursuant to the Class D Plan will qualify as “service fees” and
therefore will not be limited by FINRA rules.
Because certain of the Funds are newly formed, the Trust did not pay any amount to qualified
service providers pursuant to the Class D Plan during the periods noted for such Funds.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
Year Ended
|
|
Year Ended
|
|
Fund
|
|
11/30/13
|
|
11/30/12
|
|
11/30/11
|
|
Behavioral Advantage Large Cap Fund
|
|
$
|
519
|
|
|
$
|
34
|
|
|
|
N/A
|
|
|
China Equity Fund
|
|
|
739
|
|
|
|
818
|
|
|
$
|
1,053
|
|
|
Convertible Fund
|
|
|
N/A
|
|
|
|
92,896
|
|
|
|
83,786
|
|
|
Disciplined Equity Fund
|
|
|
537
|
|
|
|
674
|
|
|
|
1,577
|
|
|
Dynamic Emerging Multi-Asset Fund
|
|
|
35
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
Global Allocation Fund
|
|
|
1,190
|
|
|
|
521
|
|
|
|
402
|
|
|
Global Fundamental Strategy
|
|
|
11
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
Global Growth Allocation Fund
|
|
|
576
|
|
|
|
148
|
|
|
|
95
|
|
|
Global Managed Volatility Fund
|
|
|
178
|
|
|
|
34
|
|
|
|
N/A
|
|
|
Global Water Fund
|
|
|
32,357
|
|
|
|
11,881
|
|
|
|
9,446
|
|
|
High Yield Bond Fund
|
|
|
177,986
|
|
|
|
66,804
|
|
|
|
8,757
|
|
|
International Small-Cap Fund
|
|
|
405
|
|
|
|
2,003
|
|
|
|
654
|
|
|
Multi-Asset Real Return Fund
|
|
|
24
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
NFJ Emerging Markets Value Fund
|
|
|
1,464
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
NFJ Global Dividend Value Fund
|
|
|
1,459
|
|
|
|
1,497
|
|
|
|
2,524
|
|
|
NFJ International Small-Cap Value Fund
|
|
|
1,976
|
|
|
|
40
|
|
|
|
N/A
|
|
93
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
Year Ended
|
|
Year Ended
|
|
Fund
|
|
11/30/13
|
|
11/30/12
|
|
11/30/11
|
|
NFJ International Value II Fund
|
|
|
30
|
|
|
|
26
|
|
|
|
N/A
|
|
|
Redwood Fund
|
|
|
174
|
|
|
|
459
|
|
|
|
927
|
|
|
Retirement 2015 Fund
|
|
|
1,247
|
|
|
|
877
|
|
|
|
602
|
|
|
Retirement 2020 Fund
|
|
|
687
|
|
|
|
413
|
|
|
|
295
|
|
|
Retirement 2030 Fund
|
|
|
1,340
|
|
|
|
1,076
|
|
|
|
865
|
|
|
Retirement 2040 Fund
|
|
|
570
|
|
|
|
739
|
|
|
|
517
|
|
|
Retirement 2050 Fund
|
|
|
604
|
|
|
|
532
|
|
|
|
506
|
|
|
Retirement Income Fund
|
|
|
3,862
|
|
|
|
2,800
|
|
|
|
986
|
|
|
Short Duration High Income Fund
|
|
|
38,058
|
|
|
|
5,112
|
|
|
|
17
|
|
|
Structured Alpha Fund
|
|
|
1,711
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
U.S. Equity Hedged Fund
|
|
|
473
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
U.S. Small-Cap Growth Fund
|
|
|
154
|
|
|
|
112
|
|
|
|
59
|
|
|
Total
|
|
$
|
433,897
|
|
|
$
|
189,496
|
|
|
$
|
113,068
|
|
Additional Information About Class P Shares
Class P shares of each Fund may be offered through certain brokers and financial
intermediaries (“service agents”) that have established a shareholder servicing relationship with
the Trust on behalf of their customers. The Manager may make arrangements for the Funds to make
payments, directly or through the Manager or its affiliate, with respect to Class P shares of each
Fund held through such service agents, including, without limitation, the following services:
receiving, aggregating and processing purchase, redemption and exchange orders at the service agent
level; furnishing shareholder sub-accounting; providing and maintaining elective services with
respect to Class P shares such as check writing and wire transfer services; providing and
maintaining pre-authorized investment plans; communicating periodically with shareholders; acting
as the sole shareholder of record and nominee for holders of Class P shares; maintaining accounting
records for shareholders; answering questions and handling correspondence from shareholders about
their accounts; issuing confirmations for transactions by shareholders; and performing similar
account administrative services. These payments are made to financial intermediaries selected by
the Manager and/or its affiliates. The actual services provided, and the payments made for such
services, vary from firm to firm. For these services, each Fund (except for the Target Date Funds)
may pay an annual fee of up to 0.10% of the value of the assets in the relevant accounts. The
Manager and/or its affiliates may make payments to service agents for the services described in
this paragraph on top of the 0.10% that each Fund (except for the Target Date Funds) may pay to
such agents. The aggregate rate of such payments by a Fund and the Manager and/or its affiliates
with regard to Class P shares may vary from service agent to service agent and, in certain
circumstances, may exceed 0.10% per annum for any individual service agent. For the Target Date
Funds, such services are paid for with a portion of fees payable under the Administration
Agreement. Please see “Management of the Trust—Fund Administrator.” These amounts would be in
addition to amounts paid to the Trust’s transfer agents or other service providers. Service agents
may impose additional or different conditions than the Trust on the purchase, redemption or
exchanges of Trust shares by their customers. Service agents may also independently establish and
charge their customers transaction fees, account fees and other amounts in connection with
purchases, sales and redemption of Trust shares in addition to any fees charged by the Trust. Each
service agent is responsible for transmitting to its customers a schedule of any such fees and
information regarding any additional or different conditions regarding purchases and redemptions.
Shareholders who are customers of service agents should consult their service agents for
information regarding these fees and conditions. In addition, the Distributor, Allianz Global Fund
Management and their affiliates may also make payments out of the fees they receive from the Funds
and/or their own resources, to financial intermediaries for services that may be deemed to be
primarily intended to result in the sale of Class P shares of the Funds. The payments described in
this paragraph may be significant to the payors and the payees.
Additional Information About Institutional Class and Administrative Class Shares
Institutional Class and Administrative Class shares of the Trust may also be offered through
brokers, other financial intermediaries and other entities, such as benefit or savings plans and
their sponsors or service providers (“service agents”), that have established a shareholder
servicing relationship with the Trust on behalf of their customers. The Distributor, Allianz Global
Fund Management and their affiliates may pay, out of the fees they receive from the Funds and/or
their own assets, amounts to service agents for providing bona fide shareholder services to
shareholders holding Institutional Class and Administrative Class shares through such service
agents. Such services may include, but are not limited to, the following: processing and mailing
trade confirmations, monthly statements, prospectus, annual reports, semi-annual reports and
shareholder notices and other SEC required communications; capturing and processing tax data;
issuing and mailing dividend checks to shareholders who have selected cash distributions; preparing
record date shareholder lists for proxy solicitations; collecting and posting distributions to
shareholder accounts; and establishing and maintaining systematic withdrawals and automated
investment plans and shareholder account registrations. Service agents may impose additional or
different conditions than the Trust on the purchase, redemption or exchanges of Trust shares by
their customers. Service agents may also independently establish and charge their customers
transaction fees, account fees and other amounts in connection with purchases, sales and redemption
of Trust shares in addition to any fees charged by the Trust. Each service agent is responsible for
transmitting to its customers a schedule of any such fees and information regarding any additional
or different conditions regarding purchases and redemptions. Shareholders who are customers of
service agents should consult their service agents for information regarding these fees and
conditions. In addition, the Distributor, Allianz Global Fund Management and their affiliates may
also make payments out of the fees they receive from the Funds and/or their own resources, to
financial intermediaries for services that may be deemed to be primarily intended to result in the
sale of shares of the Funds. The payments described in this paragraph may be significant to the
payors and the payees.
94
Additional Payments to the Distributor
Pursuant to an intercompany agreement between the Manager and the Distributor, the Manager
pays the Distributor a monthly fee at the annual rate of 0.90% of the aggregate gross dollar value
of sales of Fund shares for the Trust during the applicable month of all share classes, to provide
support for the distribution, marketing and servicing activities rendered by the Distributor on
behalf of the Funds and related expenses. Pursuant to an intercompany agreement between Pacific
Investment Management Company LLC (“PIMCO”) and the Distributor, PIMCO pays the Distributor a fee
at the annual rate of 0.09% of the average daily net assets attributable to shares of PIMCO Funds
held by the Trust’s Funds that are “funds of funds” (i.e., currently the Target Date Funds,
AllianzGI Global Allocation Fund and AllianzGI Global Growth Allocation Fund) in return for
shareholder, administrative and other support services as requested from time to time by PIMCO on
behalf of the applicable PIMCO Funds.
Purchases, Exchanges and Redemptions
Purchases, exchanges and redemptions of the Trust’s shares are discussed in the applicable
Prospectus, under the heading “How to Buy and Sell Shares” and that information is incorporated
herein by reference. Certain purchases of the Trust’s shares are subject to a reduction or
elimination of sales charges, as summarized in the applicable Prospectus and as described in
greater detail below. Variations in sales charges reflect the varying efforts required to sell
shares to separate categories of investors.
Certain clients of the Manager or a Sub-Adviser whose assets would be eligible for purchase by
one or more Funds may purchase shares of the Trust with such assets. Assets so purchased by the
Funds will be valued in accordance with procedures adopted by the Board of Trustees.
The minimum initial investment for shares of the Institutional Class, Class P and
Administrative Class is $1 million, except that the minimum investment may be modified for certain
financial intermediaries that submit trades on behalf of underlying investors. The Fund or the
Distributor may lower or waive the minimum initial investment for certain categories of investors
at their discretion, including for Trustees, officers and current and former employees of the
Funds, the Manager, the Sub-Advisers and the Distributor and their immediate family members, and
trusts or plans primarily for the benefit of such persons. Under an “Employees as Customers”
program, the investment minimum may also be lowered or waived for investments in Institutional
Class shares by Trustees of the Trust and Allianz Funds and by current and former employees of
certain direct and indirect subsidiaries of Allianz SE (including AAMA, Allianz Asset Management of
America LLC, Allianz Global Fund Management, Allianz Global Investors U.S. Holdings LLC, AllianzGI
U.S., NFJ and the Distributor and certain of their affiliates) and certain of their family members.
The minimum initial investment for single defined contribution plans is $100,000, unless the plan
has 250 eligible participants or is associated with an existing plan that meets the minimum
investment criteria. The investment minimum for shareholders with existing accounts is $200,000,
provided that the current market value of the account is at least $1,000,000. For omnibus accounts,
all minimums stated above apply at the omnibus level and not at the underlying investor level.
For Class R6 shares, there is no minimum initial investment for Class R6 Eligible Plans and
other eligible investors.
The minimum initial investment in Class D shares of any Fund is $1,000, with a minimum
subsequent investment of $50 per Fund. The minimum investment may be modified for certain financial
intermediaries that submit trades on behalf of underlying investors. The Fund or the Distributor
may lower or waive the minimum initial investment for certain categories of investors at their
discretion.
To obtain more information about exceptions to the minimum initial investment for
Institutional Class, Class R6, Class P, Administrative Class and Class D shares, please call the
Trust at 1-800-498-5413.
One or more classes of shares of the Funds may not be qualified or registered for sale in all
States. Prospective investors should inquire as to whether shares of a particular Fund, or class of
shares thereof, are available for offer and sale in their State of domicile or residence. Shares of
a Fund may not be offered or sold in any State unless registered or qualified in that jurisdiction,
unless an exemption from registration or qualification is available.
As described and subject to any limits in the applicable Prospectus under the caption “How to
Buy and Sell Shares- Exchanging Shares” and in this Statement of Additional Information under the
section titled “Additional Information About Purchases, Exchanges and Redemptions of Class A, Class
B, Class C, Class R, Class R6 and Institutional Class Shares,” a shareholder may exchange shares of
any Fund for shares of the same class of any other series of the Trust that is available for
investment or any series of Allianz Funds that is available for investment, on the basis of their
respective net asset values. This exchange privilege may in the future be extended to cover any
“interval” funds that may be established and managed by the Manager and its affiliates. The
original purchase date(s) of shares exchanged for purposes of calculating any contingent deferred
sales charge will carry over to the investment in the new fund. For example, if a shareholder
invests in Class C shares of one fund and 6 months later (when the contingent deferred sales charge
95
upon redemption would normally be 1.00%) exchanges his shares for Class C shares of another fund,
no sales charge would be imposed upon the exchange, but the investment in the other Fund would be
subject to the 1% contingent deferred sales charge until one year after the date of the
shareholder’s investment in the first fund as described herein.
Shares of one class of a Fund may be exchanged, at a shareholder’s option, directly for shares
of another class of the same Fund (an “intra-Fund exchange”), subject to the terms and conditions
described below and to such other fees and charges as set forth in the applicable Prospectus(es)
(including the imposition or waiver of any sales charge or CDSC), provided that the shareholder for
whom the intra-Fund exchange is being requested meets the eligibility requirements of the class
into which such shareholder seeks to exchange. Additional information regarding the eligibility
requirements of different share classes, including investment minimums and intended distribution
channels, is provided under “Distribution of Trust Shares” above, and/or in the applicable
Prospectus(es). Shares of a Fund will be exchanged for shares of a different class of the same Fund
on the basis of their respective NAVs. Ongoing fees and expenses incurred by a given share class
will differ from those of other share classes, and a shareholder receiving new shares in an
intra-Fund exchange may be subject to higher or lower total expenses following such exchange. In
addition to changes in ongoing fees and expenses, a shareholder receiving new shares in an
intra-Fund exchange may be required to pay an initial sales charge (load) or CDSC. Generally,
intra-Fund exchanges into Class A shares will be subject to a Class A sales charge unless otherwise
noted below, and intra-Fund exchanges out of Class A, Class B or Class C shares will be subject to
the standard schedule of CDSCs for the share class out of which the shareholder is exchanging,
unless otherwise noted below. If Class B shares are exchanged for Class A shares, a shareholder
will be responsible for paying any applicable Class B CDSCs and any applicable Class A sales
charge. If Class C shares are exchanged for Class A shares, a shareholder will be responsible for
paying any Class C CDSCs and any applicable Class A sales charge. With respect to shares subject to
a CDSC, if less than all of an investment is exchanged out of one class of a Fund, any portion of
the investment exchanged will be from the lot of shares that would incur the lowest CDSC if such
shares were being redeemed rather than exchanged. Shareholders generally should not recognize gain
or loss for U.S. federal income tax purposes upon such an intra-Fund exchange, provided that the
transaction is undertaken and processed, with respect to any shareholder, as a direct exchange
transaction. If an intra-Fund exchange incurs a CDSC or sales charge, Fund shares may be redeemed
to pay such charge, and that redemption will be taxable. Shareholders should consult their tax
advisers as to the federal, state and local or non-U.S. tax consequences of an intra-Fund exchange.
Institutional Class shares of a Fund may be exchanged for Administrative Class shares offered
by any other Fund or series of Allianz Funds that offers such class of shares, or vice versa,
provided that the Institutional Class or Administrative Class shareholder, as the case may be,
meets the eligibility requirements of the class into which such shareholder seeks to exchange.
Orders for exchanges accepted prior to the time Fund shares are valued on any day the Trust is
open for business will be executed at the respective net asset values next determined as of the
valuation time for Fund shares on that day. Orders for exchanges received after the time Fund
shares are valued on any business day will be executed at the respective net asset values
determined as of the valuation time for Fund shares on the next business day.
The Trust and the Manager each reserves the right to refuse exchange purchases (or purchase
and redemption and/or redemption and purchase transactions) if, in the judgment of the Trust or the
Manager, the transaction would adversely affect a Fund and its shareholders. In particular, a
pattern of transactions characteristic of “market timing” strategies may be deemed by the Manager
to be detrimental to the Trust or a particular Fund. Although the Trust has no current intention of
terminating or modifying the exchange privilege, it reserves the right to do so at any time. Except
as otherwise permitted by the SEC, the Trust will give you 60 days’ advance notice if it exercises
its right to terminate or materially modify the exchange privilege. Because the Funds will not
always be able to detect market timing activity, investors should not assume that the Funds will be
able to prevent all market timing or other trading practices that may disadvantage the Funds. For
example, it is more difficult for the Funds to monitor trades that are placed by omnibus or other
nominee accounts because the broker, retirement plan administrator, fee-based program sponsor or
other financial intermediary maintains the record of the applicable Fund’s underlying beneficial
owners.
Pursuant to provisions of agreements between the Distributor and participating brokers,
introducing brokers, Service Organizations and other financial intermediaries (together,
“intermediaries”) that offer and sell shares and/or process transactions in shares of the Funds,
intermediaries are required to engage in such activities in compliance with applicable federal and
state securities laws and in accordance with the terms of the applicable Prospectus and this
Statement of Additional Information. Among other obligations, to the extent an intermediary has
actual knowledge of violations of Fund policies (as set forth in the then current Prospectus and
this Statement of Additional Information) regarding (i) the timing of purchase, redemption or
exchange orders and pricing of Fund shares, or (ii) market timing or excessive short-term trading,
the intermediary is required to report such known violations promptly to the Distributor.
Redemptions of Fund shares may be suspended when trading on the New York Stock Exchange is
restricted or during an emergency that makes it impracticable for the Funds to dispose of their
securities or to determine fairly the value of their net assets, or during any other period as
permitted by the SEC for the protection of investors. Under these and other unusual circumstances,
the Trust may suspend redemptions or postpone payments for more than seven days, as permitted by
law.
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The Trust is committed to paying in cash all requests for redemptions by any shareholder
of record of the Funds, limited in amount with respect to each shareholder during any 90-day period
to the lesser of (i) $250,000, or (ii) 1.00% of the net asset value of the Trust at the beginning
of such period. Although the Trust will normally redeem all shares for cash, it may redeem amounts
in excess of the lesser of (i) or (ii) above by payment in kind of securities held by the
particular Fund. When shares are redeemed in kind, the redeeming shareholder should expect to incur
transaction costs upon the disposition of the securities received in the distribution.
Due to the relatively high cost of maintaining smaller accounts, the Trust reserves the right
to redeem shares in any account for their then-current value (which will be promptly paid to the
investor) if at any time, due to shareholder redemption, the shares in the account do not have a
value of at least a specified amount. The applicable minimums and other information about such
mandatory redemptions are set forth in the applicable Prospectus or in this Statement of Additional
Information under the section titled “Additional Information About Purchases, Exchanges and
Redemptions of Class A, Class B, Class C, Class R, Class R6 and Institutional Class Shares.” The
Trust’s Declaration of Trust also authorizes the Trust to redeem shares under certain other
circumstances as may be specified by the Board of Trustees.
Redemption Fees
The Funds do not charge a redemption fee.
Additional Information about Purchases, Exchanges and Redemptions of Class A, Class B, Class C,
Class R, Class R6 and Institutional Class Shares
How to Buy Shares
Class A, Class B, Class C, Class R and Class R6 shares of each Fund are continuously offered
through the Distributor and through other firms that have dealer agreements with the Distributor
(“participating brokers”) or that have agreed to act as introducing brokers for the Distributor
(“introducing brokers”). Class D shares are offered through financial intermediaries. Class P
shares are offered primarily through certain asset allocation, wrap fee and other fee-based
programs sponsored by broker-dealers and other financial intermediaries. The Distributor is an
affiliate of Allianz Global Fund Management and also a subsidiary of AAMA. As discussed in the
applicable Prospectus and noted above, effective November 1, 2009, Class B shares of the Funds are
no longer available for purchase except through exchanges and dividend reinvestments. Disclosure
throughout the Statement of Additional Information regarding the “purchase” of Class B shares only
relates to such exchanges and dividend reinvestments.
Purchases Through Your Financial Advisor.
You may purchase Class A or Class C shares through a
financial advisor.
Purchases By Mail.
Investors who wish to invest in Class A or Class C shares by mail may send
a completed application form along with a check payable to the Allianz Family of Funds at:
Regular Mail
:
Allianz Family of Funds
P.O. Box 8050
Boston, MA 02266-8050
Overnight Mail
:
Allianz Family of Funds
c/o Boston Financial Data Services, Inc.
30 Dan Road
Canton, MA 02021-2809
Investors who wish to invest in Institutional Class or Class R6 shares by mail may send a
completed application form along with a check payable to Allianz Family of Funds to:
Allianz Family of Funds
P.O. Box 219968
Kansas City, MO 64121-9968
(The Distributor does not provide investment advice and will not accept any responsibility for your
selection of investments as it does not have access to the information necessary to assess your
financial situation). All shareholders who establish accounts by mail will receive individual
confirmations of each purchase, redemption, dividend reinvestment, exchange or transfer of Fund
shares, including the total number of Fund shares owned as of the confirmation date, except that
purchases resulting from the reinvestment of daily-accrued dividends and/or distributions will be
confirmed once each calendar quarter. See “Fund Distributions” in the applicable Prospectus.
Information regarding direct investment or any other features or plans offered by the Trust may be
obtained by calling the Distributor at 1-800-988-8380 or 1-800-498-5413 or by calling your broker.
97
Purchases are accepted subject to collection of checks at full value and conversion into
federal funds. Payment by a check drawn on any member of the Federal Reserve System can normally be
converted into federal funds within two business days after receipt of the check. Checks drawn on a
non-member bank may take up to 15 days to convert into federal funds. In all cases, the purchase
price is based on the net asset value next determined after the purchase order and check are
accepted, even though the check may not yet have been converted into federal funds.
The Distributor reserves the right to require payment by wire or official U.S. bank check. The
Distributor generally does not accept payments made by cash, money order, temporary/starter checks,
credit cards, traveler’s checks, credit card checks, or checks drawn on non-U.S. banks even if
payment may be effected through a U.S. bank.
The Trust or the Distributor may lower or waive the minimum investment amounts for certain
categories of investors at their discretion.
Purchases By Telephone.
You may elect to purchase shares after enrolling in Fund Link (see
“Allianz Funds Fund Link” below). You can purchase fund shares over the phone. To initiate such
purchases, call 1-800-988-8380.
Purchasing Class R Shares.
Class R shares are generally available only to 401(k) plans, 457
plans, employer-sponsored 403(b) plans, profit sharing and money purchase pension plans, defined
benefit plans, non-qualified deferred compensation plans, health care benefit funding plans, and
other specified benefit plans and accounts whereby the plan or the plan’s financial service firm
has an agreement with the Distributor or the Manager to utilize Class R shares in certain
investment products or programs (each such plan or account, a “Class R Eligible Plan”). Class R
shares are not available to traditional and Roth IRAs, SEPs, SAR-SEPs, SIMPLE IRAs, 403(b)(7)
custodial accounts, Coverdell Education Savings Accounts or retail or institutional benefit plans
other than those specified above. Additionally, Class R shares are generally available only to
Class R Eligible Plans where Class R shares are held on the books of the Funds through omnibus
accounts (either at the plan level or at the level of the financial services firm level). Although
Class R shares may be purchased by a plan administrator directly from the Distributor, specified
benefit plans that purchase Class R shares directly from the Distributor must hold their shares in
an omnibus account at the benefit plan level. Plan participants may not directly purchase Class R
shares from the Distributor.
Purchasing Class R6 Shares.
Class R6 shares are offered for 401(k) plans, 457 plans, employer
sponsored 403(b) plans, profit sharing and money purchase pension plans, defined benefit plans,
non-qualified deferred compensation plans, healthcare benefit funding plans and other specified
benefit plans whereby the plan or the plan’s broker, dealer or other financial intermediary has an
agreement with the Distributor or the Manager to utilize Class R6 shares in certain investment
products or programs (each such plan, a “Class R6 Eligible Plan”). Class R6 shares are available
only to Class R6 Eligible Plans where Class R6 shares are held on the books of the Fund through
omnibus accounts (either at the benefit plan level, platform level or at the level of the plan’s
financial service firm). Except as stated below, Class R6 shares are not available to retail or
institutional investors that do not qualify as Class R6 Eligible Plans, traditional and Roth IRAs,
Coverdell Education Savings Accounts, SEPs, SAR-SEPs, SIMPLE IRAs, or individual 403(b) plans.
Class R6 shares are also available for investment by registered funds and 529 portfolios that are
advised or sub-advised by Allianz Global Fund Management, AllianzGI U.S., NFJ or their affiliates.
Class R6 shares may also be available for investment by Trustees, officers and current and former
employees of the Trust, Allianz Funds, Allianz Global Fund Management and the Distributor and their
affiliates and their immediate family members, and trusts or plans primarily for the benefit of
such persons.
Subsequent Purchases of Shares.
Subsequent purchases of Class A, Class B, Class C, Class R6 or
Institutional Class shares can be made as indicated above by mailing a check (to the appropriate
address) with a letter describing the investment or (with respect to Class A, Class B and Class C
shares) with the additional investment portion of a confirmation statement. Except for subsequent
purchases through the Allianz Funds Auto-Invest plan, the Allianz Funds Auto-Exchange plan,
tax-qualified programs and the Allianz Funds Fund Link referred to below, except during periods
when an Automatic Withdrawal Plan is in effect, and except with respect to Class R6 shares of any
Fund, the minimum subsequent purchase, unless the minimum has been lowered or waived by the Trust
or Distributor at their discretion, in any Fund is $50. There is no minimum subsequent purchase for
Class R6 shares of any Fund. All payments should be made payable to Allianz Family of Funds and
should clearly indicate the shareholder’s account number. Checks should be mailed to the
appropriate address above under “Purchases By Mail.”
Unavailable or Restricted Funds.
Certain Funds and/or share classes are not currently offered
to the public as of the date of this Statement of Additional Information. Please see the applicable
Prospectus for details.
Additional Information About Purchasing Shares.
Shares may be purchased at a price equal to
their net asset value per share next determined after receipt of an order plus a sales charge,
which may be imposed either (i) at the time of the purchase in the case of Class A shares (the
“initial sales charge alternative”), (ii) on a contingent deferred basis in the case of Class B
shares (the “deferred sales charge alternative”) or (iii) by the deduction of an ongoing
asset-based sales charge in the case of Class C shares (the “asset-based sales charge
alternative”). Class R shares may be purchased at a price equal to their net asset value per share
next determined
98
after receipt of an order. In certain circumstances, Class A and Class C shares are
also subject to a Contingent Deferred Sales Charge (“CDSC”). See “Alternative Purchase
Arrangements.” Purchase payments for Class B and Class C shares are fully invested at the net asset
value next determined after acceptance of the trade. Purchase payments for Class A shares, less the
applicable sales charge, are invested at the net asset value next determined after acceptance of
the trade.
Orders sent to the Trust’s P.O. Box are not deemed “received” until they arrive at the Trust’s
facility. This may affect the date on which they are processed.
All purchase orders received by the Trust prior to the close of regular trading (normally 4:00
p.m., Eastern time) on the New York Stock Exchange on a regular business day are processed at that
day’s offering price. However, orders received by the Trust after the offering price is determined
that day from dealers, brokers or certain retirement plans that have an agreement with the Manager
or the Distributor will receive such offering price if the orders were received by the dealer,
broker or retirement plan from its customer prior to such determination and were transmitted to and
received by the Distributor or the Transfer Agent prior to 9:30 a.m., Eastern time on the next
business day. Purchase orders received on a day other than a regular business day will be executed
on the next succeeding regular business day. The Distributor, in its sole discretion, may accept or
reject any order for purchase of Fund shares. The sale of shares will be suspended on any day on
which the New York Stock Exchange is closed and, if permitted by the rules of the SEC, when trading
on the New York Stock Exchange is restricted or during an emergency that makes it impracticable for
the Funds to dispose of their securities or to determine fairly the value of their net assets, or
during any other period as permitted by the SEC for the protection of investors.
Minimum Purchase Amounts.
Except for purchases through the Allianz Funds Auto-Invest plan, the
Allianz Funds Auto-Exchange plan, investments pursuant to the Uniform Gifts to Minors Act,
tax-qualified plans and, to the extent agreed to by the Distributor, wrap programs referred to
below under “Alternative Purchase Arrangements-Sales at Net Asset Value,” and purchases by certain
registered representatives as described below under “Registered Representatives’ Investments,” the
minimum initial investment in Class A, Class B or Class C shares of any Fund is $1,000, with a
minimum additional investment of $50 per Fund, and there is no minimum initial or additional
investment in Class R shares because Class R shares may only be purchased through omnibus accounts.
The minimum initial investment amount for Institutional Class shares of any Fund is $1,000,000,
unless the minimum has been lowered or waived by the Trust or Distributor at their discretion.
There is no minimum initial investment amount for Class R6 shares of any Fund. For information
about dealer commissions and other payments to dealers, see “Alternative Purchase Arrangements”
below. Persons selling Fund shares may receive different compensation for selling Class A, Class B,
Class C or Class R shares. Normally, Fund shares purchased through participating brokers are held
in the investor’s account with that broker. No share certificates will be issued except, and to the
extent, provided in the applicable Prospectus.
Tax-Qualified Specified Benefit and Other Plans.
The Distributor makes available specified
benefit plan services and documents for Individual Retirement Accounts (IRAs), including Roth IRAs,
for which State Street Bank serves as trustee and for IRA Accounts under the Internal Revenue Code
of 1986, as amended (the “Code”). The Distributor makes available services and prototype documents
for Simplified Employee Pension Plans (SEP). In addition, prototype documents are available for
establishing 403(b)(7) custodial accounts with State Street Bank as custodian. This form of account
is available to employees of certain non-profit organizations.
For purposes of this section, a “Plan Investor” means any of the following: 401(k) plan,
profit-sharing plan, money purchase pension plan, defined benefit plan, 457 plan,
employer-sponsored 403(b) plan, non-qualified deferred compensation plan, health care benefit
funding plan and specified benefit plans and accounts whereby the plan or the plan’s financial
service firm has an agreement with the Distributor or the Manager to utilize Class R shares in
certain investment products or programs, or other benefit plan specified as such by the
Distributor. The term “Plan Investor” does not include an IRA, Roth IRA, SEP IRA, SIMPLE IRA,
SAR-SEP IRA, 403(b)(7) custodial account, a Coverdell Education Savings Account or a College Access
529 Plan Account.
The minimum initial investment for all Plan Investors, IRAs, Roth IRAs, SEP IRAs, SIMPLE IRAs,
SAR-SEP IRAs and 403(b)(7) custodial accounts are set forth in the table under “Minimum Account
Size” below. For Plan Investors invested in a Fund through “omnibus” account arrangements, there is
no minimum initial investment per plan participant. Instead, there is a minimum initial investment
per plan, which is agreed upon by the Distributor and the financial intermediary maintaining the
omnibus account. However, any Plan Investor that has existing positions in the Funds and that does
not already maintain an omnibus account with a Fund and would like to invest in such Fund is
subject to the minimum initial investment set forth in the table under “Minimum Account Size”
below.
Allianz Funds Auto-Invest.
The Allianz Funds Auto-Invest plan provides for periodic
investments into a shareholder’s account with the Trust by means of automatic transfers of a
designated amount from the shareholder’s bank account. The minimum investment for eligibility in
the Allianz Funds Auto-Invest plan is $1,000 per Fund for Class A, Class B and Class C shares and
$1,000,000 for Institutional Class shares, unless the minimum has been waived or lowered by the
Trust or Distributor at its discretion. Investments may be made monthly or quarterly, and may be in
any amount subject to a minimum of $50 per month for each Fund in which shares
99
are purchased
through the plan. There is no minimum investment for eligibility in the Allianz Funds Auto-Invest
plan for Class R6 shares. Investments in Class R6 shares may be made monthly or quarterly, and may
be in any amount. Further information regarding the Allianz Funds Auto-Invest plan is available
from the Distributor or participating brokers. You may enroll by completing the appropriate section
on the account application, or you may obtain an Auto-Invest application by calling the Distributor
or your broker. The use of the Allianz Funds Auto-Invest plan may be limited for certain Funds
and/or share classes at the discretion of the Distributor.
Registered Representatives’ Investments.
Current registered representatives and other
full-time employees of participating brokers or such persons’ spouses or trusts or custodial
accounts for their minor children may purchase Class A shares at net asset value without a sales
charge. The minimum initial investment in each case is $1,000 per Fund and the minimum subsequent
investment is $50.
Allianz Funds Auto-Exchange.
The Allianz Funds Auto-Exchange plan establishes regular,
periodic exchanges from one Fund account to another Fund account. The plan provides for regular
investments into a shareholder’s account in a specific Fund by means of automatic exchanges of a
designated amount from another Fund account of the same class of shares and with identical account
registration.
Exchanges may be made monthly or quarterly, and may be in any amount subject to a minimum of
$1,000 to open a new Fund account for Class A, Class B and Class C shares and $1,000,000 for
Institutional Class shares and $50 for any existing Fund account for which shares are purchased
through the plan. With respect to Class R6 shares, exchanges may be made monthly or quarterly, and
are not subject to any minimums.
Further information regarding the Allianz Funds Auto-Exchange plan is available from the
Distributor at 1-800-988-8380 (for Class A shares, Class B shares, Class C shares, Class D shares
and Class R shares), 1-800-498-5413 (for Institutional Class shares, Class R6 shares,
Administrative Class shares and Class P shares) or participating brokers. You may enroll by
completing an application, which may be obtained from the Distributor or by telephone request at
1-800-988-8380. The use of Allianz Funds Auto-Exchange plan may be limited for certain Funds and/or
other share classes at the option of the Distributor, and as set forth in the applicable
Prospectus. For more information on exchanges, see “Exchange Privilege.”
Allianz Funds Fund Link.
Allianz Funds Fund Link (“Fund Link”) connects your Fund account(s)
with a bank account. Fund Link may be used for subsequent purchases and for redemptions and other
transactions described under “How to Redeem.” Purchase transactions are effected by electronic
funds transfers from the shareholder’s account at a U.S. bank or other financial institution that
is an Automated Clearing House (“ACH”) member. Investors may use Fund Link to make subsequent
purchases of shares in any amount greater than $50. To initiate such purchases, call
1-800-988-8380. All such calls will be recorded. Fund Link is normally established within 45 days
of receipt of a Fund Link application by Boston Financial Data Services, Inc. (the “Transfer
Agent”), the Funds’ transfer agent for Class A, B, C and R shares. The minimum investment by Fund
Link is $50 per Fund. Shares will be purchased on the regular business day the Distributor receives
the funds through the ACH system, provided the funds are received before the close of regular
trading on the New York Stock Exchange. If the funds are received after the close of regular
trading, the shares will be purchased on the next regular business day.
Fund Link privileges must be requested on the account application. To establish Fund Link on
an existing account, complete a Fund Link application, which is available from the Distributor or
your broker, with signatures guaranteed from all shareholders of record for the account. See
“Signature Validation” below. Such privileges apply to each shareholder of record for the account
unless and until the Distributor receives written instructions from a shareholder of record
canceling such privileges. Changes of bank account information must be made by completing a new
Fund Link application signed by all owners of record of the account, with all signatures
guaranteed. The Distributor, the Transfer Agent and the Fund may rely on any telephone instructions
believed to be genuine and will not be responsible to shareholders for any damage, loss or expenses
arising out of such instructions. The Fund reserves the right to amend, suspend or discontinue Fund
Link privileges at any time without prior notice. Fund Link does not apply to shares held in broker
“street name” accounts or in other omnibus accounts.
Signature Validation.
When a signature validation is called for, a “Medallion” signature
validation or a Signature Validation Program (SVP) stamp will be required. A Medallion signature
validation or an SVP stamp may be obtained from a domestic bank or trust company, broker, dealer,
clearing agency, savings association or other financial institution which is participating in a
Medallion program or SVP recognized by the Securities Transfer Association. The three recognized
Medallion programs are the Securities Transfer Agents Medallion Program, Stock Exchanges Medallion
Program and New York Stock Exchange, Inc. Medallion Signature Program. Signature validations from
financial institutions which are not participating in one of these programs will not be accepted.
Please note that financial institutions participating in a recognized Medallion program may still
be ineligible to provide a signature validation for transactions of greater than a specified dollar
amount. The Trust may change the signature validation requirements from time to time upon notice to
shareholders, which may be given by means of a new or supplemented prospectus.
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Signature validation cannot be provided by a notary public. In addition, corporations, trusts,
and other institutional organizations are required to furnish evidence of the authority of the
persons designated on the Client Registration Application to effect transactions for the
organization.
The Distributor reserves the right to modify its signature validation standards at any time.
The Funds may change the signature validation requirements from time to time upon notice to
shareholders, which may, but is not required to, be given by means of a new or supplemented
Prospectus. Shareholders should contact the Distributor for additional details regarding the Funds’
signature validation requirements.
Account Registration Changes.
Changes in registration or account privileges may be made in
writing to the Transfer Agent. A Medallion Signature Validation may be required. See “Signature
Validation” above. All correspondence must include the account number and must be sent to:
Regular Mail for Class A, Class B and Class C:
Allianz Family of Funds
P.O. Box 8050
Boston, MA 02266-8050
Regular Mail for Institutional Class and Class R6:
Allianz Family of Funds
P.O. Box 219968
Kansas City, MO 64121-9968
Overnight Mail:
Allianz Family of Funds
c/o Boston Financial Data Services, Inc.
30 Dan Road
Canton, MA 02021-2809
Minimum Account Size.
Class A, Class B, Class C, Class D and Class R Shares
. Due to the relatively high cost
to the Funds of maintaining small accounts, shareholders are asked to maintain an account balance
in each Fund in which the shareholder invests at least the amount necessary to open the type of
account involved. If a shareholder’s balance for any Fund is below such minimum for three months or
longer, the Fund’s administrator shall have the right (except in the case of retirement accounts)
to close that Fund account after giving the shareholder 60 days in which to increase his or her
balance. The shareholder’s Fund account will not be liquidated if the reduction in size is due
solely to market decline in the value of the shareholder’s Fund shares or if the aggregate value of
the shareholder’s accounts (and the accounts of the shareholder’s spouse and his or her children
under the age of 21 years), or all of the accounts of an employee benefits plan of a single
employer, in Funds of the Trust and Allianz Funds exceeds $50,000.
All Share Classes
. Due to the relatively high cost to the Funds of maintaining small
accounts, the Manager and the Distributor each reserves the right to assess an annual fee of $15
for any accounts, including fiduciary accounts, with balances that fall below $1,000, subject to
the Distributor’s right to make exemptions on a case by case basis.
Additionally, the Manager and the Distributor each reserves the right to cause the Fund to
redeem, without any prior notice, an account when the Fund balance falls below $20 for any reason,
including solely due to declines in NAV. Fiduciary accounts are exempt from this provision.
Transfer on Death Registration.
The Distributor may accept “transfer on death” (“TOD”)
registration requests from investors. The laws of a state selected by the Distributor in accordance
with the Uniform TOD Security Registration Act will govern the registration. The Distributor may
require appropriate releases and indemnifications from investors as a prerequisite for permitting
TOD registration. The Distributor may from time to time change these requirements (including by
changes to the determination as to which state’s law governs TOD registrations).
Summary of Minimum Investments and Account Size.
The following table provides a summary of the
minimum initial investment, minimum subsequent investment and minimum account size for each type of
account (including Specified Benefit Accounts):
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Initial Minimum
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Subsequent Minimum
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Type of Account
|
|
Investment
|
|
Investment
|
|
Minimum Account Size
|
|
Regular/General Retail Accounts
|
|
$1,000 per Fund
|
|
$50 per Fund
|
|
$1,000
|
|
IRA
|
|
$1,000 per Fund
|
|
$50 per Fund
|
|
$1,000
|
|
Roth IRA
|
|
$1,000 per Fund
|
|
$50 per Fund
|
|
$1,000
|
|
UTMA
|
|
$1,000 per Fund
|
|
$50 per Fund
|
|
$1,000
|
|
UGMA
|
|
$1,000 per Fund
|
|
$50 per Fund
|
|
$1,000
|
|
Auto-Invest
|
|
$1,000 per Fund
|
|
$50 per Fund
|
|
$1,000
|
|
Auto-Exchange
|
|
$1,000 per Fund
|
|
$50 per Fund
|
|
$1,000
|
|
SEP IRA established on or before March 31, 2004
|
|
$50 per Fund/per participant
|
|
$0
|
|
$50**
|
|
SEP IRA established after March 31, 2004
|
|
$1,000 per Fund/per participant
|
|
$0
|
|
$1,000
|
|
SIMPLE IRA*
|
|
$50 per Fund/per participant
|
|
$0
|
|
$50**
|
|
SAR-SEP IRA*
|
|
$50 per Fund/per participant
|
|
$0
|
|
$50**
|
|
403(b)(7) custodial account plan established
on or before March 31, 2004
|
|
$50 per Fund/per participant
|
|
$0
|
|
$50**
|
|
403(b)(7) custodial account plan established
after March 31, 2004
|
|
$1,000 per Fund/per participant
|
|
$0
|
|
$1,000
|
|
Plan Investors held through omnibus accounts-
|
|
|
|
|
|
|
|
Plan Level
|
|
$0
|
|
$0
|
|
$0
|
|
Participant Level
|
|
$0
|
|
$0
|
|
$0
|
|
Plan Investors held through non-omnibus
accounts (individual participant accounts)
established on or before March 31, 2004
|
|
$50 per Fund
|
|
$0
|
|
$50**
|
|
Plan Investors held through non-omnibus
accounts (individual participant accounts)
established after March 31, 2004
|
|
$1,000 per Fund
|
|
$0
|
|
$1,000
|
|
|
|
|
|
*
|
|
The minimums apply to existing accounts only. No new SIMPLE-IRA or SAR-SEP IRA accounts are being
accepted.
|
|
|
|
**
|
|
The annual fee for small accounts will not be applicable to these accounts.
|
Alternative Purchase Arrangements
The Funds offer investors up to nine classes of shares (Class A, Class B, Class C, Class R,
Class D, Class P, Class R6, Institutional Class and Administrative Class) in the Prospectuses.
Class A, Class B and Class C shares bear sales charges in different forms and amounts and bear
different levels of expenses, as described below. Class R shares do not bear a sales charge, but
are subject to expenses that vary from those levied on Class A, Class B or Class C shares, and are
available only to Class R Eligible Plans. Class D shares are offered through financial
intermediaries. Class P shares are offered primarily through certain asset allocation, wrap fee
and other fee-based programs sponsored by broker-dealers and other financial intermediaries.
Institutional Class shares are offered to pension and profit sharing plans, employee benefit
trusts, endowments, foundations, corporations and other high net worth individuals. Administrative
Class shares are offered primarily through employee benefit plan alliances, broker-dealers and
other intermediaries. Similar to Class R shares, Class D, Class P, Class R6, Institutional Class
and Administrative Class shares are sold without a sales charge and have different expenses than
Class A, Class B, Class C and Class R shares. As a result of lower sales charges and/or operating
expenses, Class D, Class P, Class R6, Institutional Class and Administrative Class shares are
generally expected to achieve higher investment returns than Class A, Class B, Class C or Class R
shares. To obtain more information about the other classes of shares, please call the Trust at
1-800-498-5413 (for Institutional Class, Class R6, Administrative Class, and Class P shares) or the
Distributor at 1-800-988-8380 (for Class D shares).
The alternative purchase arrangements described in this Statement of Additional Information
are designed to enable a retail investor to choose the method of purchasing Fund shares that is
most beneficial to the investor based on all factors to be considered, including the amount and
intended length of the investment, the particular Fund and whether the investor intends to exchange
shares for shares of other Funds. Generally, when making an investment decision, investors should
consider the anticipated life of an intended investment in the Funds, the size of the investment,
the accumulated distribution and servicing fees plus CDSCs on Class B or Class C shares, the
initial sales charge plus accumulated servicing fees on Class A shares (plus a CDSC in certain
circumstances), the possibility that the anticipated higher return on Class A shares due to the
lower ongoing charges will offset the initial sales charge paid on such shares, the automatic
conversion of Class B shares into Class A shares and the difference in the CDSCs applicable to
Class A, Class B and Class C shares.
Investors should understand that initial sales charges, servicing and distribution fees and
CDSCs are all used directly or indirectly to fund the compensation of financial intermediaries that
sell Fund shares. Depending on the arrangements in place at any particular time, a financial
intermediary may have a financial incentive for recommending a particular share class over other
share classes.
102
Class A.
The initial sales charge alternative (Class A) might be preferred by investors
purchasing shares of sufficient aggregate value to qualify for reductions in the initial sales
charge applicable to such shares. Similar reductions are not available on the contingent deferred
sales charge alternative (Class B) or the asset-based sales charge alternative (Class C). Class A
shares are subject to a servicing fee but are not subject to a distribution fee and, accordingly,
such shares are expected to pay correspondingly higher dividends on a per share basis. However,
because initial sales charges are deducted at the time of purchase, not all of the purchase payment
for Class A shares is invested initially. Class B and Class C shares might be preferable to
investors who wish to have all purchase payments invested initially, although remaining subject to
higher distribution and servicing fees and, for certain periods, being subject to a CDSC. An
investor who qualifies for an elimination of the Class A initial sales charge should also consider
whether he or she anticipates redeeming shares in a time period that will subject such shares to a
CDSC as described below. See “Class A Deferred Sales Charge” below.
Class B.
Class B shares might be preferred by investors who intend to invest in the Funds for
longer periods and who do not intend to purchase shares of sufficient aggregate value to qualify
for sales charge reductions applicable to Class A shares. Both Class B and Class C shares can be
purchased at net asset value without an initial sales charge. However, unlike Class C shares, Class
B shares convert into Class A shares after they have been held for a period of time. Class B shares
of series of the Funds convert into Class A shares after the shares have been held for seven years.
After the conversion takes place, the shares will no longer be subject to a CDSC, and will be
subject to the servicing fees charged for Class A shares, which are lower than the distribution and
servicing fees charged on either Class B or Class C shares. See “Deferred Sales Charge
Alternative—Class B Shares” below. Class B shares are not available for purchase by Plan Investors
or by SEP IRAs, SIMPLE IRAs, SAR-SEP IRAs and 403(b)(7) custodial accounts. Traditional and Roth
IRAs may invest in Class B shares.
Class C.
Class C shares might be preferred by investors who intend to purchase shares that are
not of sufficient aggregate value to qualify for Class A sales charges of 1% or less and who wish
to have all purchase payments invested initially. Class C shares are preferable to Class B shares
for investors who intend to maintain their investment for intermediate periods and therefore may
also be preferable for investors who are unsure of the intended length of their investment. Unlike
Class B shares, Class C shares are not subject to a CDSC after they have been held for at least one
year. However, because Class C shares do not convert into Class A shares, Class B shares are
preferable to Class C shares for investors who intend to maintain their investment in the Funds for
long periods. See “Asset-Based Sales Charge Alternative—Class C Shares” below.
If an investor intends to purchase Class C shares: (i) for more than one Fund and the
aggregate purchase price for all such purchases will exceed $499,999 for Class C shares or (ii) for
one Fund in a series of transactions and the aggregate purchase amount will exceed $499,999 for
Class C shares, then in either such event the investor should consider whether purchasing another
share class may be in the investor’s best interests. The Funds may refuse any order to purchase
shares.
Class R.
Only Class R Eligible Plans may purchase Class R shares. Class R shares might be
preferred by a Class R Eligible Plan that intends to invest retirement plan assets held through
omnibus accounts and does not intend to purchase shares of sufficient aggregate value to qualify
for sales charge reductions applicable to Class A shares. Class R shares are preferable to Class B
and Class C shares because Class R shares are not subject to a CDSC and are subject to lower
aggregate distribution and/or service (12b-1) fees and may be preferable to Class A shares because
Class R shares are not subject to the initial sales charge imposed on Class A shares.
In determining which class of shares to purchase, an investor should always consider whether
any waiver or reduction of a sales charge or a CDSC is available. See generally “Initial Sales
Charge Alternative—Class A Shares” and “Waiver of Contingent Deferred Sales Charges” below.
For a description of the Distribution and Servicing Plans and distribution and servicing fees
payable thereunder with respect to Class A, Class B, Class C and Class R shares, see “Distribution
and Servicing (12b-1) Plans—Class A, Class B, Class C and Class R shares” in the applicable
Prospectus.
Waiver of Contingent Deferred Sales Charges.
The CDSC applicable to Class A and Class C shares is
currently waived for:
(i) any partial or complete redemption in connection with (a) required minimum distributions to
IRA account owners or beneficiaries who are age 70 1/2 or older or (b) distributions to
participants in employer-sponsored retirement plans upon attaining age 59 1/2 or on account of
death or permanent and total disability (as defined in Section 22(e) of the Code) that occurs
after the purchase of Class A or Class C shares;
(ii) any partial or complete redemption in connection with a qualifying loan or hardship
withdrawal from an employer sponsored retirement plan;
(iii) any complete redemption in connection with a distribution from a qualified employer
retirement plan in connection with termination of employment or termination of the employer’s
plan and the transfer to another employer’s plan or to an IRA;
103
(iv) any partial or complete redemption following death or permanent and total disability (as
defined in Section 22(e) of the Code) of an individual holding shares for his or her own account
and/or as the last survivor of a joint tenancy arrangement (this provision, however, does not
cover an individual holding in a fiduciary capacity or as a nominee or agent or a legal entity
that is other than an individual or the owners or beneficiaries of any such entity) provided the
redemption is requested within one year of the death or initial determination of disability and
provided the death or disability occurs after the purchase of the shares;
(v) any redemption resulting from a return of an excess contribution to a qualified employer
retirement plan or an IRA;
(vi) up to 10% per year of the value of a Fund account that (a) has the value of at least $10,000
at the start of such year and (b) is subject to an Automatic Withdrawal Plan;
(vii) redemptions by Trustees, officers and employees of any of the Trusts, and by directors,
officers and employees of the Distributor, AAMA or Allianz Global Fund Management;
(viii) redemptions effected pursuant to a Fund’s right to involuntarily redeem a shareholder’s
Fund account if the aggregate net asset value of shares held in such shareholder’s account is
less than a minimum account size specified in the applicable Prospectus;
(ix) involuntary redemptions caused by operation of law;
(x) redemptions of shares of any Fund that is combined with another Fund, investment company, or
personal holding company by virtue of a merger, acquisition or other similar reorganization
transaction;
(xi) redemptions by a shareholder who is a participant making periodic purchases of not less than
$50 through certain employer sponsored savings plans that are clients of a broker-dealer with
which the Distributor has an agreement with respect to such purchases;
(xii) redemptions effected by trustees or other fiduciaries who have purchased shares for
employer-sponsored plans, the trustee, administrator, fiduciary, broker, trust company or
registered investment adviser for which has an agreement with the Distributor with respect to
such purchases;
(xiii) redemptions in connection with IRA accounts established with Form 5305-SIMPLE under the
Code for which the Trust is the designated financial institution;
(xiv) a redemption by a holder of Class A or Class C shares where the participating broker or
dealer involved in the purchase of such shares waived all payments it normally would receive from
the Distributor at the time of purchase (
i.e.
, commissions or reallowances of initial sales
charges and advancements of service and distribution fees); and
(xv) a redemption by a holder of Class A or Class C shares where, by agreement with the
Distributor, the participating broker or dealer involved in the purchase of such shares waived a
portion of any payment it normally would receive from the Distributor at the time of purchase (or
otherwise agreed to a variation from the normal payment schedule) in connection with such
purchase.
The CDSC applicable to Class B shares is currently waived for any partial or complete
redemption in each of the following cases:
(i) in connection with required minimum distributions to IRA account owners or to plan
participants or beneficiaries who are age 70 1/2 or older;
(ii) involuntary redemptions caused by operation of law;
(iii) redemption of shares of any Fund that is combined with another Fund, investment company, or
personal holding company by virtue of a merger, acquisition or other similar reorganization
transaction;
(iv) following death or permanent and total disability (as defined in Section 22(e) of the Code)
of an individual holding shares for his or her own account and/or as the last survivor of a joint
tenancy arrangement (this provision, however, does not cover an individual holding in a fiduciary
capacity or as a nominee or agent or a legal entity that is other than an individual or the
owners or beneficiaries of any such entity) provided the redemption is requested within one year
of the death or initial determination of disability and further provided the death or disability
occurs after the purchase of the shares;
104
(v) up to 10% per year of the value of a Fund account that (a) has a value of at least $10,000 at
the start of such year and (b) is subject to an Automatic Withdrawal Plan (See “How to
Redeem-Automatic Withdrawal Plan”); and
(vi) redemptions effected pursuant to a Fund’s right to involuntarily redeem a shareholder’s Fund
account if the aggregate net asset value of shares held in the account is less than a minimum
account size specified in the applicable Prospectus.
The Distributor may require documentation prior to waiver of the CDSC for any class, including
distribution letters, certification by plan administrators, applicable tax forms, death
certificates, physicians’ certificates (
e.g.
, with respect to disabilities), etc.
Exempt Transactions; No CDSCs or Payments to Brokers.
Investors will not be subject to CDSCs,
and brokers and dealers will not receive any commissions or reallowances of initial sales charges
or advancements of service and distribution fees, on the transactions described below (which are
sometimes referred to as “Exempt Transactions”):
|
|
•
|
|
A redemption by a holder of Class A or Class C shares where the Distributor did not pay
at the time of purchase to the participating broker or dealer involved in the purchase of
such shares the payments the Distributor normally would have paid at the time of purchase
(
e.g.
, commissions and/or reallowances of initial sales charges and advancements of service
and distribution fees).
|
|
|
|
|
•
|
|
A redemption by a holder of Class A or Class C shares where, by agreement between the
broker-dealer and the Distributor, the Distributor did not pay at the time of purchase all
or a portion of payments it normally would have paid to the broker-dealer at the time of
purchase (or otherwise agreed to a variation from the normal payment schedule) in connection
with such purchase.
|
|
|
|
|
•
|
|
Transactions described under clause (A) of Note 4 to the tables in the subsection
“Initial Sales Charge Alternative—Class A Shares.”
|
Initial Sales Charge Alternative — Class A Shares.
Class A shares are sold at a public
offering price equal to their net asset value per share plus a sales charge. As indicated below
under “Class A Deferred Sales Charge,” certain investors who purchase $1,000,000 or more of any
Fund’s Class A shares (and thus pay no initial sales charge) may be subject to a CDSC of up to 1%
if they redeem such shares during the first 18 months after their purchase.
All Funds Other Than AllianzGI Short Duration High Income Fund and AllianzGI High Yield Bond Fund
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount or
|
|
|
|
|
|
|
|
|
|
|
|
Commission to
|
|
|
|
Sales Charge
|
|
Sales Charge
|
|
dealers as a % of
|
|
|
|
as % of Net
|
|
as % of Public
|
|
Public Offering
|
|
Amount of Purchase
|
|
Amount Invested
|
|
Offering Price
|
|
Price*
|
|
$0-$49,999
|
|
|
5.82
|
%
|
|
|
5.50
|
%
|
|
|
4.75
|
%
|
|
$50,000-$99,999
|
|
|
4.71
|
%
|
|
|
4.50
|
%
|
|
|
4.00
|
%
|
|
$100,000-$249,999
|
|
|
3.63
|
%
|
|
|
3.50
|
%
|
|
|
3.00
|
%
|
|
$250,000-$499,999
|
|
|
2.56
|
%
|
|
|
2.50
|
%
|
|
|
2.00
|
%
|
|
$500,000-$999,999
|
|
|
2.04
|
%
|
|
|
2.00
|
%
|
|
|
1.75
|
%
|
|
$1,000,000 +
|
|
|
0.00
|
%
|
|
|
0.00
|
%
|
|
|
0.00
|
%(1)
|
|
|
|
|
|
*
|
|
From time to time, these discounts and commissions may be increased pursuant to special
arrangements between the Distributor and certain participating brokers.
|
|
|
|
(1)
|
|
The Distributor will pay a commission to dealers that sell amounts of $1,000,000 or more of
Class A shares according to the following schedule: 1.00% of the first $2,000,000, 0.75% of
amounts from $2,000,001 to $5,000,000, and 0.50% of amounts over $5,000,000. The Distributor
will then also pay to such dealers a Rule 12b-1 trail fee of 0.25% beginning in the thirteenth
month after purchase. These payments are not made in connection with sales to
employer-sponsored plans.
|
AllianzGI High Yield Bond Fund
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount or
|
|
|
|
Sales Charge
|
|
Sales Charge
|
|
Commission to dealers
|
|
|
|
as % of Net
|
|
as % of Public
|
|
as a % of Public
|
|
Amount of Purchase
|
|
Amount Invested
|
|
Offering Price
|
|
Offering Price*
|
|
$0-$99,999
|
|
|
3.90
|
%
|
|
|
3.75
|
%
|
|
|
3.25
|
%
|
|
$100,000-$249,999
|
|
|
3.36
|
%
|
|
|
3.25
|
%
|
|
|
2.75
|
%
|
|
$250,000-$499,999
|
|
|
2.30
|
%
|
|
|
2.25
|
%
|
|
|
2.00
|
%
|
|
$500,000-$999,999
|
|
|
1.78
|
%
|
|
|
1.75
|
%
|
|
|
1.50
|
%
|
|
$1,000,000 +
|
|
|
0.00
|
%
|
|
|
0.00
|
%
|
|
|
0.75
|
%
|
|
|
|
|
|
*
|
|
From time to time, these discounts and commissions may be increased pursuant to special
arrangements between the Distributor and certain participating brokers.
|
105
AllianzGI Short Duration High Income Fund
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount or
|
|
|
|
Sales Charge
|
|
Sales Charge
|
|
Commission to dealers
|
|
|
|
as % of Net
|
|
as % of Public
|
|
as a % of Public
|
|
Amount of Purchase
|
|
Amount Invested
|
|
Offering Price
|
|
Offering Price*
|
|
$0-$99,999
|
|
|
2.30
|
%
|
|
|
2.25
|
%
|
|
|
2.00
|
%
|
|
$100,000-$249,999
|
|
|
1.27
|
%
|
|
|
1.25
|
%
|
|
|
1.00
|
%
|
|
$250,000 +
|
|
|
0.00
|
%
|
|
|
0.00
|
%(1)
|
|
|
0.50
|
%
|
|
|
|
|
|
*
|
|
From time to time, these discounts and commissions may be increased pursuant to special
arrangements between the Distributor and certain participating brokers.
|
|
|
|
(1)
|
|
Investors who purchase $250,000 or more of the Fund’s Class A shares (and thus pay no initial
sales charge) may be subject to a CDSC of 1% if they redeem such shares during the first 18
months after their purchase.
|
Each Fund receives the entire net asset value of its Class A shares purchased by investors
(
i.e.
, the gross purchase price minus the applicable sales charge). The Distributor receives the
sales charge shown above less any applicable discount or commission “reallowed” to participating
brokers in the amounts indicated in the table above. The Distributor may, however, elect to reallow
the entire sales charge to participating brokers for all sales with respect to which orders are
placed with the Distributor for any particular Fund during a particular period. During such periods
as may from time to time be designated by the Distributor, the Distributor will pay an additional
amount of up to 0.50% of the purchase price on sales of Class A shares of all or selected Funds
purchased to each participating broker that obtains purchase orders in amounts exceeding thresholds
established from time to time by the Distributor.
Shares issued pursuant to the automatic reinvestment of income dividends or capital gains
distributions are issued at net asset value and are not subject to any sales charges.
Under the circumstances described below, investors may be entitled to pay reduced sales
charges for Class A shares.
These discounts and commissions may be increased pursuant to special arrangements from time to
time agreed upon between the Distributor and certain participating brokers.
Right of Accumulation and Combined Purchase Privilege (Breakpoints).
A Qualifying Investor (as
defined below) may qualify for a reduced sales charge on Class A shares (the “Combined Purchase
Privilege”) by combining concurrent purchases of the Class A shares of one or more Eligible Funds
(as defined below) into a single purchase. In addition, a Qualifying Investor may qualify for a
reduced sale charge on Class A shares (the “Right of Accumulation” or “Cumulative Quantity
Discount”) by combining the purchase of Class A shares of an Eligible Fund with the current
aggregate net asset value of all Class A, B, and C shares of any Eligible Fund held by accounts for
the benefit of such Qualifying Investor. An Eligible Fund is a Fund that offers Class A shares.
The term “Qualifying Investor” refers to:
|
|
(i)
|
|
an individual, such individual’s spouse, such individual’s children under the age of 21
years, or such individual’s siblings (each a “family member”) (including family trust*
accounts established by such a family member)
|
or
|
|
(ii)
|
|
a trustee or other fiduciary for a single trust (except family trusts* noted above),
estate or fiduciary account although more than one beneficiary may be involved
|
or
|
|
(iii)
|
|
an employee benefit plan of a single employer.
|
|
|
|
|
|
*
|
|
For the purpose of determining whether a purchase would qualify for a reduced sales charge
under the Combined Purchase Privilege or Right of Accumulation, a “family trust” is one in
which a family member(s) described in section (i) above is/are a beneficiary/ies and such
person(s) and/or another family member is the trustee.
|
106
Shares purchased or held through a Plan Investor or any other employer-sponsored benefit
program do not count for purposes of determining whether an investor qualifies for a Cumulative
Quantity Discount.
Letter of Intent.
An investor may also obtain a reduced sales charge on purchases of Class A
shares by means of a written Letter of Intent, which expresses an intention to invest not less than
$50,000 within a period of 13 months in Class A shares of any Eligible Fund(s). The maximum
intended investment amount allowable in a Letter of Intent is $1,000,000. Each purchase of shares
under a Letter of Intent will be made at the public offering price or prices applicable at the time
of such purchase to a Single Purchase of the dollar amount indicated in the Letter. At the
investor’s option, a Letter of Intent may include purchases of Class A shares of any Eligible Fund
made not more than 90 days prior to the date the Letter of Intent is signed; however, the 13-month
period during which the Letter of Intent is in effect will begin on the date of the earliest
purchase to be included and the sales charge on any purchases prior to the Letter of Intent will
not be adjusted. In making computations concerning the amount purchased for purpose of a Letter of
Intent, any redemptions during the operative period are deducted from the amount invested.
Investors qualifying for the Combined Purchase Privilege described above may purchase shares
of the Eligible Funds under a single Letter of Intent. For example, if at the time you sign a
Letter of Intent to invest at least $100,000 in Class A shares of any Eligible Fund, you and your
spouse each purchase Class A shares of the AllianzGI Global Water Fund worth $30,000 (for a total
of $60,000), it will only be necessary to invest a total of $40,000 during the following 13 months
in Class A shares of any of the Eligible Funds to qualify for the 3.50% sales charge on the total
amount being invested.
A Letter of Intent is not a binding obligation to purchase the full amount indicated. The
minimum initial investment under a Letter of Intent is 5% of such amount. Shares purchased with the
first 5% of the amount indicated in the Letter of Intent will be held in escrow (while remaining
registered in your name) to secure payment of the higher sales charge applicable to the shares
actually purchased in the event the full intended amount is not purchased. If the full amount
indicated is not purchased, a sufficient amount of such escrowed shares will be involuntarily
redeemed to pay the additional sales charge applicable to the amount actually purchased, if
necessary. Dividends on escrowed shares, whether paid in cash or reinvested in additional Eligible
Fund shares, are not subject to escrow. When the full amount indicated has been purchased, the
escrow will be released.
If an investor wishes to enter into a Letter of Intent in conjunction with an initial
investment in Class A shares of a Fund, the investor should complete the appropriate portion of the
account application. A current Class A shareholder desiring to do so may obtain a form of Letter of
Intent by contacting the Distributor at 1-800-988-8380 or any broker participating in this program.
Shares purchased or held through a Plan Investor or any other employer-sponsored benefit
program do not count for purposes of determining whether an investor has qualified for a reduced
sales charge through the use of a Letter of Intent.
Reinstatement Privilege.
A Class A shareholder who has caused any or all of his shares to be
redeemed may reinvest all or any portion of the redemption proceeds in Class A shares of any
Eligible Fund at net asset value without any sales charge, provided that such reinvestment is made
within 120 calendar days after the redemption or repurchase date. Shares are sold to a reinvesting
shareholder at the net asset value next determined. See “How Fund Shares Are Priced” in the
applicable Prospectus. A reinstatement pursuant to this privilege will not cancel the redemption
transaction and, consequently, any gain or loss so realized may be recognized for federal tax
purposes except that no loss may be recognized to the extent that the proceeds are reinvested in
shares of the same Fund within 30 days. The reinstatement privilege may be utilized by a
shareholder only once, irrespective of the number of shares redeemed, except that the privilege may
be utilized without limit in connection with transactions whose sole purpose is to transfer a
shareholder’s interest in a Fund to his Individual Retirement Account or other qualified retirement
plan account. An investor may exercise the reinstatement privilege by written request sent to the
Distributor or to the investor’s broker.
Sales at Net Asset Value
. Each Fund may sell its Class A shares at net asset value without a
sales charge to
(i) current, former or retired officers, trustees, directors or employees of the Trust, Allianz
Funds, AAMA, Allianz Global Fund Management or the Distributor, other affiliates of Allianz
Global Fund Management and funds advised or subadvised by any such affiliates, provided that any
such former employee established an account holding Fund shares during his or her period of
employment, in any case at the discretion of Allianz Global Fund Management or the Distributor; a
parent, brother or sister of any such officer, trustee, director or employee or a spouse or child
of any of the foregoing persons, or any trust, profit-sharing or pension plan for the benefit of
any such person and to any other person if the Distributor anticipates that there will be minimal
sales expenses associated with the sale;
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(ii) current registered representatives and other full-time employees of participating brokers or
such persons’ spouses or for trust or custodial accounts for their minor children;
(iii) trustees or other fiduciaries purchasing shares for certain plans sponsored by employers,
professional organizations or associations or charitable organizations, the trustee,
administrator, recordkeeper, fiduciary, broker, trust company or registered investment adviser
for which has an agreement with the Distributor or Allianz Global Fund Management with respect to
such purchases (including provisions related to minimum levels of investment in a Trust), and to
participants in such plans and their spouses purchasing for their account(s) or IRAs;
(iv) participants investing through accounts known as “wrap accounts” established with brokers or
dealers approved by the Distributor where such brokers or dealers are paid a single, inclusive
fee for brokerage and investment management services;
(v) client accounts of broker-dealers or registered investment advisers affiliated with such
broker-dealers with which the Distributor or Allianz Global Fund Management has an agreement for
the use of a Fund in particular investment products or programs or in particular situations;
(vi) accounts for which the company that serves as trustee or custodian either (a) is affiliated
with Allianz Global Fund Management or (b) has a specific agreement to that effect with the
Distributor; and
(vii) investors who purchase shares in “Exempt Transactions,” as described under “Exempt
Transactions; No CDSCs or Payments to Brokers” above.
The Distributor will only pay service fees and will not pay any initial commission or other
fees to dealers upon the sale of Class A shares to the purchasers described in sub-paragraphs (i)
through (vii) above except that the Distributor will pay initial commissions to any dealer for
sales to purchasers described under sub-paragraph (iii) above provided such dealer has a written
agreement with the Distributor specifically providing for the payment of such initial commissions.
Notification of Distributor.
In many cases, neither the Trust or Allianz Funds (together the
“Trusts”) as applicable, the Distributor nor the Transfer Agent will have the information necessary
to determine whether a quantity discount or reduced sales charge is applicable to a purchase. An
investor or participating broker must notify the Distributor whenever a quantity discount or
reduced sales charge is applicable to a purchase and must provide the Distributor with sufficient
information at the time of purchase to verify that each purchase qualifies for the privilege or
discount, including such information as is necessary to obtain any applicable “combined treatment”
of an investor’s holdings in multiple accounts. Upon such notification, the investor will receive
the lowest applicable sales charge. For investors investing in Class A shares through a financial
intermediary, it is the responsibility of the financial intermediary to ensure that the investor
obtains the proper quantity discount or reduced sales charge. The quantity discounts and commission
schedules described above may be modified or terminated at any time.
Class A Deferred Sales Charge.
For purchases of Class A shares of all Funds, investors who
purchase $1,000,000 or more of Class A shares (and, thus, purchase such shares without any initial
sales charge) may be subject to a 1% CDSC if such shares are redeemed within 18 months of their
purchase. The CDSCs described in this paragraph are sometimes referred to as the “Class A CDSC.”
The Class A CDSC does not apply to investors purchasing any Fund’s Class A shares if such investors
are otherwise eligible to purchase Class A shares without any sales charge because they are
described under “Sales at Net Asset Value” above.
For purchases subject to the Class A CDSC, a CDSC will apply for any redemption of such Class
A shares that occurs within 18 months of their purchase. No CDSC will be imposed if the shares
redeemed have been acquired through the reinvestment of dividends or capital gains distributions or
if the amount redeemed is derived from increases in the value of the account above the amount of
purchase payments subject to the CDSC. In determining whether a CDSC is payable, it is assumed that
the shareholder will redeem first the lot of Class A shares that will incur the lowest CDSC. Any
CDSC imposed on a redemption of Class A shares is paid to the Distributor. The manner of
calculating the CDSC on Class A shares is described below under “Calculation of CDSC.”
The Class A CDSC is currently waived in connection with certain redemptions as described above
under “Alternative Purchase Arrangements—Waiver of Contingent Deferred Sales Charges.” For more
information about the Class A CDSC, call the Distributor at 1-800-988-8380.
For Class A shares outstanding for 18 months or more, the Distributor may also pay
participating brokers annual servicing fees of 0.25% of the net asset value of such shares.
Deferred Sales Charge Alternative — Class B Shares.
Class B shares are sold at their current
net asset value without any initial sales charge. The full amount of an investor’s purchase payment
will be invested in shares of the Fund(s) selected.
108
Calculation of CDSC.
A CDSC may be imposed on Class A, Class B or Class C shares under certain
circumstances. A CDSC is imposed on shares redeemed within a certain number of years after their
purchase. When shares are redeemed, any shares acquired through the reinvestment of dividends or
capital gains distributions will be redeemed first and will not be subject to any CDSC. For the
redemption of all other shares, the CDSC will be based on either the shareholder’s original
per-share purchase price or the then current net asset value of the shares being sold, whichever is
lower. CDSCs will be deducted from the proceeds of the shareholder’s redemption, not from the
amounts remaining in the shareholder’s account. In determining whether a CDSC is payable, it is
assumed that the shareholder will redeem first the lot of shares that will incur the lowest CDSC.
Whether a CDSC is imposed and the amount of the CDSC will depend on the number of years since
the investor purchased the shares being redeemed.
Class B shares are subject to higher distribution fees than Class A shares for a fixed period
after their purchase, after which they automatically convert to Class A shares and are no longer
subject to such higher distribution fees. Class B shares automatically convert into Class A shares
after they have been held for seven years.
For sales of Class B shares made and services rendered to Class B shareholders, the
Distributor intends to make payments to participating brokers, at the time a shareholder purchases
Class B shares, of 4.00% of the purchase amount for each of the Funds. For Class B shares
outstanding for one year or more, the Distributor may also pay participating brokers annual
servicing fees of 0.25% of the net asset value of such shares. Financial intermediaries that
receive distribution and/or servicing fees may in turn pay and/or reimburse all or a portion of
those fees to their customers. During such periods as may from time to time be designated by the
Distributor, the Distributor will pay selected participating brokers an additional amount of up to
0.50% of the purchase price on sales of Class B shares of all or selected Funds purchased to each
participating broker that obtains purchase orders in amounts exceeding thresholds established from
time to time by the Distributor.
The Class B CDSC is currently waived in connection with certain redemptions as described above
under “Alternative Purchase Arrangements—Waiver of Contingent Deferred Sales Charges.” For more
information about the Class B CDSC, call the Distributor at 1-800-988-8380.
Asset-Based Sales Charge Alternative — Class C Shares.
Class C shares are sold at their current net
asset value without any initial sales charge. A CDSC is imposed if an investor redeems Class C
shares within a certain time period after their purchase. When shares are redeemed, any shares
acquired through the reinvestment of dividends or capital gains distributions will be redeemed
first and will not be subject to any CDSC. For the redemption of all other shares, the CDSC will be
based on either the shareholder’s original per-share purchase price or the then current net asset
value of the shares being sold, whichever is lower. CDSCs will be deducted from the proceeds of the
shareholder’s redemption, not from the amounts remaining in the shareholder’s account. In
determining whether a CDSC is payable, it is assumed that the shareholder will redeem first the lot
of shares that will incur the lowest CDSC. All of an investor’s purchase payments are invested in
shares of the Fund(s) selected.
Whether a CDSC is imposed and the amount of the CDSC will depend on the number of years since
the investor made a purchase payment from which an amount is being redeemed.
Any CDSC imposed on a redemption of Class C shares is paid to the Distributor. For investors
investing in Class C shares through a financial intermediary, it is the responsibility of the
financial intermediary to ensure that the investor is credited with the proper holding period for
the shares redeemed. Unlike Class B shares, Class C shares do not automatically convert to any
other class of shares of the Funds.
The manner of calculating the CDSC on Class C shares is the same as that of Class B shares, as
described above under “Calculation of CDSC.” Except as described below, for sales of Class C shares
made and services rendered to Class C shareholders, the Distributor expects to make payments to
participating brokers, at the time the shareholder purchases Class C shares, of 1.00% (representing
0.75% distribution fees and 0.25% servicing fees) of the purchase amount for all Funds. For sales
of Class C shares made to participants making periodic purchases of not less than $50 through
certain employer sponsored savings plans that are clients of a broker-dealer with which the
Distributor has an agreement with respect to such purchases, no payments are made at the time of
purchase. For Class C shares, the Distributor expects to make annual payments to participating
brokers at the rate of 1.00% for all Funds. This change will not impact the Rule 12b-1 fees or
other fees or expenses paid by shareholders. Financial intermediaries that receive distribution
and/or service fees may in turn pay and/or reimburse all or a portion of these fees to their
customers. During such periods as may from time to time be designated by the Distributor, the
Distributor will pay an additional amount of up to 0.50% of the purchase price on sales of Class C
shares of all or selected Funds purchased to each participating broker that obtains purchase orders
in amounts exceeding thresholds established from time to time by the Distributor.
The Class C CDSC is currently waived in connection with certain redemptions as described above
under “Alternative Purchase Arrangements—Waiver of Contingent Deferred Sales Charges.” For more
information about the Class C CDSC, contact the Distributor at 1-800-988-8380.
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No Sales Charge Alternative — Class R Shares.
Class R shares are sold at their current net
asset value without any initial sales charge. The full amount of the investor’s purchase payment
will be invested in shares of the Fund(s). Class R shares are not subject to a CDSC upon redemption
by an investor. For sales of Class R shares made and services rendered to Class R shareholders, the
Distributor expects to make payments to participating brokers and, with respect to servicing fees,
other financial intermediaries (which may include specified benefit plans, their service providers
and their sponsors), at the time the shareholder purchases Class R shares, of up to 0.50%
(representing up to 0.25% distribution fees and up to 0.25% servicing fees) of the purchase.
Information For All Share Classes
. Brokers and other financial intermediaries provide varying
arrangements for their clients to purchase and redeem Fund shares. Some may establish higher
minimum investment requirements than set forth above. Firms may arrange with their clients for
other investment or administrative services and may independently establish and charge transaction
fees and/or other additional amounts to their clients for such services, which charges would reduce
clients’ return. Firms also may hold Fund shares in nominee or street name as agent for and on
behalf of their customers. In such instances, the Trusts’ Transfer Agent will have no information
with respect to or control over accounts of specific shareholders. Such shareholders may obtain
access to their accounts and information about their accounts only from their broker. In addition,
certain privileges with respect to the purchase and redemption of shares or the reinvestment of
dividends may not be available through such firms. Some firms may participate in a program allowing
them access to their clients’ accounts for servicing including, without limitation, transfers of
registration and dividend payee changes; and may perform functions such as generation of
confirmation statements and disbursement of cash dividends.
Exchange Privilege
Except with respect to exchanges for shares of Funds for which sales may be suspended to new
investors or as provided in the applicable Prospectus or in this Statement of Additional
Information, a shareholder may exchange Class A, Class B, Class C and Class R shares of any Fund
for the same Class of shares of any other Fund in an account with identical registration on the
basis of their respective net asset values.
For Class R shares, specified benefit plans may also
limit exchanges to Funds offered as investment options in the plan and exchanges may only be made
through the plan administrator
. Shares of one Class of a Fund may also be exchanged directly for
shares of another Class of the same Fund, as described (and subject to the conditions and
restrictions set forth) under “Distribution of Trust Shares—Purchases, Exchanges and Redemptions”
in this Statement of Additional Information. There are currently no other exchange fees or charges.
Exchanges are subject to any minimum initial purchase requirements for each share class of each
Fund, except with respect to exchanges effected through the Trusts’ Auto-Exchange plan. An exchange
may constitute a taxable sale for federal income tax purposes.
Investors who maintain their account with the Distributor may exchange shares by a written
exchange request sent to Allianz Global Investors Distributors LLC, P.O. Box 8050, Boston, MA
02266-8050, Allianz Family of Funds, PO Box 219968, Kansas City, MO 64121-9968 or, unless the
investor has specifically declined telephone exchange privileges on the account application or
elected in writing not to utilize telephone exchanges, by a telephone request to the Distributor at
1-800-988-8380. Each Trust will employ reasonable procedures to confirm that instructions
communicated by telephone are genuine, and may be liable for any losses due to unauthorized or
fraudulent instructions if it fails to employ such procedures. Each Trust will require a form of
personal identification prior to acting on a caller’s telephone instructions, will provide written
confirmations of such transactions and will record telephone instructions. Exchange forms are
available from the Distributor at 1-800-988-8380 and may be used if there will be no change in the
registered name or address of the shareholder. Changes in registration information or account
privileges may be made in writing to the Trust c/o the Transfer Agent, Boston Financial Data
Services, Inc., at P.O. Box 8050, Boston, MA 02266-8050, PO Box 219968, Kansas City, MO 64121-9968
or by use of forms that are available from the Distributor. A signature validation is required. See
“How to Buy Shares—Signature Validation.” Telephone exchanges for all Funds may be made between
9:00 a.m., Eastern time and the close of regular trading (normally 4:00 p.m., Eastern time) on the
New York Stock Exchange on any day the Exchange is open (generally weekdays other than normal
holidays).
The Trusts reserve the right to refuse exchange purchases (or purchase and redemption and/or
redemption and purchase transactions) if, in the judgment of the Manager or a Fund’s Sub-Adviser,
such transaction would adversely affect a Fund and its shareholders. In particular, a pattern of
transactions characteristic of “market timing” strategies may be deemed by the Manager to be
detrimental to a Trust or a particular Fund. Except as described below, although the Trusts have no
current intention of terminating or modifying the exchange privilege, each reserves the right to do
so at any time. Except as otherwise permitted by the SEC, each Trust will give 60 days’ advance
notice to shareholders of any termination or material modification of the exchange privilege.
Because the Funds will not always be able to detect market timing activity, investors should not
assume that the Funds will be able to detect or prevent all market timing or other trading
practices that may disadvantage the Funds. For example, it is more difficult for the Funds to
monitor trades that are placed by omnibus or other nominee accounts because the broker, retirement
plan administrator, fee-based program sponsor or other financial intermediary maintains the record
of the applicable Fund’s underlying beneficial owners. For further information about exchange
privileges, contact your participating broker or call the Distributor at 1-800-988-8380 or
1-800-498-5413 (for Institutional Class shares, Class R6 shares, Administrative Class shares and
Class P shares).
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With respect to Class A shares subject to a CDSC or Class B shares and Class C shares, if less
than all of an investment is exchanged out of a Fund, any portion of the investment exchanged will
be from the lot of shares that would incur the lowest CDSC if such shares were being redeemed
rather than exchanged.
Except as otherwise disclosed in the applicable Prospectus, shares that are received in an
exchange will be subject to the same CDSC as the shares exchanged. For example, Class C shares that
have a twelve-month CDSC period received in exchange for Class C shares that have an eighteen-month
CDSC period will have the same CDSC period as the shares exchanged (in this case, eighteen months).
Note, however, effective January 1, 2010, any Class C shares owned on that date or purchased
thereafter will only be subject to a CDSC if redeemed during the first twelve months.
Shareholders should take into account the effect of any exchange on the applicability of any
CDSC that may be imposed upon any subsequent redemption.
Investors may also select the Allianz Funds Auto-Exchange plan, which establishes automatic
periodic exchanges. For further information on automatic exchanges see “How to Buy Shares—Allianz
Funds Auto-Exchange” above.
How to Redeem
Redemptions of Class A, Class B, Class C or Class R Shares.
Class A, Class B, Class C or Class R shares may be redeemed through a participating broker, by
telephone, by submitting a written redemption request directly to the Transfer Agent (for
non-broker accounts) or through an Automatic Withdrawal Plan or Allianz Funds Fund Link, if
available. Class R shares may be redeemed only through the plan administrator, and not directly by
the plan participant.
A CDSC may apply to a redemption of Class A, Class B or Class C shares. See “Alternative
Purchase Arrangements” above. Shares are redeemed at their net asset value next determined after a
redemption request has been received as described below, less any applicable CDSC. There is no
charge by the Distributor (other than an applicable CDSC) with respect to a redemption; however, a
participating broker who processes a redemption for an investor may charge customary commissions
for its services (which may vary). Dealers and other financial services firms are obligated to
transmit orders promptly. Requests for redemption received by dealers or other firms prior to the
close of regular trading (normally 4:00 p.m., Eastern time) on the New York Stock Exchange on a
regular business day and received by the Distributor prior to the close of the Distributor’s
business day will be confirmed at the net asset value effective at the closing of the Exchange on
that day, less any applicable CDSC.
Other than an applicable CDSC, a shareholder will not pay any special fees or charges to a
Trust or the Distributor when the shareholder sells his or her shares. However, if a shareholder
sells his or her shares through a broker, dealer or other financial intermediary, that firm may
charge the shareholder a commission or other fee for processing the shareholder’s redemption
request.
Redemptions of Fund shares may be suspended when trading on the New York Stock Exchange is
restricted or during an emergency that makes it impracticable for the Funds to dispose of their
securities or to determine fairly the value of their net assets, or during any other period as
permitted by the SEC for the protection of investors. Under these and other unusual circumstances,
the Trusts may suspend redemptions or postpone payments for more than seven days, as permitted by
law.
Direct Redemption.
A shareholder’s original account application permits the shareholder to
redeem by written request and by telephone (unless the shareholder specifically elects not to
utilize telephone redemptions) and to elect one or more of the additional redemption procedures
described below. A shareholder may change the instructions indicated on his original account
application, or may request additional redemption options, only by transmitting a written direction
to the Transfer Agent. Requests to institute or change any of the additional redemption procedures
will require a signature validation.
Redemption proceeds will normally be mailed to the redeeming shareholder within seven days or,
in the case of wire transfer or Fund Link redemptions, sent to the designated bank account within
one business day. Fund Link redemptions may be received by the bank on the second or third business
day. In cases where shares have recently been purchased by personal check, redemption proceeds may
be withheld until the check has been collected, which may take up to 15 days. To avoid such
withholding, investors should purchase shares by certified or bank check or by wire transfer.
Written Requests.
To redeem shares in writing (whether or not represented by certificates), a
shareholder must send the following items to the Trust c/o Transfer Agent, Boston Financial Data
Services, Inc., at P.O. Box 8050, Boston, MA 02266-8050:
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(1)
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a written request for redemption signed by all registered owners exactly as the account is
registered on the Transfer Agent’s records, including fiduciary titles, if any, and specifying
the account number and the dollar amount or number of shares to be redeemed;
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(2)
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for certain redemptions described below, a guarantee of all signatures on the written request
or on the share certificate or accompanying stock power, if required, as described under “How
to Buy Shares—Signature Validation”;
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(3)
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any share certificates issued for any of the shares to be redeemed (see “Certificated Shares”
below); and
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(4)
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any additional documents that may be required by the Transfer Agent for redemption by
corporations, partnerships or other organizations, executors, administrators, trustees,
custodians or guardians, or if the redemption is requested by anyone other than the
shareholder(s) of record.
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Transfers of shares are subject to the same requirements. A signature validation is not
required for a redemption requested by and payable to all shareholders of record for the account
that is to be sent to the address of record for that account. To avoid delay in redemption or
transfer, shareholders having any questions about these requirements should contact the Transfer
Agent in writing or call the Distributor at 1-800-988-8380 before submitting a request. Redemption
or transfer requests will not be honored until all required documents have been completed by the
shareholder and received by the Transfer Agent. This redemption option does not apply to shares
held in broker “street name” accounts. Shareholders whose shares are held in broker “street name”
accounts must redeem through their broker. Plan participants must redeem through their plan
administrator.
Orders sent to the Distributor’s P.O. Box are not deemed “received” until they arrive at the
Distributor’s facility. This may affect the date on which they are processed.
If the proceeds of the redemption (i) are to be paid to a person other than the record owner,
(ii) are to be sent to an address other than the address of the account on the Transfer Agent’s
records or (iii) are to be paid to a corporation, partnership, trust or fiduciary, the signature(s)
on the redemption request and on the certificates, if any, or stock power must be guaranteed as
described above, except that the Distributor may waive the signature validation requirement for
redemptions up to $2,500 by a trustee of a qualified specified benefit plan, the administrator for
which has an agreement with the Distributor.
Telephone Redemptions.
Each Trust accepts telephone requests for redemption of uncertificated
shares, except for investors who have specifically declined telephone redemption privileges on the
account application or elected in writing not to utilize telephone redemptions. The proceeds of a
telephone redemption will be sent to the record shareholder at his record address. Changes in
account information must be made in a written authorization with a signature validation. See “How
to Buy Shares—Signature Validation.” Telephone redemptions will not be accepted during the 30-day
period following any change in an account’s record address. This redemption option does not apply
to shares held in broker “street name” accounts. Shareholders whose shares are held in broker
“street name” accounts must redeem through their broker. Plan participants must redeem through
their plan administrator.
By completing an account application, an investor agrees that the Trust, the Distributor and
the Transfer Agent shall not be liable for any loss incurred by the investor by reason of the Trust
accepting unauthorized telephone redemption requests for his account if the Trust reasonably
believes the instructions to be genuine. Thus, shareholders risk possible losses in the event of a
telephone redemption not authorized by them. Each Trust may accept telephone redemption
instructions from any person identifying himself as the owner of an account or the owner’s broker
where the owner has not declined in writing to utilize this service. Each Trust will employ
reasonable procedures to confirm that instructions communicated by telephone are genuine, and may
be liable for any losses due to unauthorized or fraudulent instructions if it fails to employ such
procedures. Each Trust will require a form of personal identification prior to acting on a caller’s
telephone instructions, will provide written confirmations of such transactions and will record
telephone instructions.
A shareholder making a telephone redemption should call the Distributor at 1-800-988-8380 and
state (i) the name of the shareholder as it appears on the Transfer Agent’s records, (ii) his
account number with the Trust, (iii) the amount to be withdrawn and (iv) the name of the person
requesting the redemption. Usually the proceeds are sent to the investor on the next Trust business
day after the redemption is effected, provided the redemption request is received prior to the
close of regular trading (normally 4:00 p.m., Eastern time) on the New York Stock Exchange that
day. If the redemption request is received after the close of the New York Stock Exchange, the
redemption is effected on the following Trust business day at that day’s net asset value and the
proceeds are usually sent to the investor on the second following Trust business day. Each Trust
reserves the right to terminate or modify the telephone redemption service at any time. During
times of severe disruptions in the securities markets, the volume of calls may make it difficult to
redeem by telephone, in which case a shareholder may wish to send a written request for redemption
as described under “Written Requests” above. Telephone communications may be recorded by the
Distributor or the Transfer Agent.
Fund Link Redemptions.
If a shareholder has established Fund Link, the shareholder may redeem
shares by telephone and have the redemption proceeds sent to a designated account at a financial
institution. Fund Link is normally established within 45 days of receipt of a Fund Link application
by the Transfer Agent. To use Fund Link for redemptions, call the Distributor at 1-800-988-8380
(for Class A shares, Class B shares, Class C shares, Class D shares and Class R shares) or
1-800-498-5413 (for Institutional Class shares, Class
112
R6 shares, Administrative Class shares and
Class P shares). Subject to the limitations set forth above under “Telephone Redemptions,” the
Distributor, a Trust and the Transfer Agent may rely on instructions by any registered owner
believed to be genuine and will not be responsible to any shareholder for any loss, damage or
expense arising out of such instructions. Requests received by the Transfer Agent prior to the
close of regular trading (normally 4:00 p.m., Eastern time) on the New York Stock Exchange on a
business day will be processed at the net asset value on that day and the proceeds (less any CDSC)
will normally be sent to the designated bank account on the following business day and received by
the bank on the second or third business day. If the redemption request is received after the close
of regular trading on the New York Stock Exchange, the redemption is effected on the following
business day. Shares purchased by check may not be redeemed through Fund Link until such shares
have been owned (
i.e.
, paid for) for at least 15 days. Fund Link may not be used to redeem shares
held in certificated form.
Changes in bank account information must be made by completing a new Fund Link application,
signed by all owners of record of the account, with all signatures guaranteed. See “How to Buy
Shares—Signature Validation.” See “How to Buy Shares—Allianz Funds Fund Link” for information on
establishing the Fund Link privilege. Any of the Trusts may terminate the Fund Link program at any
time without notice to its shareholders. This redemption option does not apply to shares held in
broker “street name” accounts. Shareholders whose shares are held in broker “street name” accounts
must redeem through their broker. Plan participants must redeem through their plan administrator.
Fund Link may not be available to all Funds and/or share classes at the option of the Distributor.
Redemptions.
A shareholder may redeem shares by telephone automatically by calling
1-800-998-8380 (Class A, Class B, Class C, Class D and Class R) or 1-800-498-5413 (Class P,
Institutional Class, Class R6 and Administrative Class) and the Fund will send the proceeds
directly to the shareholder’s Fund bank account. Please refer to “How to Redeem” for details. Plan
participants must process their transactions through their plan administrator.
Expedited Wire Transfer Redemptions. If a shareholder has given authorization for expedited
wire redemption, shares can be redeemed and the proceeds sent by federal wire transfer to a single
previously designated bank account. Requests received by a Trust prior to the close of the New York
Stock Exchange will result in shares being redeemed that day at the next determined net asset value
(less any CDSC, if applicable). Normally the proceeds will be sent to the designated bank account
the following business day. The bank must be a member of the Federal Reserve wire system. Delivery
of the proceeds of a wire redemption request may be delayed by the Trust for up to seven days if
the Distributor deems it appropriate under then current market and other conditions. Once
authorization is on file with a Trust, such Trust will honor requests by any person identifying
himself as the owner of an account or the owner’s broker by telephone at 1-800-988-8380 or by
written instructions. A Trust cannot be responsible for the efficiency of the Federal Reserve wire
system or the shareholder’s bank. None of the Trusts currently charge for wire transfers. The
shareholder is responsible for any charges imposed by the shareholder’s bank. The minimum amount
that may be wired is $2,500. Each Trust reserves the right to change this minimum or to terminate
the wire redemption privilege. Shares purchased by check may not be redeemed by wire transfer until
such shares have been owned (
i.e.
, paid for) for at least 15 days. Expedited wire transfer
redemptions may be authorized by completing a form available from the Distributor. Wire redemptions
may not be used to redeem shares in certificated form. To change the name of the single bank
account designated to receive wire redemption proceeds, it is necessary to send a written request
with signatures guaranteed to Allianz Global Investors Distributors LLC, P.O. Box 8050, Boston, MA
02266-8050. See “How to Buy Shares—Signature Validation.” This redemption option does not apply to
shares held in broker “street name” accounts. Shareholders whose shares are held in broker “street
name” accounts must redeem through their broker. Plan participants must redeem through their plan
administrator.
Certificated Shares.
The Trust currently does not, and has no intention to, issue share
certificates. If it does so in the future, to redeem shares for which certificates have been
issued, the certificates must be mailed to or deposited with the Trust, duly endorsed or
accompanied by a duly endorsed stock power or by a written request for redemption. Signatures must
be guaranteed as described under “How to Buy Shares—Signature Validation,” above. Further
documentation may be requested from institutions or fiduciary accounts, such as corporations,
custodians (
e.g.
, under the Uniform Gifts to Minors Act), executors, administrators, trustees or
guardians (“institutional account owners”). The redemption request and stock power must be signed
exactly as the account is registered, including indication of any special capacity of the
registered owner.
Automatic Withdrawal Plan.
An investor who owns or buys shares of a Fund having a net asset
value of $10,000 or more may open an Automatic Withdrawal Plan and have a designated sum of money
paid monthly (or quarterly) to the investor or another person. Such a plan may be established by
completing the appropriate section of the account application or by obtaining an Automatic
Withdrawal Plan application from the Distributor or your broker. If an Automatic Withdrawal Plan is
set up after the account is established providing for payment to a person other than the record
shareholder or to an address other than the address of record, a signature validation is required.
See “How to Buy Shares—Signature Validation.” In the case of Uniform Gifts to Minors or Uniform
Transfers to Minors accounts, the application must state that the proceeds will be for the
beneficial interest of the minor. Class A, Class B and Class C shares of any Fund are deposited in
a plan account and all distributions are reinvested in additional shares of the particular class of
the Fund at net asset value. Shares in a plan account are then redeemed at net asset value (less
any applicable CDSC) to make each withdrawal payment. Any applicable CDSC may be waived for certain
redemptions under an Automatic Withdrawal Plan. See “Alternative Purchase Arrangements—Waiver of
Contingent Deferred Sales Charges.”
113
Redemptions for the purpose of withdrawals are ordinarily made on the business day selected by
the investor at that day’s closing net asset value. Checks are normally mailed on the following
business day. If the date selected by the investor falls on a weekend or holiday, the Transfer
Agent will normally process the redemption on the preceding business day. Payment will be made to
any person the investor designates; however, if the shares are registered in the name of a trustee
or other fiduciary, payment will be made only to the fiduciary, except in the case of a
profit-sharing or pension plan where payment will be made to the designee. As withdrawal payments
may include a return of principal, they cannot be considered a guaranteed annuity or actual yield
of income to the investor. The redemption of shares in connection with an Automatic Withdrawal Plan
may result in a gain or loss for tax purposes. Continued withdrawals in excess of income will
reduce and possibly exhaust invested principal, especially in the event of a market decline. The
maintenance of an Automatic Withdrawal Plan concurrently with purchases of additional shares of the
Fund would be disadvantageous to the investor because of the CDSC that may become payable on such
withdrawals in the case of Class A, Class B or Class C shares and because of the initial sales
charge in the case of Class A shares. For this reason, the minimum investment accepted for a Fund
while an Automatic Withdrawal Plan is in effect for that Fund is $1,000, and an investor may not
maintain a plan for the accumulation of shares of the Fund (other than through reinvestment of
distributions) and an Automatic Withdrawal Plan at the same time. The Trusts or the Distributor may
terminate or change the terms of the Automatic Withdrawal Plan at any time.
Because the Automatic Withdrawal Plan may involve erosion of capital, investors should
consider carefully with their own financial advisors whether the plan and the specified amounts to
be withdrawn are appropriate in their circumstances. The Trusts and the Distributor make no
recommendations or representations in this regard.
DISCLOSURE OF PORTFOLIO HOLDINGS
The Board of Trustees has adopted, on behalf of the Funds, policies and procedures relating to
disclosure of a Fund’s portfolio securities. These policies and procedures are designed to protect
the confidentiality of each Fund’s portfolio holdings information and to prevent the selective
disclosure of such information. These policies and procedures may be modified at any time with the
approval of the Board of Trustees.
Each Fund may disclose portfolio holdings information as required by applicable law or as
requested by governmental authorities. In addition, Allianz Global Fund Management will post
portfolio holdings information on its website at
us.allianzgi.com
. This website will
contain each Fund’s complete schedule of portfolio holdings as of the last day of the most recent
month end. Allianz Global Fund Management will post this information on the website approximately
five (5) business days after a month’s end, and such information will remain accessible on the
website until the Funds file a Form N-Q or Form N-CSR on the SEC’s EDGAR website for the period
that includes the date of the information. For each portfolio security (not including cash
positions), the posted information will include such information about each holding as may be
determined by the Manager from time to time. If a Fund’s portfolio holdings information is
disclosed to the public (either through a filing on the SEC’s EDGAR website or otherwise) before
the disclosure of that information on the Manager’s website, the Fund may post such information on
the Manager’s website.
Portfolio holdings of each Fund will also be disclosed on a quarterly basis on forms required
to be filed with the SEC as follows: (i) portfolio holdings as of the end of each fiscal year
ending November 30 will be filed as part of the annual report filed on Form N-CSR; (ii) portfolio
holdings as of the end of the fiscal quarter ending February 28 will be filed on Form N-Q; (iii)
portfolio holdings as of the end of the six-month period ending May 31 will be filed as part of the
semi-annual report filed on Form N-CSR; and (iv) portfolio holdings as of the end of the fiscal
quarter ending August 31 will be filed on Form N-Q. The Trust’s Form N-CSRs and Form N-Qs will be
available on the SEC’s website at
www.sec.gov
.
Disclosure of a Fund’s portfolio holdings information that is not publicly available
(“Confidential Portfolio Information”) may be made to the Manager or Sub-Advisers (together, the
“Investment Managers”) or to the Fund’s principal underwriter or Allianz Asset Management of
America L.P., its subsidiaries and advisory affiliates who provide services to the Funds (including
to personnel of the Investment Managers involved in the management of affiliated funds-of-funds,
Section 529 plan portfolios and institutional accounts that invest in affiliated funds). In
addition, to the extent permitted under applicable law, each Investment Manager may distribute (or
authorize the custodian or principal underwriter to distribute) Confidential Portfolio Information
to the relevant Fund’s service providers (such as custodial services, pricing services, proxy
voting services, accounting and auditing services and research and trading services) that require
access to such information in order to fulfill their contractual duties with respect to the Fund
(“Service Providers”) and to facilitate the review of a Fund by certain mutual fund analysts and
ratings agencies (such as Morningstar and Lipper Analytical Services) (“Rating Agencies”); provided
that such disclosure is limited to the information that the Investment Managers believe is
reasonably necessary in connection with the services to be provided. Except to the extent permitted
under the Funds’ portfolio holdings disclosure policies and procedures, Confidential Portfolio
Information may not be disseminated for compensation or other consideration.
Before any disclosure of Confidential Portfolio Information to Service Providers or Rating
Agencies is permitted, the Investment Manager’s Chief Compliance Officer (or persons designated by
the Investment Manager’s Chief Compliance Officer) must determine that, under the circumstances,
disclosure is in or not opposed to the best interests of the relevant Fund’s shareholders.
Furthermore, the recipient of Confidential Portfolio Information by a Service Provider or Rating
Agency must be subject to a written confidentiality agreement or other duty of confidentiality that
prohibits any trading upon the Confidential Portfolio Information.
114
The Funds have ongoing arrangements to make Confidential Portfolio Information available to
the following Service Providers or Rating Agencies:
|
|
|
|
|
|
|
|
|
Name of Vendor
|
|
Type of Service
|
|
Frequency
|
|
Lag Time
|
|
Bloomberg
|
|
Trading system, compliance monitoring and trade execution analysis
|
|
daily
|
|
n/a
|
|
Ernst & Young LLP
|
|
Independent registered public accounting firm
|
|
varied
|
|
n/a
|
|
FactSet
|
|
Provider of financial information and analytical applications
|
|
daily
|
|
n/a
|
|
Glass, Lewis & Co.
|
|
Proxy voting service
|
|
daily
|
|
n/a
|
|
IDS GmbH
|
|
Analysis and reporting services
|
|
daily
|
|
n/a
|
|
Institutional Shareholder Services
|
|
Proxy Voting
|
|
daily
|
|
n/a
|
|
ITG
|
|
Trade execution analysis
|
|
daily
|
|
n/a
|
|
Northern Trust
|
|
Back-office Outsourcing Service Provider
|
|
daily
|
|
n/a
|
|
[ ]
|
|
Independent registered public accounting firm
|
|
varied
|
|
n/a
|
|
Ropes & Gray LLP
|
|
Legal counsel
|
|
varied
|
|
n/a
|
|
Simpson Thacher & Bartlett LLP
|
|
Legal counsel
|
|
varied
|
|
n/a
|
|
SS&C Technologies
|
|
Portfolio accounting service provider
|
|
daily
|
|
n/a
|
|
State Street Bank and Trust Co.
|
|
Custodial, accounting, and compliance services
|
|
daily
|
|
n/a
|
|
SunGard
|
|
Accounting services provider and personal trading and insider trading monitoring
|
|
daily
|
|
n/a
|
|
Thomson Financial
|
|
Attribution
|
|
daily
|
|
n/a
|
Exceptions to these procedures may only be made if the Trust’s Chief Executive Officer and
Chief Compliance Officer determine that, under the circumstances, such exceptions are in or not
opposed to the best interests of the Funds and if the recipients are subject to a confidentiality
agreement or other duty of confidentiality that prohibits any trading upon the Confidential
Portfolio Information. All exceptions must be reported to the Board of Trustees at its next
regularly scheduled meeting.
In addition, certain Sub-Advisers may provide investment recommendations to the managers or
sponsors of managed or “wrap” accounts (collectively, a “non-discretionary accounts”), usually in
the form of a “model” portfolio. To the extent a nondiscretionary account employs investment
strategies that are substantially similar or identical to those employed by a Fund, the
Sub-Adviser’s portfolio recommendations to the non-discretionary account may result in portfolio
holdings that are substantially similar and, in certain cases, nearly identical, to those of the
Fund. As a result, any persons with access to portfolio holdings information regarding such a
non-discretionary account may indirectly acquire information about the portfolio holdings of, or
transactions by, the Fund with similar or identical portfolio holdings.
The Investment Managers shall have primary responsibility for ensuring that a Fund’s portfolio
holdings information is only disclosed in accordance with the policies described above. As part of
this responsibility, the Investment Managers must maintain such internal informational barriers as
they believe are reasonably necessary for preventing the unauthorized disclosure of Confidential
Portfolio Information.
Other registered investment companies that are advised or sub-advised by the Manager or a
Sub-Adviser may be subject to different portfolio holdings disclosure policies, and neither the
Manager nor the Board of Trustees of the Trust exercises control over such policies or disclosure.
In addition, separate account clients of the Manager and the Sub-Adviser have access to their
portfolio holdings and are not subject to the Funds’ portfolio holdings disclosure policies. Some
of the registered investment companies that are advised or sub-advised by the Manager or
Sub-Adviser and some of the separate accounts managed by the Manager or Sub-Adviser have investment
objectives and strategies that are substantially similar or identical to the Funds’, and therefore
potentially substantially similar, and in certain cases nearly identical, portfolio holdings, as
certain Funds.
PORTFOLIO TRANSACTIONS AND BROKERAGE
Investment Decisions and Portfolio Transactions
Investment decisions for the Trust and for the other investment management clients of the
Manager and Sub-Adviser are made with a view to achieving their respective investment objectives.
Investment decisions are the product of many factors in addition to basic suitability for the
particular client involved (including the Trust). Some securities considered for investment by the
Funds may also be appropriate for other clients served by the Manager or Sub-Adviser. Thus, a
particular security may be bought or sold for certain
115
clients even though it could have been bought
or sold for other clients at the same time. If a purchase or sale of securities consistent with the
investment policies of a Fund and one or more of these clients is considered at or about the same
time, transactions in such securities will be allocated among the Fund and clients in a manner
deemed fair and reasonable by the Manager or Sub-Adviser. Particularly when investing in less
liquid or illiquid securities of smaller capitalization companies, such allocation may take into
account the asset size of a Fund in determining whether the allocation of an investment is
suitable. As a result, larger funds may become more concentrated in more liquid securities than
smaller funds or private accounts of the Manager or Sub-Adviser pursuing a small capitalization
investment strategy, which could adversely affect performance. The Manager or Sub-Adviser may
aggregate orders for the Funds with simultaneous transactions entered into on behalf of its other
clients so long as price and transaction expenses are averaged either for the portfolio transaction
or for that day. Likewise, a particular security may be bought for one or more clients when one or
more clients are selling the security. In some instances, one client may sell a particular security
to another client. It also sometimes happens that two or more clients simultaneously purchase or
sell the same security and the transactions are therefore aggregated, in which event each day’s
aggregated transactions in such security are, insofar as possible, averaged as to price and
allocated between such clients in a manner that, in the Manager’s or Sub-Adviser’s opinion, is
equitable to each and in accordance with the amount being purchased or sold by each. There may be
circumstances when purchases or sales of portfolio securities for one or more clients will have an
adverse effect on other clients, including the Funds.
In addition, as noted above under “Disclosure of Portfolio Holdings,” a Sub-Adviser may
provide investment recommendations to the managers or sponsors of non-discretionary accounts, and
the Sub-Adviser’s portfolio recommendations to such a non-discretionary account may result in
portfolio holdings that are substantially similar and, in certain cases, nearly identical, to those
of a Fund. In an effort to provide fair and equitable treatment in the execution of trades and to
ensure that a Fund and a similar non-discretionary account normally will not have competing trades
outstanding, the Sub-Adviser may implement rotation procedures for alternating between executing
trades for the Fund (and other similarly managed funds and accounts) and notifying the
manager/sponsor of the non-discretionary account of changes in the Sub-Adviser’s portfolio
recommendations (other than in connection with transactions resulting from account rebalancing or
account cash flows).
Brokerage and Research Services
There is generally no stated commission in the case of fixed-income securities and other
securities traded on a principal basis in the over-the-counter markets, but the price paid by the
Trust usually includes an undisclosed dealer commission or mark-up. In underwritten offerings, the
price paid by the Trust includes a disclosed, fixed commission or discount retained by the
underwriter or dealer. Transactions on U.S. stock exchanges and other agency transactions involve
the payment by the Trust of negotiated brokerage commissions. Such commissions vary among different
brokers. Also, a particular broker may charge different commissions according to such factors as
the difficulty and size of the transaction. Transactions in foreign securities generally involve
the payment of fixed brokerage commissions, which are generally higher than those in the United
States.
Each Sub-Adviser places orders for the purchase and sale of portfolio securities, options and
futures contracts and buys and sells such securities, options and futures for a Fund through a
substantial number of brokers and dealers. In so doing, the Sub-Adviser uses its best efforts to
obtain for the Fund the most favorable price and execution available, except to the extent it may
be permitted to pay higher brokerage commissions as described below. In seeking the most favorable
price and execution, the Sub-Adviser, having in mind the Fund’s best interests, considers all
factors it deems relevant, including, by way of illustration, price, the size of the transaction,
the nature of the market for the security, the amount of the commission, the timing of the
transaction taking into account market prices and trends, the reputation, experience and financial
stability of the broker-dealer involved and the quality of service rendered by the broker-dealer in
that or other transactions. Because the Target Funds invest largely, and the Multi-Asset Funds may
invest largely, in Institutional Class (or a comparable class) shares of Underlying Funds, they
generally do not pay brokerage commissions and related costs on such investments, but do indirectly
bear a proportionate share of these costs incurred by the Underlying Funds in which they invest.
The foreign exchange trading practices of the Sub-Advisers may vary but as a general matter,
each Sub-Adviser employs directly negotiated foreign exchange trades in connection with the
purchase and sale of foreign securities. In certain jurisdictions where it is general market
practice or under limited circumstances when the Sub-Adviser believes operational or trading
efficiencies may be gained (e.g. dividend and income repatriation), a Sub-Adviser may arrange
standing instructions with the relevant Fund’s custodian to execute the foreign exchange
transaction, subject to the custodian’s terms and conditions. Such transactions tend to be in
smaller amounts and given their nature and the general size of the markets, the relevant
Sub-Adviser may have limited ability to analyze or review the specific details and efficiency of
trading in these amounts.
116
Because certain of the Funds are newly formed, such Funds did not pay any amount in brokerage
commissions during the periods noted:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
Year Ended
|
|
Year Ended
|
|
Fund
|
|
11/30/13
|
|
11/30/12
|
|
11/30/11
|
|
Behavioral Advantage Large Cap Fund
|
|
$
|
23,234
|
|
|
$
|
8,744
|
|
|
$
|
5,010
|
|
|
Best Styles Global Equity Fund
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
China Equity Fund
|
|
|
5,704
|
|
|
|
5,849
|
|
|
|
18,818
|
|
|
Convertible Fund
|
|
|
63,300
|
|
|
|
49,515
|
|
|
|
51,107
|
|
|
Disciplined Equity Fund
|
|
|
30,107
|
|
|
|
20,681
|
|
|
|
38,210
|
|
|
Dynamic Emerging Multi-Asset Fund
|
|
|
5,075
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
Emerging Markets Debt Fund
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
Global Allocation Fund
|
|
|
822
|
|
|
|
3,030
|
|
|
|
N/A
|
|
|
Global Fundamental Strategy Fund
|
|
|
3,945
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
Global Growth Allocation Fund
|
|
|
50
|
|
|
|
N/A
|
|
|
|
9
|
|
|
Global Managed Volatility Fund
|
|
|
18,042
|
|
|
|
25,795
|
|
|
|
N/A
|
|
|
Global Water Fund
|
|
|
201,524
|
|
|
|
124,193
|
|
|
|
117,196
|
|
|
High Yield Bond Fund
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
International Small-Cap Fund
|
|
|
293,633
|
|
|
|
311,029
|
|
|
|
300,011
|
|
|
Micro Cap Fund
|
|
|
118,254
|
|
|
|
233,543
|
|
|
|
277,731
|
|
|
Multi-Asset Real Return Fund
|
|
|
1,356
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
NFJ Emerging Markets Value Fund
|
|
|
15,908
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
NFJ Global Dividend Value Fund
|
|
|
55,379
|
|
|
|
36,266
|
|
|
|
53,711
|
|
|
NFJ International Small-Cap Value Fund
|
|
|
16,621
|
|
|
|
3,509
|
|
|
|
N/A
|
|
|
NFJ International Value II Fund
|
|
|
2,015
|
|
|
|
4,063
|
|
|
|
N/A
|
|
|
Redwood Fund
|
|
|
18,587
|
|
|
|
37,497
|
|
|
|
53,322
|
|
|
Retirement 2015 Fund
|
|
|
979
|
|
|
|
251
|
|
|
|
N/A
|
|
|
Retirement 2020 Fund
|
|
|
1,400
|
|
|
|
172
|
|
|
|
N/A
|
|
|
Retirement 2025 Fund
|
|
|
997
|
|
|
|
116
|
|
|
|
N/A
|
|
|
Retirement 2030 Fund
|
|
|
824
|
|
|
|
115
|
|
|
|
N/A
|
|
|
Retirement 2035 Fund
|
|
|
565
|
|
|
|
45
|
|
|
|
N/A
|
|
|
Retirement 2040 Fund
|
|
|
429
|
|
|
|
37
|
|
|
|
N/A
|
|
|
Retirement 2045 Fund
|
|
|
129
|
|
|
|
9
|
|
|
|
N/A
|
|
|
Retirement 2050 Fund
|
|
|
136
|
|
|
|
6
|
|
|
|
N/A
|
|
|
Retirement 2055 Fund
|
|
|
50
|
|
|
|
5
|
|
|
|
N/A
|
|
|
Retirement Income Fund
|
|
|
1,326
|
|
|
|
323
|
|
|
|
N/A
|
|
|
Short Duration High Income Fund
|
|
|
N/A
|
|
|
|
12,136
|
|
|
|
N/A
|
|
|
Structured Alpha Fund
|
|
|
31,241
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
Ultra Micro Cap Fund
|
|
|
284,515
|
|
|
|
121,995
|
|
|
|
76,416
|
|
|
U.S. Equity Hedged Fund
|
|
|
1,332
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
U.S. Small-Cap Growth Fund
|
|
|
64,568
|
|
|
|
78,129
|
|
|
|
94,224
|
|
|
Total
|
|
$
|
1,262,047
|
|
|
$
|
1,077,053
|
|
|
$
|
1,085,756
|
|
The Sub-Adviser places orders for the purchase and sale of portfolio investments for a Fund’s
accounts with brokers or dealers selected by it in its discretion. In effecting purchases and sales
of portfolio securities for the accounts of the Funds, the Sub-Adviser will seek the best price and
execution of the Funds’ orders. In doing so, a Fund may pay higher commission rates than the lowest
available when the Sub-Adviser believes it is reasonable to do so in light of the value of the
brokerage and research services provided by the broker effecting the transaction, as discussed
below. Although the Funds may use a broker-dealer that sells Fund shares to effect transactions for
the Funds’ portfolios, the Funds, the Manager and the Sub-Adviser will not consider the sale of
Fund shares as a factor when selecting broker-dealers to execute those transactions.
It has for many years been a common practice in the investment advisory business for advisers
of investment companies and other institutional investors to receive research and brokerage
products and services (together, “services”) from broker-dealers that execute portfolio
transactions for the clients of such advisers. Consistent with this practice, the Sub-Adviser
receives services from many broker-dealers with which the Sub-Adviser places the Funds’ portfolio
transactions. These services, which in some cases may also be purchased for cash, may include,
among other things, such items as general economic and security market reviews, industry and
company reviews, evaluations of securities, recommendations as to the purchase and sale of
securities, and services related to the execution of securities transactions. The management fees
paid by the Funds are not reduced because the Sub-Adviser receives such services even though the
receipt of such services relieves the Sub-Adviser from expenses they might otherwise bear. Research
and brokerage services provided by broker-dealers chosen by the Sub-Adviser to place the Funds
portfolio transactions may be useful to the Sub-Adviser in providing services to other Sub-Adviser
clients, although not all of these services may be necessarily useful and of value to the
Sub-Adviser in managing the Funds. Conversely, research and brokerage services provided to the
Sub-Adviser by broker-dealers in connection with trades executed on behalf of other clients of the
Sub-Adviser may be useful to the Sub-Adviser in managing the Funds, although not all of these
services may be necessarily useful and of value to the Sub-Adviser in managing such other clients.
117
In reliance on the “safe harbor” provided by Section 28(e) of the Securities Exchange Act of
1934, as amended (the “1934 Act”) and the SEC’s interpretive guidance thereunder, the Sub-Adviser
may cause a Fund to pay a broker-dealer that provides “brokerage and research services” (as defined
for purposes of Section 28(e)) to the Sub-Adviser an amount of commission for effecting a
securities transaction for the Fund in excess of the commission that another broker-dealer would
have charged for effecting that transaction if the Sub-Adviser determines in good faith that the
commission is reasonable in relation to the value of the brokerage and research services provided
by the broker-dealer viewed in terms of either a particular transaction or the Manager’s overall
responsibilities to the advisory accounts for which the Sub-Adviser exercises investment
discretion.
Absent an exemption from the SEC or other regulatory relief, the Funds are generally precluded
from effecting certain principal transactions with brokers that are deemed to be affiliated persons
of the Funds, the Manager or the Sub-Adviser. The Funds’ ability to purchase securities being
underwritten by an affiliated broker or a syndicate including an affiliated broker, or to utilize
affiliated brokers for agency transactions, is subject to restrictions. These restrictions could
limit the Funds’ ability to engage in securities transactions and take advantage of market
opportunities. The Sub-Adviser may place orders for the purchase and sale of exchange-listed
portfolio securities with a broker-dealer that is an affiliate of the Manager or Sub-Adviser where,
in the judgment of the Sub-Adviser, such firm will be able to obtain a price and execution at least
as favorable as other qualified broker-dealers. Pursuant to rules of the SEC, a broker-dealer that
is an affiliate of the Manager or Sub-Adviser may receive and retain compensation for effecting
portfolio transactions for a Fund on a securities exchange if the commissions paid to such an
affiliated broker-dealer by a Fund on exchange transactions do not exceed “usual and customary
brokerage commissions.” The rules define “usual and customary” commissions to include amounts that
are “reasonable and fair compared to the commission, fee or other remuneration received or to be
received by other brokers in connection with comparable transactions involving similar securities
being purchased or sold on a securities exchange during a comparable period of time.” As required
by applicable SEC rules, the Board of Trustees has adopted procedures that are reasonably designed
to provide that any commissions, fees or other remuneration paid to an affiliated broker are
consistent with the foregoing standards.
The Funds did not pay any amount in brokerage commissions to affiliated brokers during the
fiscal years ended November 30, 2013, November 30, 2012 and November 30, 2011. Because the status
of brokers as “affiliated brokers” depends on factors such as potential affiliations between the
Manager and its affiliates (
e.g.
, Allianz SE) and such brokers and their affiliates, which may
change over time, a broker that is considered an affiliated broker during some time periods may not
be considered affiliated during other time periods.
Regular Broker-Dealers
The table below contains the aggregate value of securities of the Trust’s regular
broker-dealers* or their parent companies held by each Fund, if any, at the end of fiscal year 2013
(November 30, 2013) (those Funds that have only recently commenced operations and did not hold any
securities of the Trust’s regular broker-dealers during this period are not included).
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Aggregate Value of
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Securities of
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Regular
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Broker-Dealer Held
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|
Fund
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Regular Broker - Dealer
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by Fund
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Behavioral Advantage Large Cap Fund
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Wells Fargo Investments, LLC
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$
|
805,566
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JPMorgan Chase & Co.
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|
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$
|
726,694
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Citigroup, Inc.
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|
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$
|
343,980
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The Goldman Sachs Group, Inc.
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$
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185,834
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State Street Bank & Trust Co.
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$
|
159,742
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Bank of America Corp.
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$
|
118,650
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Morgan Stanley
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$
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40,690
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Convertible Fund
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State Street Bank & Trust Co.
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$
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83,202,000
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Bank of America Corp.
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$
|
26,643,875
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Wells Fargo Investments, LLC
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$
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23,752,080
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Disciplined Equity Fund
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State Street Bank & Trust Co.
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$
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1,480,000
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Citigroup, Inc.
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$
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1,202,342
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JPMorgan Chase & Co.
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$
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1,058,856
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Wells Fargo Investments, LLC
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$
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968,440
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|
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Dynamic Emerging Multi-Asset Fund
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State Street Bank & Trust Co.
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$
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980,000
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|
118
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|
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Aggregate Value of
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Securities of
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Regular
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Broker-Dealer Held
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Fund
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Regular Broker - Dealer
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by Fund
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Global Allocation Fund
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Wells Fargo Investments, LLC
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$
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6,416,380
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State Street Bank & Trust Co.
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$
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675,000
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Global Fundamental Strategy Fund
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Credit Suisse Group
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$
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572,761
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Morgan Stanley
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$
|
524,087
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|
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State Street Bank & Trust Co.
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$
|
398,000
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|
|
|
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|
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Global Water Fund
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State Street Bank & Trust Co.
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|
$
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14,260,000
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|
|
|
|
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|
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High Yield Bond Fund
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State Street Bank & Trust Co.
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$
|
12,077,000
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|
|
|
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|
|
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International Small-Cap Fund
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State Street Bank & Trust Co.
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|
$
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1,570,000
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|
|
|
|
|
|
|
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Micro Cap Fund
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State Street Bank & Trust Co.
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$
|
1,242,000
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|
|
|
|
|
|
|
|
|
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NFJ Global Dividend Value Fund
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Credit Suisse Group
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$
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1,466,200
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|
|
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JPMorgan Chase & Co.
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$
|
1,459,110
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|
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State Street Bank & Trust Co.
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$
|
816,000
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|
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|
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NFJ International Small-Cap Value Fund
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State Street Bank & Trust Co.
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$
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243,000
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|
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NFJ International Value II Fund
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State Street Bank & Trust Co.
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$
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125,000
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|
|
|
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|
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Redwood Fund
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State Street Bank & Trust Co.
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$
|
2,736,000
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|
|
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Citigroup, Inc.
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$
|
74,088
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|
|
|
|
|
|
|
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Retirement 2015 Fund
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Wells Fargo Investments, LLC
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$
|
657,558
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|
|
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State Street Bank & Trust Co.
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|
$
|
174,000
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|
|
|
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|
|
|
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Retirement 2020 Fund
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Wells Fargo Investments, LLC
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|
$
|
828,971
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State Street Bank & Trust Co.
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|
$
|
213,000
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|
|
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Retirement 2025 Fund
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Wells Fargo Investments, LLC
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$
|
507,530
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|
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State Street Bank & Trust Co.
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$
|
254,000
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|
|
|
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Retirement 2030 Fund
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Wells Fargo Investments, LLC
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$
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603,587
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|
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State Street Bank & Trust Co.
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|
$
|
256,000
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|
|
|
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Retirement 2035 Fund
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Wells Fargo Investments, LLC
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$
|
295,309
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State Street Bank & Trust Co.
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$
|
219,000
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|
|
|
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Retirement 2040 Fund
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State Street Bank & Trust Co.
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$
|
114,000
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|
|
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Retirement 2050 Fund
|
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State Street Bank & Trust Co.
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$
|
134,000
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|
|
|
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Retirement Income Fund
|
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Wells Fargo Investments, LLC
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$
|
792,411
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|
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|
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State Street Bank & Trust Co.
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$
|
139,000
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|
|
|
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|
|
|
|
|
|
Short Duration High Income Fund
|
|
State Street Bank & Trust Co.
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$
|
34,425,000
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|
|
|
|
|
|
|
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|
|
Structured Alpha Fund
|
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State Street Bank & Trust Co.
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|
$
|
467,000
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|
|
|
|
|
|
|
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|
|
Ultra Micro Cap Fund
|
|
State Street Bank & Trust Co.
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|
$
|
7,658,000
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|
|
|
|
|
|
|
|
|
|
U.S. Equity-Hedged Fund
|
|
State Street Bank & Trust Co.
|
|
$
|
686,215
|
|
|
|
|
JPMorgan Chase & Co.
|
|
$
|
87,547
|
|
|
|
|
Wells Fargo Investments, LLC
|
|
$
|
86,367
|
|
|
|
|
Bank of America Corp.
|
|
$
|
69,086
|
|
|
|
|
Citigroup, Inc.
|
|
$
|
65,409
|
|
|
|
|
The Goldman Sachs Group, Inc.
|
|
$
|
28,551
|
|
|
|
|
Morgan Stanley
|
|
$
|
17,747
|
|
|
|
|
|
|
|
|
|
|
U.S. Small-Cap Growth Fund
|
|
State Street Bank & Trust Co.
|
|
$
|
1,305,000
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
$
|
236,407,663
|
|
119
|
|
|
|
|
*
|
|
“Regular Broker-Dealers” are defined by the SEC as: (a) one of the 10 brokers or dealers that
received the greatest dollar amount of brokerage commissions by virtue of direct or indirect
participation in the company’s portfolio transactions during the company’s most recent fiscal
year; (b) one of the 10 brokers or dealers that engaged as principal in the largest dollar
amount of portfolio transactions of the investment company during the company’s most recent
fiscal year; or (c) one of the 10 brokers or dealers that sold the largest dollar amount of
securities of the investment company during the company’s most recent fiscal year.
|
Portfolio Turnover
The selling of the securities held by a Fund and reinvestment of the proceeds is known as
“portfolio turnover.” The Sub-Adviser manages the Funds without regard generally to restrictions on
portfolio turnover. The use of futures contracts and other derivative instruments with relatively
short maturities may tend to exaggerate the portfolio turnover rate for some of the Funds. Trading
in fixed income securities does not generally involve the payment of brokerage commissions, but
does involve indirect transaction costs. The use of futures contracts may involve the payment of
commissions to futures commission merchants. Higher portfolio turnover involves correspondingly
greater expenses to a Fund, including brokerage commissions or dealer mark-ups and other
transaction costs on the sale of securities and reinvestments in other securities. The higher the
rate of portfolio turnover of a Fund, the higher these transaction costs borne by the Fund
generally will be. Such sales may result in realization of taxable capital gains (including
short-term capital gains, which are generally taxed to shareholders at ordinary income tax rates
when distributed net of short-term capital losses and net long-term capital losses), and may
adversely impact a Fund’s after-tax returns. See “Taxation.”
The portfolio turnover rate of a Fund is calculated by dividing (a) the lesser of purchases or
sales of portfolio securities for the particular fiscal year by (b) the monthly average of the
value of the portfolio securities owned by the Fund during the particular fiscal year. In
calculating the rate of portfolio turnover, there is excluded from both (a) and (b) all securities,
including options, whose maturities or expiration dates at the time of acquisition were one year or
less. Proceeds from short sales and assets used to cover short positions undertaken are included in
the amounts of securities sold and purchased, respectively, during the year.
The Target Funds, Multi-Asset Funds and the Global Fundamental Strategy Fund indirectly bear
the expenses associated with the portfolio turnover of the Underlying Funds, which may have higher
portfolio turnover rates than those Funds.
Portfolio turnover rates, if available, for each Fund for which financial highlights are
available are provided under “Financial Highlights” in the applicable Prospectus.
With respect to the AllianzGI Global Growth Allocation Fund, the portfolio turnover rate
increased from 51% for fiscal year 2012 to 101% for fiscal year 2013. The increase in portfolio
turnover is partly due to adding a secondary benchmark and an increase of active allocation trades
based on managing exposure to duration-related risks. With respect to the AllianzGI NFJ
International Small-Cap Value Fund, the portfolio turnover rate increased from 19% for fiscal year
2012 to 50% for fiscal year 2013. The Fund’s initial fiscal year was brief, as the Fund’s inception
date is June 5, 2012. This increase in portfolio turnover rate can be attributed to the short time
during which the Fund operated in 2012 compared to its full year in 2013.
NET ASSET VALUE
As described in the Prospectuses under the heading “How Fund Shares are Priced,” the net asset
value per share (“NAV”) of a Fund’s shares of a particular class is determined by dividing the
total value of a Fund’s portfolio investments and other assets attributable to that class, less any
liabilities, by the total number of shares outstanding of that class. The Prospectuses further
notes that Fund shares are valued on each day that the New York Stock Exchange is open (a “Business
Day”), and describe the time (the “Valuation Time”) as of which Fund shares are valued each
Business Day. The Trust expects that the holidays upon which the New York Stock Exchange will be
closed are as follows: New Year’s Day, Martin Luther King, Jr. Day, Presidents’ Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.
Each Fund’s liabilities are allocated among its classes. The total of such liabilities
allocated to a class plus that class’s distribution and/or servicing fees and any other expenses
specially allocated to that class are then deducted from the class’s proportionate interest in the
Fund’s assets, and the resulting amount for each class is divided by the number of shares of that
class outstanding to produce the class’s NAV. Under certain circumstances, NAV of classes of shares
of the Funds with higher service and/or distribution fees may be lower than NAV of the classes of
shares with lower or no service and/or distribution fees as a result of the relative daily expense
accruals that result from paying different service and/or distribution fees. Generally, for Funds
that pay income dividends, those dividends are expected to differ over time by approximately the
amount of the expense accrual differential between a particular Fund’s
120
classes. In accordance with
regulations governing registered investment companies, a Fund’s transactions in portfolio
securities and purchases and sales of Fund shares (which bear upon the number of Fund shares
outstanding) are generally not reflected in NAV determined for the Business Day on which the
transactions are effected (the trade date), but rather on the following Business Day.
The Board has adopted procedures for valuing portfolio securities and other financial
derivative instruments in circumstances where market quotes are not readily available, and has
delegated the responsibility for applying the valuation methods to the Allianz Global Fund
Management and the Sub-Advisers. The Trust’s Valuation Committee was established by the Board to
oversee the implementation of the Funds’ valuation methods and to make fair value determinations on
behalf of the Board, as instructed. Each Sub-Adviser monitors the continued appropriateness of
methods applied and determines if adjustments should be made in light of market changes, events
affecting the issuer, or other factors. If the Sub-Advisers determine that a valuation method may
no longer be appropriate, another valuation method may be selected, or the Valuation Committee will
be convened to consider the matter and take any appropriate action in accordance with procedures
set forth by the Board. The Board shall review the appropriateness of the valuation methods and
these methods may be amended or supplemented from time to time by the Valuation Committee.
As described in the Prospectuses, for purposes of calculating NAV, the Funds’ investments for
which market quotations are readily available are valued at market value. The following summarizes
the methods used by the Funds to determine market values for the noted types of securities or
instruments (although other appropriate market-based methods may be used at any time or from time
to time):
Equity securities are generally valued at the official closing price or the last sale price on
the exchange or over-the-counter market that is the primary market for such securities. If no sales
or closing prices are reported during the day, equity securities are generally valued at the mean
of the last available bid and asked quotations on the exchange or market on which the security is
primarily traded, or using other market information obtained from a quotation reporting system,
established market makers, or pricing services.
Debt securities are generally valued using quotes obtained from pricing services or brokers or
dealers.
Futures contracts are generally valued at the settlement price determined by the exchange on
which the instrument is primarily traded or, if there were no trades that day for a particular
instrument, at the mean of the last available bid and asked quotations on the market in which the
instrument is primarily traded.
Exchange-traded options are generally valued at the last sale or official closing price on the
exchange on which they are primarily traded, or at the mean of the last available bid and asked
quotations on the exchange on which they are primarily traded for options for which there were no
sales or closing prices reported during the day. Over-the-counter options not traded on an exchange
are valued at a broker-dealer bid quotation.
Swap agreements are generally valued using a broker-dealer bid quotation or on market-based
prices provided by other pricing sources. The market value of a derivative instrument is not based
on its notional value.
With respect to certain foreign securities, the Funds may fair-value securities using modeling
tools provided by third-party vendors. The Funds have retained a statistical research service to
assist in determining the fair value of foreign securities. This service utilizes statistics and
programs based on historical performance of markets and other economic data to assist in making
fair value estimates.
Portfolio securities and other assets initially valued in currencies other than the U.S.
Dollar are converted to U.S. Dollars using exchange rates obtained from pricing services.
Short-term investments having a maturity of 60 days or less are generally valued at amortized
cost.
As described in the Prospectuses, if market quotations are not readily available (including in
cases where available market quotations are deemed to be unreliable), the Funds’ investments will
be valued as determined in good faith pursuant to the Valuation Procedures (so-called “fair value
pricing”). Fair value pricing may require subjective determinations about the value of a security
or other asset, and fair values used to determine the NAV of each share class of a Fund may differ
from quoted or published prices, or from prices that are used by others, for the same investments.
In addition, the use of fair value pricing may not always result in adjustments to the prices of
securities or other assets held by a Fund. The Prospectuses provide additional information
regarding the circumstances in which fair value pricing may be used and related information.
TAXATION
The following discussion of U.S. federal income tax consequences of investment in the Funds is
based on the Code, U.S. Treasury regulations, and other applicable authority, as of the date of
this Statement of Additional Information. These authorities are subject to change by legislative or
administrative action, possibly with retroactive effect. The following discussion is only a summary
of some of
121
the important U.S. federal income tax considerations generally applicable to investments
in the Funds. There may be other tax considerations applicable to particular shareholders.
Shareholders should consult their own tax advisors regarding their particular situation and the
possible application of federal, state, local or non-U.S. tax laws.
Taxation of the Funds
Each Fund has elected (or, in the case of a new Fund, intends to elect) to be treated and intends
to qualify and be treated each year as a regulated investment company under Subchapter M of the
Code. In order to qualify for the special tax treatment accorded regulated investment companies and
their shareholders, each Fund generally must, among other things:
(a) derive at least 90% of its gross income for each taxable year from (i) dividends, interest,
payments with respect to certain securities loans, and gains from the sale or other disposition
of stock, securities or foreign currencies, or other income (including but not limited to gains
from options, futures, or forward contracts) derived with respect to its business of investing in
such stock, securities, or currencies, and (ii) net income from interests in “qualified publicly
traded partnerships” (as defined below);
(b) diversify its holdings so that, at the end of each quarter of the Fund’s taxable year, (i) at
least 50% of the value of the Fund’s total assets is represented by cash and cash items, U.S.
Government securities, securities of other regulated investment companies, and other securities
limited in respect of any one issuer to a value not greater than 5% of the value of the Fund’s
total assets and not more than 10% of the outstanding voting securities of such issuer, and (ii)
not more than 25% of the value of the Fund’s total assets is invested (x) in the securities
(other than those of the U.S. Government or other regulated investment companies) of any one
issuer or of two or more issuers that the Fund controls and that are engaged in the same,
similar, or related trades or businesses, or (y) in the securities of one or more qualified
publicly traded partnerships (as defined below); and
(c) distribute with respect to each taxable year at least 90% of the sum of its investment
company taxable income (as that term is defined in the Code without regard to the deduction for
dividends paid—generally, taxable ordinary income and the excess, if any, of net short-term
capital gains over net long-term capital losses) and any net tax-exempt interest income, for such
year.
In general, for purposes of the 90% gross income requirement described in paragraph (a) above,
income derived from a partnership will be treated as qualifying income only to the extent such
income is attributable to items of income of the partnership that would be qualifying income if
realized directly by the regulated investment company. However, 100% of the net income derived from
an interest in a “qualified publicly traded partnership” (a partnership (x) the interests in which
are traded on an established securities market or are readily tradable on a secondary market or the
substantial equivalent thereof, and (y) that derives less than 90% of its income from the
qualifying income described in paragraph (a)(i) above) will be treated as qualifying income. In
general, such entities will be treated as partnerships for federal income tax purposes because they
meet the passive income requirement under Code section 7704(c)(2). In addition, although in general
the passive loss rules of the Code do not apply to regulated investment companies, such rules do
apply to a regulated investment company with respect to items attributable to an interest in a
qualified publicly traded partnership. For purposes of the diversification test in (b) above, the
term “outstanding voting securities of such issuer” will include the equity securities of a
qualified publicly traded partnership. Also, for purposes of the diversification test in (b) above,
the identification of the issuer (or, in some cases, issuers) of a particular Fund investment can
depend on the terms and conditions of that investment. In some cases, identification of the issuer
(or issuers) is uncertain under current law, and an adverse determination or future guidance by the
Internal Revenue Service (“IRS”) with respect to issuer identification for a particular type of
investment may adversely affect the Fund’s ability to meet the diversification test in (b) above.
If a Fund qualifies as a regulated investment company that is accorded special tax treatment, the
Fund will not be subject to U.S. federal income tax on income distributed in a timely manner to its
shareholders in the form of dividends (including Capital Gain Dividends, as defined below). If a
Fund were to fail to meet the income, diversification or distribution tests described above, the
Fund could in some cases cure such failure, including by paying a Fund-level tax, paying interest,
making additional distributions or disposing of certain assets. If the Fund were ineligible to or
otherwise did not cure such failure for any year, or if the Fund were otherwise to fail to qualify
as a regulated investment company accorded special tax treatment for such year, the Fund would be
subject to tax on its taxable income at corporate rates, and all distributions from earnings and
profits, including any distributions of net tax-exempt income and net long-term capital gains,
would be taxable to shareholders as ordinary income. Some portions of such distributions could be
eligible for the dividends-received deduction in the case of corporate shareholders and may be
eligible to be treated as “qualified dividend income” in the case of shareholders taxed as
individuals, provided, in both cases, that the shareholder meets certain holding period and other
requirements in respect of the Fund’s shares (as described below). In addition, the Fund could be
required to recognize unrealized gains, pay substantial taxes and interest and make substantial
distributions before re-qualifying as a regulated investment company that is accorded special tax
treatment.
As a regulated investment company, each Fund generally will not be subject to U.S. federal income
tax on its investment company taxable income and net capital gains (that is, any net long-term
capital gains in excess of the sum of net short-term capital losses, in each case determined with
reference to any capital loss carryovers from prior years) properly reported by the Fund as capital
gain
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dividends (“Capital Gain Dividends”), if any, that it distributes to shareholders on a timely
basis. Each Fund intends to distribute to its shareholders, at least annually, substantially all of
its investment company taxable income (computed without regard to the dividends-paid deduction),
its net tax-exempt income and any net capital gains. Investment company taxable income that is
retained by a Fund will be subject to tax at regular corporate rates. A Fund may also retain for
investment its net capital gain. If a Fund retains any net capital gain, it will be subject to tax
at the regular corporate rates on the amount retained, but it may designate the retained amount as
undistributed capital gains in a notice mailed within 60 days of the close of the Fund’s taxable
year to its shareholders who, in turn, (i) will be required to include in income for U.S. federal
income tax purposes, as long-term capital gain, their shares of such undistributed amount, and (ii)
will be entitled to credit their proportionate shares of the tax paid by the Fund on such
undistributed amount against their U.S. federal income tax liabilities, if any, and to claim
refunds on properly-filed U.S. tax returns to the extent the credit exceeds such liabilities. If a
Fund makes this designation, for U.S. federal income tax purposes, the tax basis of shares owned by
a shareholder of a Fund will be increased by an amount equal under current law to the difference
between the amount of undistributed capital gains included in the shareholder’s gross income, under
clause (i) of the preceding sentence, and the tax deemed paid by the shareholder under clause (ii)
of the preceding sentence. A Fund is not required to, and there can be no assurance that a Fund
will, make this designation if it retains all or a portion of its net capital gain in a taxable
year.
In determining its net capital gain, including in connection with determining the amount available
to support a capital gain dividend, its taxable income and its earnings and profits, a Fund may
elect to treat any post-October capital loss (defined as the greatest of net capital loss, net
long-term capital loss, or net short-term capital loss, in each case attributable to the portion of
the taxable year after October 31 (or a later date, if the Fund is eligible to elect and so
elects)) and late-year ordinary loss (generally, (i) net ordinary losses from the sale, exchange or
other taxable disposition of property, attributable to the portion of the taxable year after
October 31 (or a later date, if the Fund makes the election referred to above), plus (ii) other net
ordinary losses attributable to the portion of the taxable year after December 31) as if incurred
in the succeeding taxable year.
If a Fund fails to distribute in a calendar year at least an amount equal to the sum of 98% of its
ordinary income for such year and 98.2% of its capital gain net income for the one-year period
ending on October 31 of such year (or a later date, if the Fund makes the election referred to
above), plus any retained amount for the prior year, the Fund will be subject to a nondeductible 4%
excise tax on the undistributed amounts. For these purposes, ordinary gains and losses from the
sale, exchange or other taxable disposition of property that would be properly taken into account
after October 31 (or a later date, if the Fund makes the election referred to above) are treated as
arising on January 1 of the following calendar year. For purposes of the excise tax, a Fund will be
treated as having distributed any amount on which it has been subject to corporate income tax in
the taxable year ending within the calendar year. A dividend paid to shareholders in January of a
year generally is deemed to have been paid on December 31 of the preceding year, if the dividend is
declared and payable to shareholders of record on a date in October, November or December of that
preceding year. The Funds intend generally to make distributions sufficient to avoid imposition of
the 4% excise tax, although there can be no assurance that they will be able to do so.
Fund Distributions
Shareholders subject to U.S. federal income tax will be subject to tax on dividends received from a
Fund, regardless of whether received in cash or reinvested in additional shares. Such distributions
generally will be taxable to shareholders in the calendar year in which the distributions are
declared, rather than the calendar year in which the distributions are received. Distributions
received by tax-exempt shareholders generally will not be subject to U.S. federal income tax to the
extent permitted under applicable tax law.
For U.S. federal income tax purposes, distributions of investment income generally are taxable to
shareholders as ordinary income. Taxes to shareholders on distributions of capital gains are
determined by how long a Fund owned (and is treated for U.S. federal income tax purposes as having
owned) the investments that generated them, rather than how long a shareholder has owned his or her
shares. In general, the Fund will recognize long-term capital gain or loss on investments it has
owned (or is deemed to have owned) for more than one year, and short-term capital gain or loss on
investments it has owned (or is deemed to have owned) for one year or less. Tax rules can alter the
Fund’s holding period in investments and thereby affect the tax treatment of gain or loss on such
investments. Distributions of Capital Gain Dividends generally will be taxable to shareholders as
long-term capital gains includible in net capital gain and taxed to individuals at reduced rates.
Distributions of short-term capital gains (as reduced by any long-term capital loss for the taxable
year) will be taxable to shareholders as ordinary income.
As required by federal law, detailed federal tax information with respect to each calendar year
will be furnished to each shareholder early in the succeeding year.
The ultimate tax characterization of a Fund’s distributions made in a taxable year cannot finally
be determined until after the end of that taxable year. As a result, there is a possibility that a
Fund may make total distributions during a taxable year in an amount that exceeds the Fund’s
“current and accumulated earnings and profits” (generally, the net investment income and net
capital gains of the Fund with respect to that year), in which case the excess generally will be
treated as a return of capital, which will be tax-free to the holders of the shares, up to the
amount of the shareholder’s tax basis in the applicable shares, with any amounts exceeding such
basis treated as gain from the sale of such shares.
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To the extent that a Fund has capital loss carryforwards from prior tax years, those carryforwards
will reduce the net capital gains that can support the Fund’s distribution of Capital Gain
Dividends. If the Fund uses net capital losses incurred in taxable years beginning on or before
December 22, 2010 (pre-2011 losses), those carryforwards will not reduce the Fund’s current
earnings and profits, as losses incurred in later years will. As a result, if that Fund then makes
distributions of capital gains recognized during the current year in excess of net capital gains
(as reduced by carryforwards), the portion of the excess equal to pre-2011 losses factoring into
net capital gain will be taxable as an ordinary dividend distribution, even though that distributed
excess amount would not have been subject to tax if retained by the Fund. Capital loss
carryforwards are reduced to the extent they offset current-year net realized capital gains,
whether the Fund retains or distributes such gains.
If a Fund incurs or has incurred net capital losses in taxable years beginning after December 22,
2010 (“post-2010 losses”), those losses will be carried forward to one or more subsequent taxable
years without expiration; any such carryforward losses will retain their character as short-term or
long-term. If a Fund incurred pre-2011 losses, the Fund is permitted to carry such losses forward
for eight taxable years; in the year to which they are carried forward, such losses are treated as
short-term capital losses that first offset any short-term capital gains, and then offset any
long-term capital gains. A Fund must use any post-2010 losses, which will not expire, before it
uses any pre-2011 losses. This increases the likelihood that pre-2011 losses will expire unused at
the conclusion of the eight-year carryforward period.
“Qualified dividend income” received by an individual will be taxed at the rates applicable to
long-term capital gain. In order for some portion of the dividends received by a Fund shareholder
to be qualified dividend income, the Fund must meet holding period and other requirements with
respect to some portion of the dividend-paying stocks in its portfolio and the shareholder must
meet holding period and other requirements with respect to the Fund’s shares. A dividend will not
be treated as qualified dividend income (at either the Fund or shareholder level) (1) if the
dividend is received with respect to any share of stock held for fewer than 61 days during the
121-day period beginning on the date that is 60 days before the date on which such share becomes
ex-dividend with respect to such dividend (or, in the case of certain preferred stock, 91 days
during the 181-day period beginning 90 days before such date), (2) to the extent that the recipient
is under an obligation (whether pursuant to a short sale or otherwise) to make related payments
with respect to positions in substantially similar or related property, (3) if the recipient elects
to have the dividend income treated as investment income for purposes of the limitation on
deductibility of investment interest, or (4) if the dividend is received from a foreign corporation
that is (a) not eligible for the benefits of a comprehensive income tax treaty with the United
States (with the exception of dividends paid on stock of such a foreign corporation readily
tradable on an established securities market in the United States) or (b) treated as a PFIC.
In general, distributions of investment income reported by a Fund as derived from qualified
dividend income will be treated as qualified dividend income by a shareholder taxed as an
individual, provided both the shareholder and the Fund meet the holding period and other
requirements described above. If the aggregate qualified dividends received by a Fund during any
taxable year are 95% or more of its gross income (excluding net long-term capital gain over net
short-term capital loss), then 100% of the Fund’s dividends (other than Capital Gain Dividends)
will be eligible to be treated as qualified dividend income.
If a Fund, such as one of the Target Funds or the Multi-Asset Funds, or the Global Fundamental
Strategy Fund receives dividends from an Underlying Fund or Other Acquired Fund that qualifies as a
regulated investment company (each, an “Underlying RIC”), and the Underlying RIC reports such
dividends as qualified dividend income, or if a Fund is allocated qualified dividend income from an
Underlying Fund or Other Acquired Fund or a private equity fund or hedge fund that is treated as a
partnership for U.S. federal income tax purposes (see “Funds Treated as Partnerships” below), then
the Fund is permitted in turn to report a portion of its distributions as qualified dividend
income, provided, in the case of an Underlying RIC, that the Fund meets holding period and other
requirements with respect to shares of the Underlying RIC.
In general, dividends of net investment income received by corporate shareholders of a Fund will
qualify for the 70% dividends-received deduction generally available to corporations to the extent
of the amount of eligible dividends received by the Fund from domestic corporations for the taxable
year. A dividend received by a Fund will not be treated as a dividend eligible for the
dividends-received deduction (1) if it has been received with respect to any share of stock that
the Fund has held for less than 46 days (91 days in the case of certain preferred stock) during the
91-day period beginning on the date which is 45 days before the date on which such share becomes
ex-dividend with respect to such dividend (during the 181-day period beginning 90 days before such
date in the case of certain preferred stock) or (2) to the extent that the Fund is under an
obligation (pursuant to a short sale or otherwise) to make related payments with respect to
positions in substantially similar or related property. Moreover, the dividends-received deduction
may otherwise be disallowed or reduced (1) if the corporate shareholder fails to satisfy the
foregoing requirements with respect to its shares of the Fund or (2) by application of various
provisions of the Code (for instance, the dividends-received deduction is reduced in the case of a
dividend received on debt-financed portfolio stock (generally, stock acquired with borrowed
funds)).
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Any distribution of income that is attributable to (i) income received by a Fund in lieu of
dividends with respect to securities on loan pursuant to a securities lending transaction or (ii)
dividend income received by such Fund on securities it temporarily purchased from a counterparty
pursuant to a repurchase agreement that is treated for U.S. federal income tax purposes as a loan
by the Fund will not constitute qualified dividend income to individual shareholders and will not
be eligible for the dividends-received deduction for corporate shareholders.
If a Fund, such as one of the Target Funds or Multi-Asset Funds, or the Global Fundamental Strategy
Fund receives dividends from an Underlying RIC, and the Underlying RIC reports such dividends as
eligible for the dividends-received deduction, or if a Fund is allocated such dividends from an
Underlying Fund or Other Acquired Fund or a private equity fund or hedge fund that is treated as a
partnership for U.S. federal income tax purposes (see “Funds Treated as Partnerships” below),then
the Fund is permitted in turn to report its distributions derived from those dividends as eligible
for the dividends-received deduction as well, provided, in the case of an Underlying RIC, that the
Fund meets holding period and other requirements with respect to shares of the Underlying RIC.
A Fund’s investment in Underlying RICs can affect the amount, timing and character of distributions
to shareholders of such Fund, relative to what those distributions otherwise might have been had
the Fund invested directly in the securities owned by those Underlying RICs. For example, a Fund,
such as one of the Target Funds or Multi-Asset Funds, or the Global Fundamental Strategy Fund, will
not be able to offset losses realized by one Underlying RIC against gains realized by another
Underlying RIC in that taxable year. Instead, those losses will reduce the taxable income or gains
of the Fund only at the earlier of (i) such time as they reduce gains recognized by the Underlying
RIC that previously recognized the losses, or (ii) when the Fund disposes of shares of the
Underlying RIC that recognized the losses. Moreover, even when such a Fund disposes of shares of an
Underlying RIC, it will not be able to offset any capital loss from such disposition against its
ordinary income (including distributions of any net short-term capital gain realized by another
Underlying RIC), and part or all of such loss may be treated as a long-term capital loss, that will
not be treated as favorably for federal income tax purposes as short-term capital loss. If an
Underlying RIC were to cease to qualify as a RIC, the value of a Fund’s investment in such
Underlying RIC would be negatively affected.
In addition, in certain circumstances, the “wash sale” rules under Section 1091 of the Code may
apply to a Fund’s sales of Underlying RIC shares that have generated losses. A wash sale occurs if
shares of an Underlying RIC are sold by a Fund at a loss and the Fund acquires additional shares of
that same Underlying RIC 30 days before or after the date of the sale. The wash-sale rules could
defer losses in the Fund’s hands on sales of Underlying RIC shares (to the extent such sales are
wash sales) for extended (and, in certain cases, potentially indefinite) periods of time.
As a result of the foregoing rules, and certain other special rules, it is possible that the
amounts of net investment income and net capital gains that a Fund, such as one of the Target Funds
or Multi-Asset Funds, or the Global Fundamental Strategy Fund, will be required to distribute to
shareholders will be greater than such amounts would have been had the Fund invested directly in
the securities held by Underlying RICs, rather than investing in shares of the Underlying RICs. For
similar reasons, the amount and timing of distributions from a Fund qualifying for treatment as a
particular character (e.g., long-term capital gain, eligibility for dividends-received deduction,
etc.) will not necessarily be the same as it would have been had the Fund invested directly in the
securities held by the Underlying RICs.
Section 1411 of the Code generally imposes a 3.8% Medicare contribution tax on the net investment
income of certain individuals whose income exceeds certain threshold amounts, and of certain trusts
and estates under similar rules. For these purposes, “net investment income” generally includes,
among other things, (i) distributions paid by a Fund of net investment income and capital gains as
described above, and (ii) any net gain from the sale, redemption or exchange of Fund shares.
Shareholders are advised to consult their tax advisors regarding the possible implications of this
additional tax on their investment in a Fund.
Taxable shareholders should note that the timing of their investment or redemptions could have
undesirable tax consequences. Dividends and distributions on shares of a Fund are generally subject
to U.S. federal income tax as described herein to the extent they do not exceed the Fund’s realized
income and gains (“current and accumulated earnings and profits”), even though such dividends and
distributions may economically represent a return of a particular shareholder’s investment. Such
distributions are likely to occur in respect of shares purchased at a time when the net asset value
of a Fund reflects either unrealized gains, or realized undistributed income or gains, that were
therefore included in the price the shareholder paid. Such realized income or gains may be required
to be distributed regardless of whether a Fund’s net asset value also reflects unrealized losses.
Such distributions may reduce the fair market value of the Fund’s shares below the shareholder’s
cost basis in those shares.
If a Fund holds, directly or indirectly, one or more “tax credit bonds” (including Build America
Bonds issued before January 1, 2011) on one or more applicable dates during a taxable year, it is
possible that the Fund will elect to permit its shareholders to claim a tax credit on their income
tax returns equal to each shareholder’s proportionate share of tax credits from the applicable
bonds that otherwise would be allowed to the Fund. In such a case, a shareholder will be deemed to
receive a distribution of money with respect to its Fund shares equal to the shareholder’s
proportionate share of the amount of such credits and be allowed a credit against the shareholder’s
U.S. federal income tax liability equal to the amount of such deemed distribution, subject to
certain limitations imposed by the Code on the credits involved. Even if a Fund is eligible to
pass through tax credits to shareholders, the Fund may choose not to do so.
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Sale, Exchange or Redemption of Shares
The sale, exchange or redemption of shares of a Fund may give rise to a gain or loss. In general,
any gain or loss realized upon a taxable disposition of shares will be treated as long-term capital
gain or loss if the shares have been held for more than 12 months. Otherwise, the gain or loss on
the taxable disposition of shares will be treated as short-term capital gain or loss. However, any
loss realized upon a taxable disposition of shares held for six months or less will be treated as
long-term, rather than short-term, to the extent of any Capital Gain Dividends received (or deemed
received) by the shareholder with respect to those shares. All or a portion of any loss realized
upon a taxable disposition of shares will be disallowed under the Code’s “wash-sale” rule if other
substantially identical shares of the Fund are purchased within 30 days before or after the
disposition. In such a case, the basis of the newly purchased shares will be adjusted to reflect
the disallowed loss.
Upon the sale, exchange or redemption of Fund shares, the Fund or, in the case of shares purchased
through a financial intermediary, the financial intermediary may be required to provide you and the
IRS with cost basis and certain other related tax information about the Fund shares you sold,
exchanged or redeemed. See “Cost Basis Reporting” in the Fund’s applicable Prospectus for more
information.
Options, Futures, Forward Contracts, Swap Agreements, Hedges, Straddles and Other Transactions
In general, option premiums received by a Fund are not immediately included in the income of the
Fund. Instead, the premiums are recognized (i) when the option contract expires, (ii) the option is
exercised by the holder, or (iii) the Fund transfers or otherwise terminates the option (e.g.,
through a closing transaction). If a call option written by a Fund is exercised and the Fund sells
or delivers the underlying stock, the Fund generally will recognize capital gain or loss equal to
(a) the sum of the strike price and the option premium received by the Fund minus (b) the Fund’s
basis in the stock. Such gain or loss generally will be short-term or long-term depending upon the
holding period of the underlying stock. If securities are purchased by a Fund pursuant to the
exercise of a put option written by it, the Fund generally will subtract the premium received for
purposes of computing its cost basis in the securities purchased. Gain or loss arising in respect
of a termination of the Fund’s obligation under an option other than through the exercise of the
option will be short-term gain or loss depending on whether the premium income received by the Fund
is greater or less than the amount paid by the Fund (if any) in terminating the transaction. Thus,
for example, if an option written by a Fund expires unexercised, the Fund generally will recognize
short-term gain equal to the premium received. As a result of these and other special tax rules
generally applicable to the Funds’ options transactions, if any, such transactions could cause a
substantial portion of a Fund’s income to consist of net short-term capital gains, which, when
distributed, are treated and taxable to shareholders as ordinary income.
Certain covered call writing activities of a Fund may trigger the U.S. federal income tax straddle
rules contained primarily in Section 1092 of the Code. Very generally, where applicable, Section
1092 requires (i) that losses be deferred on positions deemed to be offsetting positions with
respect to “substantially similar or related property,” to the extent of unrealized gain in the
latter, and (ii) that the holding period of such a straddle position that has not already been held
for the long-term holding period be terminated and begin anew once the position is no longer part
of a straddle. Options on single stocks that are not “deep in the money” may constitute qualified
covered calls, which generally are not subject to the straddle rules; the holding period on stock
underlying qualified covered calls that are “in the money” although not “deep in the money” will be
suspended during the period that such calls are outstanding. Thus, the straddle rules and the rules
governing qualified covered calls could cause gains that would otherwise constitute long-term
capital gains to be treated as short-term capital gains, and distributions that would otherwise
constitute “qualified dividend income” or qualify for the dividends-received deduction to fail to
satisfy the holding period requirements and therefore to be taxed as ordinary income or fail to
qualify for the 70% dividends-received deduction, as the case may be.
The tax treatment of certain positions entered into by a Fund, including regulated futures
contracts, certain foreign currency positions and certain listed non-equity options, will be
governed by section 1256 of the Code (“Section 1256 Contracts”). Gains or losses on Section 1256
Contracts generally are considered 60% long-term and 40% short-term capital gains or losses
(“60/40”), although certain foreign currency gains and losses from such contracts may be treated as
ordinary in character. Also, Section 1256 Contracts held by a Fund at the end of each taxable year
(and, for purposes of the 4% excise tax, on certain other dates as prescribed under the Code) are
“marked to market” with the result that unrealized gains or losses are treated as though they were
realized and the resulting gain or loss is treated as ordinary or 60/40 gain or loss, as
applicable.
In addition to the special rules described above in respect of futures and options transactions, a
Fund’s transactions in other derivative instruments (
e.g.
forward contracts and swap agreements),
as well as any of its other hedging, short sale, securities loan or similar transactions, may be
subject to one or more special tax rules (including mark-to-market, constructive sale, notional
principal contract, straddle, wash sale and short sale rules). These rules may affect whether gains
and losses recognized by a Fund are treated as ordinary or capital or as short-term or long-term,
accelerate the recognition of income or gains to a Fund, defer losses to a Fund, and cause
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adjustments in the holding periods of a Fund’s securities. These rules, therefore, could affect the
amount, timing and/or character of distributions to shareholders. Because these and other tax rules
applicable to these types of transactions are in some cases uncertain under current law, an adverse
determination or future guidance by the IRS with respect to these rules (which determination or
guidance could be retroactive) may affect whether a Fund has made sufficient distributions, and
otherwise satisfied the relevant requirements, to maintain its qualification as a regulated
investment company and avoid a Fund-level tax. Each Fund will monitor its transactions, will make
appropriate tax elections and will make appropriate entries in its books and records in order to
mitigate the effect of these rules.
A Fund’s direct investments in commodities and use of commodity-linked derivatives can be limited
by the Fund’s intention to qualify as a regulated investment company, and can bear on the Fund’s
ability to so qualify. Income and gains from commodities and certain commodity-linked derivatives
does not constitute qualifying income to a regulated investment company for purposes of the 90%
gross income test described above. The tax treatment of certain other commodity-linked instruments
in which the Fund might invest, including ETNs and certain structured notes, is not certain, in
particular with respect to whether income or gains from such instruments constitute qualifying
income to a regulated investment company. If a Fund were to treat income or gain from a particular
instrument as qualifying income and the income or gain were later determined not to constitute
qualifying income and, together with any other nonqualifying income, caused the Fund’s
nonqualifying income to exceed 10% of its gross income in any taxable year, the Fund would fail to
qualify as a regulated investment company unless it is eligible to and does pay a tax at the Fund
level.
To the extent that, in order to achieve exposure to commodities, a Fund invests in entities that
are treated as pass-through vehicles for U.S. federal income tax purposes, including, for instance,
certain ETFs (e.g., ETFs investing in gold bullion) and partnerships other than qualified publicly
traded partnerships (as defined earlier), all or a portion of any income and gains from such
entities could constitute non-qualifying income to the fund for purposes of the 90% gross income
requirement described above. In such a case, the Fund’s investments in such entities could be
limited by its intention to qualify as a regulated investment company and could bear on its ability
to so qualify. Certain commodities-related ETFs may qualify as qualified publicly traded
partnerships. In such cases, the net income derived from such investments will constitute
qualifying income for purposes of the 90% gross income requirement. If, however, such a vehicle
were to fail to qualify as a qualified publicly traded partnership in a particular year, a portion
of the gross income derived from it in such year could constitute non-qualifying income to the fund
for purposes of the 90% gross income requirement and thus could adversely affect the Fund’s ability
to qualify as a regulated investment company for a particular year. In addition, the
diversification requirement described above for regulated investment company qualification will
limit the fund’s investments in one or more vehicles that are qualified publicly traded
partnerships to 25% of the Fund’s total assets as of the close of each quarter of the fund’s
taxable year.
Certain of a Fund’s investments in derivative instruments and in foreign-currency denominated
instruments, and any of the Fund’s transactions in foreign currencies and hedging activities, are
likely to produce a difference between the Fund’s book income and the sum of its taxable income and
net tax-exempt income (if any). If a Fund’s book income is less than the sum of its taxable income
and net tax-exempt income (if any), the Fund could be required to make distributions exceeding book
income to qualify as a regulated investment company that is accorded special tax treatment and to
avoid a Fund-level tax. If, in the alternative, a Fund’s book income exceeds the sum of its taxable
income (including realized capital gains) and net tax-exempt income (if any), the distribution (if
any) of such excess will be treated as (i) a dividend to the extent of the Fund’s remaining
earnings and profits (including earnings and profits arising from tax-exempt income), (ii)
thereafter, as a return of capital to the extent of the recipient’s basis in its shares, and (iii)
thereafter, as gain from the sale or exchange of a capital asset.
Short Sales
To the extent a Fund participates in short sales by contracting for the sale of stock it does not
own and later purchasing stock necessary to close the sale, the character of the gain or loss
realized on such a short sale is determined by reference to the property used to close the short
sale and is thus generally short-term. Because net short-term capital gain (after reduction by any
long-term capital loss) is generally taxed at ordinary income rates, a Fund’s short sale
transactions will likely increase the percentage of the Fund’s gains that are taxable to
shareholders as ordinary income.
Original Issue Discount, Pay-In-Kind Securities, Market Discount and Commodity-Linked Notes
Some debt obligations with a fixed maturity date of more than one year from the date of issuance
(and all zero-coupon debt obligations with a fixed maturity date of more than one year from the
date of issuance) will be treated as debt obligations that are issued originally at a discount.
Generally, the amount of the original issue discount (“OID”) is treated as interest income and is
included in a Fund’s taxable income (and required to be distributed by the Fund) over the term of
the debt obligation, even though payment of that amount is not received until a later time (i.e.,
upon partial or full repayment or disposition of the debt security) or is received in kind rather
than in cash. Increases in the principal amount of inflation-indexed bonds will also be treated as
OID.
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Some debt obligations with a fixed maturity date of more than one year from the date of issuance
that are acquired by a Fund in the secondary market may be treated as having “market discount.”
Very generally, market discount is the excess of the stated redemption price of a debt obligation
(or in the case of an obligation issued with OID, its “revised issue price”) over the purchase
price of such obligation. Generally, any gain recognized on the disposition of, and any partial
payment of principal on, a debt obligation having market discount is treated as ordinary income to
the extent the gain, or principal payment, does not exceed the “accrued market discount” on such
debt obligation. Alternatively, a Fund may elect to accrue market discount currently, in which case
the Fund will be required to include the accrued market discount in the Fund’s income (as ordinary
income) and thus distribute it over the term of the debt security, even though payment of that
amount is not received until a later time, upon partial or full repayment or disposition of the
debt security. The rate at which the market discount accrues, and thus is included in a Fund’s
income, will depend upon which of the permitted accrual methods the Fund elects. In the case of
higher-risk securities, the amount of market discount may be unclear. See “Higher-Risk Securities.”
Some debt obligations with a fixed maturity date of one year or less from the date of issuance may
be treated as having “acquisition discount” (very generally, the excess of the stated redemption
price over the purchase price), or OID in the case of certain types of debt obligations. A Fund
will be required to include the acquisition discount, or OID, in income (as ordinary income) over
the term of the debt obligation, even though payment of that amount is not received until a later
time, upon partial or full repayment or disposition of the debt security. A Fund may make one or
more of the elections applicable to debt obligations having acquisition discount, or OID, which
could affect the character and timing of recognition of income.
In addition, payment-in-kind securities will, and commodity-linked notes may, give rise to income
that is required to be distributed and is taxable even though the Fund holding the security
receives no interest payment in cash on the security during the year.
Each Fund that holds the foregoing kinds of securities may be required to pay out as an income
distribution each year an amount that is greater than the total amount of cash interest the Fund
actually received. Such distributions may be made from the cash assets of a Fund or if necessary by
liquidation of portfolio securities (including when it is not advantageous to do so). A Fund may
realize gains or losses from such liquidations. In the event a Fund realizes net capital gains from
such transactions, its shareholders may receive a larger capital gain distribution than they would
in the absence of such transactions.
Securities Purchased at a Premium
Very generally, where a Fund purchases a bond at a price that exceeds the redemption price at
maturity (i.e., a premium), the premium is amortizable over the remaining term of the bond. In the
case of a taxable bond, if a Fund makes an election applicable to all such bonds it purchases,
which election is irrevocable without consent of the IRS, the Fund reduces the current taxable
income from the bond by the amortized premium and reduces its tax basis in the bond by the amount
of such offset; upon the disposition or maturity of such bonds, the Fund is permitted to deduct any
remaining premium allocable to a prior period. In the case of a tax-exempt bond, tax rules require
such a Fund to reduce its tax basis by the amount of amortized premium.
Higher-Risk Securities
To the extent such investments are permissible for a Fund, the Fund may invest in debt obligations
that are in the lowest rating categories or are unrated, including debt obligations of issuers not
currently paying interest or who are in default. Investments in debt obligations that are at risk
of or in default present special tax issues for a Fund. Tax rules are not entirely clear about
issues such as when a Fund may cease to accrue interest, OID or market discount; whether, when or
to what extent a Fund should recognize market discount on a debt obligation; when and to what
extent deductions may be taken for bad debts or worthless securities; and how payments received on
obligations in default should be allocated between principal and income. These and other related
issues will be addressed by a Fund when, as and if it invests in such securities, in order to seek
to ensure that it distributes sufficient income to preserve its status as a regulated investment
company and does not become subject to U.S. federal income or excise tax.
Issuer Deductibility of Interest
A portion of the interest paid or accrued on certain high yield discount obligations owned by a
Fund may not be deductible to (and thus, may affect the cash flow of) the issuer. If a portion of
the interest paid or accrued on certain high yield discount obligations is not deductible, that
portion will be treated as a dividend for purposes of the corporate dividends-received deduction.
In such cases, if the issuer of the high yield discount obligations is a domestic corporation,
dividend payments by the Fund may be eligible for the dividends-received deduction to the extent of
the deemed dividend portion of such accrued interest.
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Interest paid on debt obligations owned by a Fund, if any, that are considered for U.S. tax
purposes to be payable in the equity of the issuer or a related party will not be deductible to the
issuer, possibly affecting the cash flow of the issuer.
Certain Investments in REITs and Mortgage-Related Securities
To the extent such investments are permissible for a Fund, a Fund may invest in REITs. A Fund’s
investments in REIT equity securities may result in a Fund’s receipt of cash in excess of the
REIT’s earnings; if a Fund distributes such amounts, such distribution could constitute a return of
capital to Fund shareholders for U.S. federal income tax purposes. Investments in REIT equity
securities may also require a Fund to accrue and to distribute income not yet received. To generate
sufficient cash to make the requisite distributions, a Fund may be required to sell securities in
its portfolio (including when it is not advantageous to do so) that it otherwise would have
continued to hold. Dividends received by a Fund from a REIT will not qualify for the corporate
dividends-received deduction and generally will not constitute qualified dividend income.
A Fund may invest directly or indirectly in residual interests of real estate mortgage investment
conduits (“REMICs”) (including by investing in residual interests in collateralized mortgage
securities (“CMOs”) with respect to which an election to be treated as a REMIC is in effect) or
equity interests in taxable mortgage pools (“TMPs”). Under a notice issued by the IRS in October
2006 and Treasury regulations that have yet to be issued but may apply retroactively, a portion of
a Fund’s income (including income allocated to the Fund from a REIT or other pass-through entity)
that is attributable to a residual interest in a REMIC or an equity interest in a TMP (referred to
in the Code as an “excess inclusion”) will be subject to U.S. federal income tax in all events.
This notice also provides, and the regulations are expected to provide, that “excess inclusion
income” of a regulated investment company, such as a Fund, will be allocated to shareholders of the
regulated investment company in proportion to the dividends received by such shareholders, with the
same consequences as if the shareholders held the related interest directly. As a result, a Fund
investing in such interests may not be a suitable investment for charitable remainder trusts, as
noted below.
In general, “excess inclusion income” allocated to shareholders (i) cannot be offset by net
operating losses (subject to a limited exception for certain thrift institutions), (ii) will
constitute unrelated business taxable income (“UBTI”) to entities subject to tax on unrelated
business income (including a qualified pension plan, an individual retirement account, a 401(k)
plan, a Keogh plan or other tax-exempt entity), thereby potentially requiring such an entity that
is allocated excess inclusion income and otherwise might not be required to file a U.S. federal
income tax return, to file such a tax return and pay tax on such income, and (iii) in the case of a
non-U.S. shareholder, will not qualify for any reduction in U.S. federal withholding tax (discussed
below). A shareholder will be subject to U.S. federal income tax on such inclusions notwithstanding
any exemption from such income tax otherwise available under the Code.
Tax-Exempt Shareholders
Income of a regulated investment company that would be UBTI if earned directly by a tax-exempt
entity will not generally be attributed as UBTI to a tax-exempt shareholder of a regulated
investment company. Notwithstanding this “blocking” effect, a tax-exempt shareholder could
recognize UBTI by virtue of its investment in a Fund if shares in the Fund constitute debt-financed
property in the hands of the tax-exempt shareholder within the meaning of Code Section 514(b).
Furthermore, a tax-exempt shareholder may recognize UBTI if a Fund recognizes “excess inclusion
income” derived from direct or indirect investments in residual interests in REMICs or equity
interests in TMPs if the amount of such income recognized by the Fund exceeds the Fund’s investment
company taxable income (after taking into account deductions for dividends paid by the Fund).
In addition, special tax consequences apply to charitable remainder trusts (“CRTs”) that invest in
regulated investment companies that invest directly or indirectly in residual interests in REMICs
or equity interests in TMPs. Under legislation enacted in December 2006, a CRT (as defined in
section 664 of the Code) that realizes any UBTI for a taxable year, must pay an excise tax annually
of an amount equal to such UBTI. Under IRS guidance issued in October 2006, a CRT will not
recognize UBTI solely as a result of investing in a Fund that recognizes “excess inclusion income.”
Rather, if at any time during any taxable year a CRT (or one of certain other tax-exempt
shareholders, such as the United States, a state or political subdivision, or an agency or
instrumentality thereof, and certain energy cooperatives) is a record holder of a share in a Fund
that recognizes “excess inclusion income,” then the regulated investment company will be subject to
a tax on that portion of its “excess inclusion income” for the taxable year that is allocable to
such shareholders at the highest federal corporate income tax rate. The extent to which this IRS
guidance remains applicable in light of the December 2006 legislation is unclear. To the extent
permitted under the 1940 Act, a Fund may elect to specially allocate any such tax to the applicable
CRT, or other shareholder, and thus reduce such shareholder’s distributions for the year by the
amount of the tax that relates to such shareholder’s interest in the Fund. The Funds have not yet
determined whether such an election will be made.
CRTs and other tax-exempt shareholders are urged to consult their tax advisors concerning the
consequences of investing in the Fund.
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Funds Treated as Partnerships
Certain Funds, such as the Target Funds, Multi-Asset Funds or Global Fundamental Strategy Fund, may
invest in Underlying Funds, Other Acquired Funds or private equity and hedge funds that are treated
as partnerships for U.S. federal income tax purposes. In such cases, the character of such a
partnership’s underlying income will pass through to a Fund investing in it on a gross basis
(unreduced by expenses). As a result, a Fund’s investment in certain private equity and hedge funds
and certain Underlying Funds or Other Acquired Funds may be limited by its intention to qualify as
a regulated investment company. A Fund investing in such a partnership generally will be allocated
its share of the income, gains, losses, deductions, credits, and other tax items of the partnership
so as to reflect the Fund’s interest in the partnership. A Fund will be required to include in its
income its share of a partnership’s tax items, including gross income, gain, deduction, or loss,
for any partnership taxable year ending within or with the Fund’s taxable year, regardless of
whether or not the partnership distributes any cash to the Fund in such year.
Passive Foreign Investment Companies
Investments
treated as equity for federal income tax purposes, that a Fund makes in certain “passive foreign investment companies” (“PFICs”) could
potentially subject the Fund to a U.S. federal income tax or other charge (including interest
charges) on the distributions received from the PFIC or on proceeds received from the disposition
of shares in the PFIC. This tax cannot be eliminated by making distributions to Fund shareholders.
However, a Fund may elect to avoid the imposition of that tax. For example, if a Fund is in a
position to and elects to treat a PFIC as a “qualified electing fund” (
i.e.
, make a “QEF
election”), the Fund will be required to include its share of the PFIC’s income and net capital
gains annually, regardless of whether it receives any distribution from the PFIC. Alternatively, a
Fund may make an election to mark the gains (and to a limited extent losses) in such holdings “to
the market” as though it had sold and repurchased its holdings in those PFICs on the last day of
the Fund’s taxable year. Such gains and losses are treated as ordinary income and loss. The QEF and
mark-to-market elections may accelerate the recognition of income (without the receipt of cash) and
increase the amount required to be distributed by a Fund to avoid taxation. Making either of these
elections therefore may require a Fund to liquidate other investments (including when it is not
advantageous to do so) to meet its distribution requirement, which also may accelerate the
recognition of gain and affect the Fund’s total return. If a Fund, such as one of the Target Funds
or Multi-Asset Funds, indirectly invests in PFICs by virtue of the Fund’s investments in Underlying
RICs, it may not make such PFIC elections; rather, the Underlying RICs directly investing in the
PFICs would decide whether to make such elections. Dividends paid by PFICs will not be eligible to
be treated as “qualified dividend income.”
It is not always possible to identify a foreign corporation as a PFIC, and a Fund may therefore
incur the tax and interest charges described above in some instances.
A PFIC is any foreign corporation: (i) 75% or more of the gross income of which for the taxable
year is passive income, or (ii) the average percentage of the assets of which (generally by value,
but by adjusted tax basis in certain cases) that produce or are held for the production of passive
income is at least 50%. Generally, passive income for this purpose means dividends, interest
(including income equivalent to interest), royalties, rents, annuities, the excess of gains over
losses from certain property transactions and commodities transactions, and foreign currency gains.
Passive income for this purpose does not include rents and royalties received by the foreign
corporation from active business and certain income received from related persons.
Foreign Currency Transactions
A Fund’s transactions in foreign currencies, foreign currency-denominated debt obligations and
certain foreign currency options, futures contracts and forward contracts (and similar instruments)
may give rise to ordinary income or loss to the extent such income or loss results from
fluctuations in the value of the foreign currency concerned. Any such net gains could require a
larger dividend toward the end of the calendar year. Any such net losses will generally reduce and
potentially require the recharacterization of prior ordinary income distributions. Such ordinary
income treatment may accelerate Fund distributions to shareholders and increase the distributions
taxed to shareholders as ordinary income. Any net ordinary losses so created cannot be carried
forward by a Fund to offset income or gains earned in subsequent taxable years.
Foreign Taxation
Income received by the Funds, Underlying Funds or Other Acquired Funds from sources within foreign
countries may be subject to withholding and other taxes imposed by such countries. Tax treaties
between certain countries and the U.S. may reduce or eliminate such taxes.
If more than 50% of a Fund’s assets at the close of the taxable year consist of the securities of
foreign corporations, the Fund may elect to permit shareholders to claim a credit or deduction on
their income tax returns for their pro rata portions of qualified taxes paid by the Fund to foreign
countries in respect of foreign securities that the Fund has held for at least the minimum period
specified in the Code. For this purpose, “securities of foreign corporations” generally includes
securities of foreign governments. In addition, a “qualifying fund of funds” (a regulated
investment company that invests at least 50% of its total assets in other regulated investment
companies at the close of each quarter of its taxable year, such as any of the Target Funds or,
generally, the Multi-Asset Funds) will be permitted to make the same election in respect of foreign
taxes paid by such Fund and by Underlying RICs that themselves make such
130
an election. In such
cases, shareholders will include in gross income from foreign sources their pro rata shares of such
taxes paid by the Fund and, in the case of a qualifying fund of funds, paid by Underlying RICs. A
shareholder’s ability to claim an offsetting foreign tax credit or deduction in respect of such
foreign taxes is subject to certain limitations imposed by the Code, which may result in the
shareholder’s not receiving a full credit or deduction (if any) for the amount of such taxes.
Shareholders who do not itemize on their U.S. federal income tax returns may claim a credit but not
a deduction for such foreign taxes. Shareholders that are not subject to U.S. federal income tax,
and those who invest in a Fund through tax-advantaged accounts (including those who invest through
individual retirement accounts or other tax-advantaged retirement plans), generally will receive no
benefit from any tax credit or deduction passed through by a Fund.
Non-U.S. Shareholders
Capital Gain Dividends are generally not subject to withholding of U.S. federal income tax. Absent
a specific statutory exemption, dividends other than Capital Gain Dividends paid by a Fund to a
shareholder that is not a “U.S. person” within the meaning of the Code (such shareholder, a
“foreign shareholder”) are subject to withholding of U.S. federal income tax at a rate of 30%, or
lower applicable tax treaty rate, even if they are funded by income or gains (such as portfolio
interest, short-term capital gains, or foreign-source dividend and interest income) that, if paid
to a foreign shareholder directly, would not be subject to withholding.
Effective for distributions with respect to taxable years beginning before January 1, 2014, a
regulated investment company is not required to withhold any amounts (i) with respect to
distributions (other than distributions to a foreign shareholder (w) that does not provide a
satisfactory statement that the beneficial owner is not a U.S. person, (x) to the extent that the
dividend is attributable to certain interest on an obligation if the foreign shareholder is the
issuer or is a 10% shareholder of the issuer, (y) that is within certain foreign countries that
have inadequate information exchange with the United States, or (z) to the extent the dividend is
attributable to interest paid by a person that is a related person of the foreign shareholder and
the foreign shareholder is a controlled foreign corporation) from U.S.-source interest income of
types similar to those not subject to U.S. federal income tax if earned directly by an individual
foreign shareholder, to the extent such distributions are properly reported as such by the Fund in
a written notice to shareholders (“interest-related dividends”), and (ii) with respect to
distributions (other than (a) distributions to an individual foreign shareholder who is present in
the United States for a period or periods aggregating 183 days or more during the year of the
distribution and (b) distributions subject to special rules regarding the disposition of U.S. real
property interests as described below) of net short-term capital gains in excess of net long-term
capital losses to the extent such distributions are properly reported by the regulated investment
company (“short-term capital gain dividends”). If a Fund, such as a Target Fund, invests in an
Underlying RIC that pays such distributions to the Fund, such distributions retain their character
as not subject to withholding if properly reported when paid by the Fund to foreign shareholders.
A Fund is permitted to report such part of its dividends as are eligible, to be treated as
interest-related or short-term capital gain dividends, but is not required to do so. The Funds do
not currently intend to report any eligible part of their dividends as exempt interest related
dividends or short term capital gain dividends. This exemption from withholding for
interest-related and short-term capital gain dividends has expired for distributions with respect
to taxable years of a Fund beginning on or after January 1, 2014. It is currently unclear whether
Congress will extend this exemption for distributions with respect to taxable years of a Fund
beginning on or after January 1, 2014, or what the terms of such an extension would be, including
whether such extension would have retroactive effect.
In the case of shares held through an intermediary, the intermediary may withhold even if the Fund
reports all or a portion of a payment as an interest-related or short-term capital gain dividend to
shareholders. Foreign persons should contact their intermediaries regarding the application of
these rules to their accounts.
Under U.S. federal tax law, a foreign shareholder generally is not subject to U.S. federal income
tax on gains (and is not allowed a deduction for losses) realized on the sale of shares of a Fund
or on Capital Gain Dividends unless (i) such gain or dividend is effectively connected with the
conduct of a trade or business carried on by such holder within the United States, (ii) in the case
of an individual holder, the holder is present in the United States for a period or periods
aggregating 183 days or more during the year of the sale or the receipt of the Capital Gain
Dividend and certain other conditions are met, or (iii) the special rules relating to gain
attributable to the sale or exchange of “U.S. real property interests” (“USRPIs”) apply to the
foreign shareholder’s sale of shares of the Fund or to the Capital Gain Dividend the foreign
shareholder received (as described below).
Special rules would apply if a Fund were either a “U.S. real property holding corporation”
(“USRPHC”) or would be a USRPHC but for the operation of certain exceptions to the definition
thereof. Very generally, a USRPHC is a domestic corporation that holds USRPIs the fair market value
of which equals or exceeds 50% of the sum of the fair market values of the corporation’s USPRIs,
interests in real property located outside the United States, and other trade or business assets.
USRPIs are generally defined as any interest in U.S. real property and any interest (other than
solely as a creditor) in a USRPHC or former USRPHC.
131
If a Fund were a USRPHC or would be a USRPHC but for the exceptions referred to above, under a
special “look-through” rule, any distributions by the Fund to a foreign shareholder (including, in
certain cases, distributions made by the Fund in redemption of its shares) that are attributable
directly or indirectly to distributions received by the Fund from a lower-tier REIT that the Fund
is required to treat as USRPI gain in its hands generally would be subject to U.S. tax withholding.
In addition, such distributions could result in the foreign shareholder being required to file a
U.S. tax return and pay tax on the distributions at regular U.S. federal income tax rates. The
consequences to a foreign shareholder, including the rate of such withholding and character of such
distributions (e.g., as ordinary income or USRPI gain), would vary depending upon the extent of the
foreign shareholder’s current and past ownership of the Fund. Prior to January 1, 2014, the
“look-through” USRPI treatment described above for distributions by the Fund to foreign
shareholders also applied to distributions attributable to (i) gains realized on the disposition of
USRPIs by the Fund and (ii) distributions received by the Fund from a lower-tier RIC that the Fund
was required to treat as USRPI gain in its hands. It is currently unclear whether Congress will
extend these former “look-through” provisions to distributions made on or after January 1, 2014,
and what the terms of any such extension would be, including whether any such extension would have
retroactive effect.
In addition, if the Fund were a USRPHC or former USRPHC, it could be required to withhold U.S. tax
on the proceeds of a share redemption by a greater-than-5% foreign shareholder, in which case such
foreign shareholder generally would also be required to file U.S. tax returns and pay any
additional taxes due in connection with the redemption.
Whether or not a Fund is characterized as a USRPHC will depend upon the nature and mix of the
Fund’s assets. The Funds do not expect to be USRPHCs.
Foreign shareholders should consult their tax advisors and, if holding shares through
intermediaries, their intermediaries, concerning the application of these rules to their investment
in the Fund.
Foreign shareholders with respect to whom income from the Fund is effectively connected with a
trade or business conducted by the foreign shareholder within the United States will in general be
subject to U.S. federal income tax on the income derived from the Fund at the graduated rates
applicable to U.S. citizens, residents or domestic corporations, whether such income is received in
cash or reinvested in shares of the Fund and, in the case of a foreign corporation, may also be
subject to a branch profits tax.
If a foreign shareholder is eligible for the benefits of a tax treaty, any effectively connected
income or gain will generally be subject to U.S. federal income tax on a net basis only if it is
also attributable to a permanent establishment maintained by the shareholder in the United States.
More generally, foreign shareholders who are residents in a country with an income tax treaty with
the United States may obtain different tax results than those described herein, and are urged to
consult their tax advisors.
In order to qualify for any exemptions from withholding described above or for lower withholding
tax rates under income tax treaties, or to establish an exemption from backup withholding, a
foreign shareholder must comply with special certification and filing requirements relating to its
non-US status (including, in general, furnishing an IRS Form W-8BEN or substitute form). Foreign
shareholders in a Fund should consult their tax advisors in this regard.
Special rules (including withholding and reporting requirements) apply to foreign partnerships and
those holding shares in a Fund through foreign partnerships. Additional considerations may apply to
foreign trusts and estates. Investors holding shares in a Fund through foreign entities should
consult their tax advisors about their particular situation.
A beneficial holder of Fund shares who is a foreign shareholder may be subject to state and local
tax and to the U.S. federal estate tax in addition to the federal tax on income referred to above.
Backup Withholding
Each Fund generally is required to withhold and remit to the U.S. Treasury a percentage of the
taxable distributions and redemption proceeds paid to any individual shareholder (i) who fails to
properly furnish a Fund with a correct taxpayer identification number, (ii) who has under-reported
dividend or interest income, or (iii) who fails to certify to a Fund that he or she is not subject
to such withholding. The backup withholding tax rate is 28%.
Backup withholding is not an additional tax. Any amounts withheld may be credited against the
shareholder’s U.S. federal income tax liability, provided the appropriate information is furnished
to the IRS.
Tax Shelter Reporting Regulations
Under U.S. Treasury regulations, if a shareholder recognizes a loss with respect to a Fund’s shares
of $2 million or more for an individual shareholder or $10 million or more for a corporate
shareholder, the shareholder must file with the IRS a disclosure statement on Form 8886. Direct
shareholders of portfolio securities are in many cases excepted from this reporting requirement,
but under current guidance, shareholders of a regulated investment company are not excepted. Future
guidance may extend the current exception from this reporting requirement to shareholders of most
or all regulated investment companies. The fact that a loss is reportable under these regulations
does not affect the legal determination of whether the taxpayer’s treatment of the loss is proper.
Shareholders should consult their tax advisors to determine the applicability of these regulations
in light of their individual circumstances.
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Other Reporting and Withholding Requirements
The Foreign Account Tax Compliance Act (“FATCA”) generally requires a Fund to obtain information
sufficient to identify the status of each of its shareholders under FATCA. If a shareholder fails
to provide this information or otherwise fails to comply with FATCA, the Fund may be required to
withhold under FATCA at a rate of 30% with respect to that shareholder on dividends, including
Capital Gain Dividends, and the proceeds of the sale, redemption or exchange of Fund shares. If a
payment by the Fund is subject to FATCA withholding, the Fund is required to withhold even if such
payment would otherwise be exempt from withholding under the rules applicable to foreign
shareholders described above (e.g., Capital Gain Dividends and short-term capital gain and
interest-related dividends), beginning as early as July 1, 2014. Each prospective investor is urged
to consult its tax advisor regarding the applicability of FATCA and any other reporting
requirements with respect to the prospective investor’s own situation, including investments
through an intermediary.
Shares Purchased through Tax-Qualified Plans
Special tax rules apply to investments through defined contribution plans and other tax-qualified
plans. Shareholders should consult their tax advisors to determine the suitability of shares of a
Fund as an investment through such plans, and the precise effect of an investment on their
particular tax situation.
Other Taxation
From time to time, certain of the Trust’s series may be considered under the Code to be
“nonpublicly offered regulated investment companies.” Pursuant to Treasury Department regulations,
certain expenses of nonpublicly offered regulated investment companies, including advisory fees,
may be deductible by certain shareholders, generally including individuals and entities that
compute their taxable income in the same manner as an individual (thus, for example, a qualified
pension plan is not subject to this rule). Such a shareholder’s pro rata portion of “affected
expenses” will be treated as an additional dividend to the shareholder and will be deductible by
such shareholder, subject to the 2% “floor” on miscellaneous itemized deductions and other
limitations on itemized deductions set forth in the Code. A regulated investment company generally
will be classified as nonpublicly offered unless it either has at least 500 shareholders at all
times during a taxable year or continuously offers shares pursuant to a public offering.
OTHER INFORMATION
Capitalization
The Trust is a Massachusetts business trust established under an Agreement and Declaration of
Trust on January 10, 2008. The capitalization of the Trust consists solely of an unlimited number
of shares of beneficial interest. The Board of Trustees may establish additional series (with
different investment objectives and fundamental policies) at any time in the future. Establishment
and offering of additional series will not alter the rights of the Trust’s shareholders. When
issued, shares are fully paid, non-assessable, redeemable and freely transferable. Shares do not
have preemptive rights or subscription rights. In the event a Fund liquidates, each shareholder is
entitled to receive his pro rata share of the net assets of that Fund.
Shares begin earning dividends on Fund shares the day after the Trust receives the
shareholder’s purchase payment. Net investment income from interest and dividends, if any, will be
declared and paid at least annually to shareholders of record by the Funds. Any net capital gains
from the sale of portfolio securities will be distributed no less frequently than once annually.
Net short-term capital gains may be paid more frequently. Dividend and capital gain distributions
of a Fund will be reinvested in additional shares of that Fund or Portfolio unless the shareholder
elects to have the distributions paid in cash.
Under Massachusetts law, shareholders could, under certain circumstances, be held liable for
the obligations of the Trust. However, the Amended and Restated Agreement and Declaration of Trust
(the “Declaration of Trust”) disclaims shareholder liability for acts or obligations of the Trust
and requires that notice of such disclaimer be given in each agreement, obligation or instrument
entered into or executed by the Trust or the Trustees. The Declaration of Trust also provides for
indemnification out of a Fund’s property for all loss and expense of any shareholder of that Fund
held liable on account of being or having been a shareholder. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability is limited to circumstances in which
such disclaimer is inoperative or the Fund of which he or she is or was a shareholder is unable to
meet its obligations, and thus should be considered remote.
133
Additional Performance Information
From time to time the Trust may make available certain information about the performance of
some or all classes of shares of some or all of the Funds. Information about a Fund’s performance
is based on that Fund’s (or its predecessor’s) record to a recent date and is not intended to
indicate future performance.
The total return of the classes of shares of the Funds may be included in advertisements or
other written material. When a Fund’s total return is advertised, it will be calculated for the
past year, the past five years, and the past ten years (or if the Fund has been offered for a
period shorter than one, five or ten years, that period will be substituted) since the
establishment of the Fund (or its predecessor series), as more fully described below. For periods
prior to the initial offering date of the advertised class of shares, total return presentations
for such class will be based on the historical performance of an older class of the Fund (if any)
restated, as necessary, to reflect any different sales charges and/or operating expenses (such as
different management fees and/or 12b-1/servicing fee charges) associated with the newer class. In
certain cases, such a restatement will result in performance that is higher than if the performance
of the older class were not restated to reflect the different operating expenses of the newer
class. In such cases, the Trust’s advertisements will also, to the extent appropriate, show the
lower performance figure reflecting the actual operating expenses incurred by the older class for
periods prior to the initial offering date of the newer class. Total return for each class is
measured by comparing the value of an investment in the Fund at the beginning of the relevant
period to the redemption value of the investment in the Fund at the end of the period (assuming
immediate reinvestment of any dividends or capital gains distributions at net asset value). Total
return may be advertised using alternative methods that reflect all elements of return, but that
may be adjusted to reflect the cumulative impact of alternative fee and expense structures.
The Funds may also provide current distribution information to their shareholders in
shareholder reports or other shareholder communications, or in certain types of sales literature
provided to prospective investors. Current distribution information for a particular class of a
Fund will be based on distributions for a specified period (
i.e.
, total dividends from net
investment income), divided by the relevant class net asset value per share on the last day of the
period and annualized. The rate of current distributions does not reflect deductions for unrealized
losses from transactions in derivative instruments such as options and futures, which may reduce
total return. Current distribution rates differ from standardized yield rates in that they
represent what a class of a Fund has declared and paid to shareholders as of the end of a specified
period rather than the Fund’s actual net investment income for that period.
Performance information is computed separately for each class of a Fund. Each Fund may from
time to time include the total return of each class of its shares in advertisements or in
information furnished to present or prospective shareholders. The Funds may from time to time
include the yield and total return of each class of their shares in advertisements or information
furnished to present or prospective shareholders. Each Fund may from time to time include in
advertisements the total return of each class and the ranking of those performance figures relative
to such figures for groups of mutual funds categorized by Lipper Inc. or another third party as
having the same or similar investment objectives, policies and/or strategies. Information provided
to any newspaper or similar listing of the Fund’s net asset values and public offering prices will
separately present each class of shares. The Funds also may compute current distribution rates and
use this information in their applicable Prospectus and Statement of Additional Information, in
reports to current shareholders, or in certain types of sales literature provided to prospective
investors.
Investment results of the Funds will fluctuate over time, and any representation of the Funds’
total return or yield for any prior period should not be considered as a representation of what an
investor’s total return or yield may be in any future period. The Trust’s Annual and Semi-Annual
Reports contain additional performance information for the Funds and are available upon request,
without charge, by calling the telephone numbers listed on the cover of this Statement of
Additional Information.
The Nicholas-Applegate U.S. Convertible Fund, formerly a series of Nicholas-Applegate
Institutional Funds, reorganized into the
Convertible Fund
on April 12, 2010. Performance
information shown for periods prior to the reorganization (including that presented in any
advertisements for the
Convertible Fund
) is based upon the historical performance of the
Convertible Fund’s
predecessor fund, the Nicholas-Applegate U.S. Convertible Fund, adjusted as set
forth herein.
The Nicholas-Applegate U.S. Emerging Growth Fund, formerly a series of Nicholas-Applegate
Institutional Funds, reorganized into the
U.S. Small-Cap Growth Fund
on April 12, 2010. Performance
information shown for periods prior to the reorganization (including that presented in any
advertisements for the
U.S. Small-Cap Growth Fund
) is based upon the historical performance of the
U.S. Small-Cap Growth Fund’s
predecessor fund, the Nicholas-Applegate U.S. Emerging Growth Fund,
adjusted as set forth herein.
The Nicholas-Applegate U.S. High Yield Bond Fund, formerly a series of Nicholas-Applegate
Institutional Funds, reorganized into the
High Yield Bond Fund
on April 12, 2010. Performance
information shown for periods prior to the reorganization (including that presented in any
advertisements for the
High Yield Bond Fund
) is based upon the historical performance of the
High
Yield Bond Fund’s
predecessor fund, the Nicholas-Applegate U.S. High Yield Bond Fund, adjusted as
set forth herein.
134
The Nicholas-Applegate International Growth Opportunities Fund, formerly a series of
Nicholas-Applegate Institutional Funds, reorganized into the
International Small-Cap Fund (
formerly
AGIC International Growth Opportunities Fund)
, on April 12, 2010. Performance information shown for
periods prior to the reorganization (including that presented in any advertisements for the
International Small-Cap Fund
) is based upon the historical performance of the
International
Small-Cap Fund’s
predecessor fund, the Nicholas-Applegate International Growth Opportunities Fund,
adjusted as set forth herein.
The Nicholas-Applegate U.S. Micro Cap Fund, formerly a series of Nicholas-Applegate
Institutional Funds, reorganized into the
Micro Cap Fund
on April 12, 2010. Performance information
shown for periods prior to the reorganization (including that presented in any advertisements for
the
Micro Cap Fund
) is based upon the historical performance of the
Micro Cap Fund’s
predecessor
fund, the Nicholas-Applegate U.S. Micro Cap Fund, adjusted as set forth herein.
The Nicholas-Applegate U.S. Ultra Micro Cap Fund, formerly a series of Nicholas-Applegate
Institutional Funds, reorganized into the
Ultra Micro Cap Fund
on April 12, 2010. Performance
information shown for periods prior to the reorganization (including that presented in any
advertisements for the
Ultra Micro Cap Fund
) is based upon the historical performance of the
Ultra
Micro Cap Fund’s
predecessor fund, the Nicholas-Applegate U.S. Ultra Micro Cap Fund, adjusted as
set forth herein.
The Allianz Global Investors Multi-Style Fund, formerly a series of the Allianz Funds,
reorganized into the
Global Allocation Fund
on May 4, 2009. Performance information shown for
periods prior to May 4, 2009 (including that presented in advertisements for the
Global Allocation
Fund)
is based upon the historical performance of the
Global Allocation Fund’s
predecessor fund,
the Allianz Global Investors Multi-Style Fund, adjusted as set forth herein.
Calculation of Total Return
Quotations of average annual total return for a Fund, or a class of shares thereof, will be
expressed in terms of the average annual compounded rate of return of a hypothetical investment in
the Fund or class over periods of one, five, and ten years (up to the life of the Fund), calculated
pursuant to the following formula: P (1 + T)n = ERV (where P = a hypothetical initial payment of
$1,000, T = the average annual total return, n = the number of years, and ERV = the ending
redeemable value of a hypothetical $1,000 payment made at the beginning of the period). Except as
noted below, all total return figures reflect the deduction of a proportionate share of Fund or
class expenses on an annual basis, and assume that (i) the maximum sales load (or other charges
deducted from payments) is deducted from the initial $1,000 payment and that the maximum contingent
deferred sales charge, if any, is deducted at the times, in the amounts, and under the terms
disclosed in the applicable Prospectus and (ii) all dividends and distributions are reinvested when
paid. Quotations of total return may also be shown for other periods. The Funds may also, with
respect to certain periods of less than one year, provide total return information for that period
that is unannualized. Under applicable regulations, any such information is required to be
accompanied by standardized total return information.
Funds may have had adviser and sub-adviser changes during the periods for which performance is
shown below. The same or other Funds may have changed their investment objectives, policies and/or
strategies during such periods. All such changes would be discussed in the applicable Prospectus,
and elsewhere in this Statement of Additional Information. Such Funds would not necessarily have
achieved the results shown under their current investment management arrangements and/or investment
objectives, policies and strategies.
***
135
The following table sets forth the average annual total return of certain classes of shares of
the Predecessor Funds for periods ended November 30, 2013. The
Convertible, U.S. Small-Cap Growth,
High Yield Bond, International Small-Cap (formerly International Growth Opportunities), Micro Cap,
and
Ultra Micro Cap Funds
reorganized on April 12, 2010, when the Nicholas-Applegate U.S.
Convertible, U.S. Emerging Growth, U.S. High Yield Bond, International Growth Opportunities, U.S.
Micro Cap and U.S. Ultra Micro Cap Funds reorganized into the
Convertible, U.S. Small-Cap Growth,
High Yield Bond, International Small-Cap, Micro Cap,
and
Ultra Micro Cap Funds
, respectively, by
transferring substantially all of their assets and liabilities into the
Convertible, U.S. Small-Cap
Growth, High Yield Bond, International Small-Cap, Micro Cap,
and
Ultra Micro Cap Funds
in exchange
for Class P and Institutional Class shares of the
Convertible Fund,
Institutional Class shares of
the
U.S. Small-Cap Growth Fund,
Institutional Class shares of the
High Yield Bond Fund,
Class P and
Institutional Class shares of the
International Small-Cap Fund,
Institutional Class shares of the
Micro Cap Fund
, Institutional Class shares of the
Ultra Micro Cap Fund
, respectively. Accordingly,
“Inception Date of Fund” for these Funds refers to the inception date of their Nicholas-Applegate
predecessor series. The Nicholas-Applegate predecessor series of each of these Funds did not offer
shares corresponding to the Funds’ Class A, Class B, Class C, Class D, Class P (except for
Convertible
and
International Small-Cap Funds
as noted above), Class R or Administrative Class
shares. For periods prior to the “Inception Date” of a particular class of the
Convertible, U.S.
Small-Cap Growth, High Yield Bond, International Small-Cap, Micro Cap,
and
Ultra Micro Cap Funds’
shares, total return presentations for the class are based on the historical performance of the
Class I shares of the Nicholas-Applegate U.S. Convertible Fund, Class I shares of the
Nicholas-Applegate U.S. Emerging Growth Fund, Class I shares of the Nicholas-Applegate U.S. High
Yield Bond Fund, Class II shares (and Class I shares prior to the inception of Class II) of the
Nicholas-Applegate International Growth Opportunities Fund (except for the Fund’s Class P shares,
for which total return presentations are based solely on Class I), Class I shares of the
Nicholas-Applegate U.S. Micro Cap Fund, Class I shares of the Nicholas-Applegate U.S. Small to Mid
Cap Growth Fund and Class I shares of the Nicholas-Applegate U.S. Ultra Micro Cap Fund, adjusted,
as necessary, to reflect any current sales charges (including any contingent deferred sales
charges) associated with the newer class and any different operating expenses associated with the
newer class, such as 12b-1 distribution and servicing fees (which were not paid by the predecessor
Nicholas-Applegate Funds) and different administrative fee and advisory fee charges.
Average Annual Total Return for Periods Ended November 30, 2013*
|
|
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|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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Since Inception Date
|
|
Inception
|
|
Inception
|
|
Fund
|
|
Class
|
|
1 Year
|
|
5 Year
|
|
10 Year
|
|
of Fund (Annualized)
|
|
Date of Fund
|
|
Date of Class
|
|
Convertible Fund(1)
|
|
Class A
|
|
|
18.59
|
%
|
|
|
17.32
|
%
|
|
|
8.96
|
%
|
|
|
10.35
|
%
|
|
4/19/1993
|
|
|
4/12/2010
|
|
|
|
|
Class C
|
|
|
23.55
|
%
|
|
|
17.78
|
%
|
|
|
8.77
|
%
|
|
|
9.83
|
%
|
|
|
|
|
4/12/2010
|
|
|
|
|
Class D
|
|
|
25.41
|
%
|
|
|
18.63
|
%
|
|
|
9.57
|
%
|
|
|
10.65
|
%
|
|
|
|
|
4/12/2010
|
|
|
|
|
Class R
|
|
|
24.86
|
%
|
|
|
18.28
|
%
|
|
|
9.28
|
%
|
|
|
10.36
|
%
|
|
|
|
|
4/12/2010
|
|
|
|
|
Class P
|
|
|
25.76
|
%
|
|
|
18.88
|
%
|
|
|
9.81
|
%
|
|
|
10.89
|
%
|
|
|
|
|
6/7/2010
|
|
|
|
|
Institutional
|
|
|
25.88
|
%
|
|
|
19.01
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%
|
|
|
9.92
|
%
|
|
|
11.00
|
%
|
|
|
|
|
4/19/1993
|
|
|
|
|
Administrative
|
|
|
25.55
|
%
|
|
|
18.69
|
%
|
|
|
9.60
|
%
|
|
|
10.66
|
%
|
|
|
|
|
4/12/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
High Yield Bond Fund(2)
|
|
Class A
|
|
|
4.89
|
%
|
|
|
16.77
|
%
|
|
|
7.47
|
%
|
|
|
7.92
|
%
|
|
7/31/1996
|
|
|
4/12/2010
|
|
|
|
|
Class C
|
|
|
7.14
|
%
|
|
|
16.84
|
%
|
|
|
7.10
|
%
|
|
|
7.36
|
%
|
|
|
|
|
4/12/2010
|
|
|
|
|
Class D
|
|
|
8.92
|
%
|
|
|
17.68
|
%
|
|
|
7.89
|
%
|
|
|
8.16
|
%
|
|
|
|
|
4/12/2010
|
|
|
|
|
Class R
|
|
|
8.72
|
%
|
|
|
17.39
|
%
|
|
|
7.62
|
%
|
|
|
7.89
|
%
|
|
|
|
|
4/12/2010
|
|
|
|
|
Class P
|
|
|
9.27
|
%
|
|
|
17.90
|
%
|
|
|
8.07
|
%
|
|
|
8.33
|
%
|
|
|
|
|
4/12/2010
|
|
|
|
|
Institutional
|
|
|
9.35
|
%
|
|
|
18.14
|
%
|
|
|
8.35
|
%
|
|
|
8.64
|
%
|
|
|
|
|
7/31/1996
|
|
|
|
|
Administrative
|
|
|
9.02
|
%
|
|
|
17.72
|
%
|
|
|
7.91
|
%
|
|
|
8.17
|
%
|
|
|
|
|
4/12/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Micro Cap Fund(3)
|
|
Class A
|
|
|
41.85
|
%
|
|
|
21.18
|
%
|
|
|
7.69
|
%
|
|
|
11.83
|
%
|
|
7/12/1995
|
|
|
12/19/2011
|
|
|
|
|
Class P
|
|
|
50.42
|
%
|
|
|
22.79
|
%
|
|
|
8.53
|
%
|
|
|
12.42
|
%
|
|
|
|
|
12/27/2010
|
|
|
|
|
Institutional
|
|
|
50.51
|
%
|
|
|
22.93
|
%
|
|
|
8.65
|
%
|
|
|
12.54
|
%
|
|
|
|
|
7/12/1995
|
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|
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|
|
|
|
|
|
Ultra Micro Cap Fund(4)
|
|
Class A
|
|
|
48.19
|
%
|
|
|
32.30
|
%
|
|
|
N/A
|
|
|
|
16.50
|
%
|
|
1/28/2008
|
|
|
12/19/2011
|
|
|
|
|
Class P
|
|
|
57.10
|
%
|
|
|
34.12
|
%
|
|
|
N/A
|
|
|
|
17.92
|
%
|
|
|
|
|
12/27/2010
|
|
|
|
|
Institutional
|
|
|
57.18
|
%
|
|
|
34.27
|
%
|
|
|
N/A
|
|
|
|
18.05
|
%
|
|
|
|
|
1/28/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Small-Cap Growth Fund(5)
|
|
Class A
|
|
|
39.07
|
%
|
|
|
22.84
|
%
|
|
|
9.01
|
%
|
|
|
7.84
|
%
|
|
10/1/1993
|
|
|
12/20/2010
|
|
|
|
|
Class C
|
|
|
45.03
|
%
|
|
|
23.34
|
%
|
|
|
8.83
|
%
|
|
|
7.34
|
%
|
|
|
|
|
12/20/2010
|
|
|
|
|
Class D
|
|
|
47.32
|
%
|
|
|
24.26
|
%
|
|
|
9.64
|
%
|
|
|
8.15
|
%
|
|
|
|
|
12/20/2010
|
|
|
|
|
Class R
|
|
|
46.99
|
%
|
|
|
23.97
|
%
|
|
|
9.38
|
%
|
|
|
7.88
|
%
|
|
|
|
|
12/20/2010
|
|
|
|
|
Class P
|
|
|
47.60
|
%
|
|
|
24.56
|
%
|
|
|
9.91
|
%
|
|
|
8.42
|
%
|
|
|
|
|
12/20/2010
|
|
|
|
|
Institutional
|
|
|
47.64
|
%
|
|
|
24.68
|
%
|
|
|
10.02
|
%
|
|
|
8.52
|
%
|
|
|
|
|
10/1/1993
|
|
136
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Since Inception Date
|
|
Inception
|
|
Inception
|
|
Fund
|
|
Class
|
|
1 Year
|
|
5 Year
|
|
10 Year
|
|
of Fund (Annualized)
|
|
Date of Fund
|
Date of Class
|
|
International Small-Cap Fund(6)
|
|
Class A
|
|
|
25.35
|
%
|
|
|
19.83
|
%
|
|
|
11.53
|
%
|
|
|
12.97
|
%
|
|
12/31/1997
|
|
|
4/12/2010
|
|
|
|
|
Class C
|
|
|
30.67
|
%
|
|
|
20.29
|
%
|
|
|
11.33
|
%
|
|
|
12.53
|
%
|
|
|
|
|
4/12/2010
|
|
|
|
|
Class D
|
|
|
32.65
|
%
|
|
|
21.18
|
%
|
|
|
12.16
|
%
|
|
|
13.36
|
%
|
|
|
|
|
4/12/2010
|
|
|
|
|
Class R
|
|
|
32.29
|
%
|
|
|
20.88
|
%
|
|
|
11.89
|
%
|
|
|
13.09
|
%
|
|
|
|
|
4/12/2010
|
|
|
|
|
Class P
|
|
|
32.86
|
%
|
|
|
21.46
|
%
|
|
|
12.45
|
%
|
|
|
13.72
|
%
|
|
|
|
|
4/12/2010
|
|
|
|
|
Institutional
|
|
|
32.96
|
%
|
|
|
21.61
|
%
|
|
|
12.59
|
%
|
|
|
13.82
|
%
|
|
|
|
|
12/31/1997
|
|
|
|
|
Administrative
|
|
|
32.65
|
%
|
|
|
21.15
|
%
|
|
|
12.15
|
%
|
|
|
123.36
|
%
|
|
|
|
|
4/12/2010
|
|
|
|
|
|
|
*
|
|
Average annual total return presentations for a particular class of shares assume payment of
the current maximum sales charge (if any) applicable to that class at the time of purchase and
assume that the maximum CDSC (if any) for Class A and C shares was deducted at the times, in
the amounts, and under the terms discussed in the applicable Prospectus.
|
|
|
|
**
|
|
Cumulative.
|
|
|
|
(1)
|
|
The Nicholas-Applegate U.S. Convertible Fund was a series of Nicholas-Applegate Institutional
Funds until its reorganization into the
Convertible Fund
on April 12, 2010. The Prospectus of
the
Convertible Fund
discloses performance information for Class I shares of the predecessor
fund.
|
|
|
|
(2)
|
|
The Nicholas-Applegate U.S. High Yield Bond Fund was a series of Nicholas-Applegate
Institutional Funds until its reorganization into the
High Yield Bond Fund
on April 12, 2010.
The Prospectus of the
High Yield Bond Fund
discloses performance information for Class I
shares of the predecessor fund.
|
|
|
|
(3)
|
|
The Nicholas-Applegate U.S. Micro Cap Fund was a series of Nicholas-Applegate Institutional
Funds until its reorganization into the
Micro Cap Fund
on April 12, 2010. The Prospectus of
the
Micro Cap Fund
discloses performance information for Class I shares of the predecessor
fund.
|
|
|
|
(4)
|
|
The Nicholas-Applegate U.S. Ultra Micro Cap Fund was a series of Nicholas-Applegate
Institutional Funds until its reorganization into the
Ultra Micro Cap Fund
on April 12, 2010.
The Prospectus of the
Ultra Micro Cap Fund
discloses performance information for Class I
shares of the predecessor fund.
|
|
|
|
(5)
|
|
The Nicholas-Applegate U.S. Emerging Growth Fund was a series of Nicholas-Applegate
Institutional Funds until its reorganization into the
U.S. Small-Cap Growth Fund
on April 12,
2010. The Prospectus of the
U.S. Small-Cap Growth Fund
discloses performance information for I
shares of the predecessor fund.
|
|
|
|
(6)
|
|
The Nicholas-Applegate International Growth Opportunities Fund was a series of
Nicholas-Applegate Institutional Funds until its reorganization into the
International
Small-Cap Fund
on April 12, 2010. The Prospectus of the
International Small-Cap Fund
discloses
performance information for Class I and II shares of the predecessor fund.
|
The following table sets forth the average annual total return of certain classes of shares of
the
Global Allocation Fund
for periods ended November 30, 2013. The
Global Allocation Fund
reorganized on May 4, 2009, when the Allianz Global Investors Multi-Style Fund reorganized into the
Global Allocation Fund
by transferring substantially all of its assets and liabilities to the
Global Allocation Fund
in exchange for shares of the
Global Allocation Fund.
Accordingly,
“Inception Date of Fund” refers to the inception date of the Allianz Global Investors Multi-Style
Fund, the Global Allocation Fund’s predecessor fund. The Allianz Global Investors Multi-Style Fund,
the Global Allocation Fund’s predecessor fund, did not offer shares corresponding to the Fund’s
Class D, Class P, Class R, and Administrative Class shares. For periods prior to the “Inception
Date” of a particular class of the
Global Allocation Fund’s
shares, total return presentations for
the class are based on the historical performance of the Class A or Institutional Class shares of
the Allianz Global Investors Multi-Style Fund, adjusted, as necessary, to reflect any current sales
charges (including any contingent deferred sales charges) associated with the newer class and any
different operating expenses associated with the newer class, such as 12b-1 distribution and
servicing fees.
137
Average Annual Total Return for Periods Ended November 30, 2013*
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
Since Inception Date
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|
|
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|
|
|
|
|
|
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|
of Fund
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|
Inception
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|
Inception
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|
Fund
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|
Class
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|
1 Year
|
|
5 Years
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|
10 Years
|
|
(Annualized)
|
|
Date of Fund
|
|
Date of Class
|
|
Global Allocation Fund**
|
|
Class A
|
|
|
5.64
|
%
|
|
|
11.51
|
%
|
|
|
5.78
|
%
|
|
|
5.74
|
%
|
|
9/30/1998
|
|
|
9/30/1998
|
|
|
|
|
Class B
|
|
|
5.84
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%
|
|
|
11.68
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%
|
|
|
5.83
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%
|
|
|
5.76
|
%
|
|
|
|
|
9/30/1998
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|
|
|
|
Class C
|
|
|
9.81
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%
|
|
|
11.93
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%
|
|
|
5.59
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%
|
|
|
5.34
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%
|
|
|
|
|
9/30/1998
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|
|
|
|
Class D
|
|
|
11.70
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%
|
|
|
12.76
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%
|
|
|
6.38
|
%
|
|
|
6.13
|
%
|
|
|
|
|
5/4/2009
|
|
|
|
|
Class R
|
|
|
11.44
|
%
|
|
|
12.51
|
%
|
|
|
6.13
|
%
|
|
|
5.88
|
%
|
|
|
|
|
5/4/2009
|
|
|
|
|
Class P
|
|
|
11.92
|
%
|
|
|
13.00
|
%
|
|
|
6.60
|
%
|
|
|
6.35
|
%
|
|
|
|
|
5/4/2009
|
|
|
|
|
Institutional
|
|
|
11.90
|
%
|
|
|
13.11
|
%
|
|
|
6.83
|
%
|
|
|
6.61
|
%
|
|
|
|
|
2/26/1999
|
|
|
|
|
Administrative
|
|
|
11.59
|
%
|
|
|
12.79
|
%
|
|
|
6.42
|
%
|
|
|
6.18
|
%
|
|
|
|
|
5/4/2009
|
|
|
|
|
|
|
*
|
|
Average annual total return presentations for a particular class of shares assume payment of
the current maximum sales charge (if any) applicable to that class at the time of purchase and
assume that the maximum CDSC (if any) for Class A, B and C shares was deducted at the times,
in the amounts, and under the terms discussed in the applicable Prospectus.
|
|
|
|
**
|
|
The Allianz Global Investors Multi-Style Fund was a series of Allianz Funds prior to its
reorganization into the
Global Allocation Fund
on May 4, 2009. The Prospectus of the
Global
Allocation Fund
discloses performance information for Class A, Class B, Class C and
Institutional Class of the predecessor fund, adjusted to reflect the actual administrative
fees and other expenses of the Fund’s corresponding classes.
|
(#)
Where noted, the method of adjustment used in the table above for periods prior to the
Inception Date of the noted class resulted in performance for the period shown that is higher than
if the performance of the oldest class (Class A) was not adjusted to reflect the lower operating
expenses of the newer class.
The following table shows the lower performance figures that would be obtained if the performance
for newer classes with lower operating expenses were calculated by tacking to such newer classes’
historical performance the actual performance (with adjustment for actual sales charges) of the
older class of shares, with its higher operating expenses, for periods prior to the Inception Date
of the newer class (
i.e.
, the total return presentations below are based, for periods prior to the
Inception Date of the noted classes, on the historical performance of the older class adjusted to
reflect the current sales charges (if any) associated with the newer class, but
not
reflecting lower operating expenses associated with the newer class).
Total Return for Periods Ended November 30, 2013
(with no adjustment for operating expenses of the noted
classes for periods prior to their inception dates)
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Since Inception Date
|
|
Fund
|
|
Class
|
|
1 Year
|
|
5 Years
|
|
10 Years
|
|
of Fund (Annualized)
|
|
Global Allocation Fund**
|
|
Class P
|
|
|
N/A
|
|
|
|
12.97
|
%
|
|
|
6.47
|
%
|
|
|
6.19
|
%
|
|
|
|
Institutional
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
6.36
|
%
|
|
|
|
Administrative
|
|
|
N/A
|
|
|
|
12.78
|
%
|
|
|
6.38
|
%
|
|
|
6.13
|
%
|
The following table sets forth the average annual total return of certain classes of shares of
the
Global Water Fund
for periods ended November 30, 2013. The
Global Water Fund
was formed on
March 31, 2008 (the “Inception Date of Fund”). Institutional Class shares were launched on July 15,
2008. For periods prior to the “Inception Date” of Institutional Class shares, total return
presentations for the class are based on the historical performance of the Class A shares of the
Global Water Fund,
adjusted, as necessary, to reflect any current sales charges (including any
contingent deferred sales charges) associated with the newer class and any different operating
expenses associated with the newer class, such as 12b-1 distribution and servicing fees.
138
Average Annual Total Return for Periods Ended November 30, 2013*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Since Inception Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of Fund
|
|
Inception
|
|
Inception
|
|
Fund
|
|
Class
|
|
1 Year
|
|
5 Years
|
|
(Annualized)
|
|
Date of Fund
|
|
Date of Class
|
|
Global Water Fund
|
|
Class A
|
|
|
15.58
|
%
|
|
|
14.38
|
%
|
|
|
3.71
|
%
|
|
|
3/31/2008
|
|
|
|
3/31/2008
|
|
|
|
|
Class C
|
|
|
20.41
|
%
|
|
|
14.84
|
%
|
|
|
3.96
|
%
|
|
|
|
|
|
|
3/31/2008
|
|
|
|
|
Class D
|
|
|
22.30
|
%
|
|
|
15.69
|
%
|
|
|
4.73
|
%
|
|
|
|
|
|
|
3/31/2008
|
|
|
|
|
Class P
|
|
|
22.58
|
%
|
|
|
15.93
|
%
|
|
|
4.98
|
%
|
|
|
|
|
|
|
3/31/2008
|
|
|
|
|
Institutional
|
|
|
22.77
|
%
|
|
|
16.07
|
%
|
|
|
5.10
|
%
|
|
|
|
|
|
|
7/15/2008
|
|
|
|
|
|
|
*
|
|
Average annual total return presentations for a particular class of shares assume payment of
the current maximum sales charge (if any) applicable to that class at the time of purchase and
assume that the maximum CDSC (if any) for Class A and C shares was deducted at the times, in
the amounts, and under the terms discussed in the applicable Prospectus.
|
(#)
Where noted, the method of adjustment used in the table above for periods prior to the
Inception Date of the noted class resulted in performance for the period shown that is higher than
if the performance of the oldest class (Class A) was not adjusted to reflect the lower operating
expenses of the newer class.
The following table shows the lower performance figures that would be obtained if the performance
for newer classes with lower operating expenses were calculated by tacking to such newer classes’
historical performance the actual performance (with adjustment for actual sales charges) of the
older class of shares, with its higher operating expenses, for periods prior to the Inception Date
of the newer class (
i.e.
, the total return presentations below are based, for periods prior to the
Inception Date of the noted classes, on the historical performance of the older class adjusted to
reflect the current sales charges (if any) associated with the newer class, but
not
reflecting lower operating expenses associated with the newer class).
Total Return for Periods Ended November 30, 2013
(with no adjustment for operating expenses of the noted
class for periods prior to its inception date)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Since Inception Date
|
|
Fund
|
|
Class
|
|
1 Year
|
|
5 Years
|
|
of Fund (Annualized)
|
|
Global Water Fund
|
|
Institutional
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
5.09
|
%
|
Voting Rights
Under the Declaration of Trust, the Trust is not required to hold annual meetings of Trust
shareholders to elect Trustees or for other purposes. It is not anticipated that the Trust will
hold shareholders’ meetings unless required by law or the Declaration of Trust. In this regard, the
Trust will be required to hold a meeting to elect Trustees to fill any existing vacancies on the
Board if, at any time, fewer than a majority of the Trustees have been elected by the shareholders
of the Trust. Shareholders may remove a person serving as Trustee either by declaration in writing
or at a meeting called for such purpose. The Trustees are required to call a meeting for the
purpose of considering the removal of a person serving as Trustee if requested in writing to do so
by the holders of not less than 10% of the outstanding shares of the Trust. In the event that such
a request was made, the Trust has represented that it would assist with any necessary shareholder
communications. Shareholders of a class of shares have different voting rights with respect to
matters that affect only that class.
Shares entitle their holders to one vote per share (with proportionate voting for fractional
shares). All classes of shares of the Funds have identical voting rights except that each class of
shares has exclusive voting rights on any matter submitted to shareholders that relates solely to
that class, and has separate voting rights on any matter submitted to shareholders in which the
interests of one class differ from the interests of any other class. Each class of shares has
exclusive voting rights with respect to matters pertaining to any distribution or servicing plan or
agreement applicable to that class. These shares are entitled to vote at meetings of shareholders.
Matters submitted to shareholder vote must be approved by each Fund separately except (i) when
required by the 1940 Act shares shall be voted together and (ii) when the Trustees have determined
that the matter does not affect all series of the Trust, then only shareholders of the series
affected shall be entitled to vote on the matter. All classes of shares of the Funds will vote
together, except with respect to the Distribution and Servicing Plan applicable to Class A, Class
B, Class C or Class R shares, to the Distribution or Administrative Services Plans applicable to
Administrative Class shares, to the Management Agreement as applicable to a particular class or
classes, or when a class vote is required as specified above or otherwise by the 1940 Act.
The Trust’s shares do not have cumulative voting rights. Therefore, the holders of more than
50% of the outstanding shares may elect the entire Board of Trustees, in which case the holders of
the remaining shares would not be able to elect any Trustees.
139
The Target Funds and the Multi-Asset Funds will vote shares of each Underlying Fund that they
own in their discretion in accordance with their proxy voting policies.
Certain Ownership of Trust Shares
Because the
Emerging Markets Debt Fund
is newly formed, the Trustees and officers of the Trust
as a group own no securities of the Fund as of the date of this Statement of Additional
Information. As of February 28, 2014, the Trust believes that the Trustees and officers of the
Trust, as a group, owned less than one percent of each class of each Fund and of the Trust as a
whole, except that with respect to the
Retirement Income Fund
, Trustees and officers of the Trust
owned 4.78% of Class D shares of the Fund; with respect to the
Retirement 2020 Fund
, Trustees and
officers of the Trust owned 1.14% of Class R6 shares of the Fund; with respect to the
China Equity
Fund
, Trustees and officers of the Trust owned 1.23% of Institutional Class shares and 15.15% of
Class D shares of the Fund; with respect to the
Redwood Fund
, Trustees and officers of the Trust
owned 1.31% of Institutional Class shares of the Fund; with respect to the
NFJ Global Dividend
Value Fund
, Trustees and officers of the Trust owned 8.40% of Institutional Class shares of the
Fund; and with respect to the
NFJ Emerging Markets Value Fund
, Trustees and officers of the Trust
owned 7.08% of Institutional Class shares of the Fund.
Appendix B lists persons who own of record 5% or more of the noted class of shares of the
Funds as of the dates noted, as well as information about owners of 25% or more of the outstanding
shares of beneficial interest of the Funds, and therefore may be presumed to “control” the
specified Fund, as that term is defined in the 1940 Act. To the extent a shareholder “controls” a
Fund, it may not be possible for matters subject to a vote of a majority of the outstanding voting
securities of a Fund to be approved without the affirmative vote of such shareholder, and it may be
possible for such matters to be approved by such shareholder without the affirmative vote of any
other shareholders. Because the
Emerging Markets Debt Fund
is newly formed, no persons own of
record 5% or more of any class of shares of the Fund as of the date of this Statement of Additional
Information.
Custodian
State Street Bank & Trust Co. (“State Street”), 801 Pennsylvania Avenue, Kansas City, Missouri
64105, serves as custodian for assets of all Funds, including as custodian of the Trust for the
custody of the foreign securities acquired by those Funds that invest in foreign securities. Under
the agreement, State Street may hold foreign securities at its principal offices and its branches,
and subject to approval by the Board of Trustees, at a foreign branch of a qualified U.S. bank,
with an eligible foreign subcustodian, or with an eligible foreign securities depository.
Pursuant to rules or other exemptions under the 1940 Act, the Trust may maintain foreign
securities and cash in the custody of certain eligible foreign banks and securities depositories.
Selection of these foreign custodial institutions is currently made by the Trust’s “foreign custody
manager” (currently, its custodian) following a consideration of a number of factors. Currently,
the Board of Trustees reviews annually the continuance of foreign custodial arrangements for the
Trust, but reserves the right to discontinue this practice as permitted by Rule 17f-5. No assurance
can be given that the appraisal of the risks in connection with foreign custodial arrangements will
always be correct or that expropriation, nationalization, freezes, or confiscation of assets that
would impact assets of the Funds will not occur, and shareholders bear the risk of losses arising
from these or other events.
Independent Registered Public Accounting Firm
[ ], [ ] serves as the independent registered public accounting firm
for the Funds. [ ] provides audit services, audit-related services, tax services and
other services relating to SEC filings.
Transfer and Shareholder Servicing Agents
Boston Financial Data Services, Inc., 30 Dan Road, Canton, Massachusetts 02021-2809, serves as
the Transfer and Shareholder Servicing Agent for the Trust’s Class A, Class B, Class C, Class D and
Class R shares. Boston Financial Data Services, Inc., 330 West 9th Street, 5th Floor, Kansas City,
Missouri 64105 serves as the Transfer Agent for the Trust’s Class P, Institutional Class, Class R6
and Administrative Class shares.
Legal Counsel
Ropes & Gray LLP, Prudential Tower, 800 Boylston Street, Boston, Massachusetts 02199-3600,
serves as legal counsel to the Trust.
Registration Statement
This Statement of Additional Information and the Prospectuses do not contain all of the
information included in the Trust’s registration statements filed with the SEC under the 1933 Act
with respect to the securities offered hereby, certain portions of which have been omitted pursuant
to the rules and regulations of the SEC. The registration statements, including the exhibits filed
therewith, may be examined at the offices of the SEC in Washington, D.C.
140
Statements contained herein and in the Prospectuses as to the contents of any contract or
other documents referred to are not necessarily complete, and, in each instance, reference is made
to the copy of such contract or other documents filed as an exhibit to the relevant registration
statement, each such statement being qualified in all respects by such reference.
Forward-Looking Statements
The Trust’s Prospectuses and this Statement of Additional Information include forward-looking
statements. All statements other than statements of historical facts contained in the prospectus
and this Statement of Additional Information, including statements regarding Funds investment
strategies, are forward-looking statements. The words “believe,” “may,” “estimate,” “continue,”
“anticipate,” “intend,” “should,” “plan,” “could,” “target,” “potential,” “is likely,” “will,”
“expect” and similar expressions, as they relate to the Funds, are intended to identify
forward-looking statements. Forward-looking statements are subject to a number of risks,
uncertainties and assumptions, some of which are described in the prospectus and in this Statement
of Additional Information. In addition, the Funds’ past results do not necessarily indicate their
future results. You should not rely upon forward-looking statements as predictions of future events
or performance. You cannot be assured that the events and circumstances reflected in the
forward-looking statements will be achieved or occur.
Financial Statements
Audited financial statements for the Funds as of [ ], including notes thereto, and the
reports of [ ] thereon, are incorporated by reference from the Trust’s of
November 30, 2013 Annual Reports. Because AllianzGI Best Styles Global Equity Fund and AllianzGI
Emerging Markets Debt Fund are newly formed, they do not appear in the Trust’s most recent Annual
Reports. The Trust’s of November 30, 2013 Annual Reports were filed electronically with the SEC on
January 31, 2014 (Accession No. 0001193125-14-030103).
141
APPENDIX A
DESCRIPTION OF SECURITIES RATINGS
Certain of the Funds make use of average portfolio credit quality standards to assist institutional
investors whose own investment guidelines limit their investments accordingly. In determining a
Fund’s overall dollar-weighted average quality, unrated securities are treated as if rated, based
on the Manager’s or Sub-Adviser’s view of their comparability to rated securities. A Fund’s use of
average quality criteria is intended to be a guide for those investors whose investment guidelines
require that assets be invested according to comparable criteria. Reference to an overall average
quality rating for a Fund does not mean that all securities held by the Fund will be rated in that
category or higher. A Fund’s investments may range in quality from securities rated in the lowest
category in which the Fund is permitted to invest to securities rated in the highest category (as
rated by Moody’s, S&P or Fitch, or, if unrated, determined by the Manager or a Sub-Adviser to be of
comparable quality). The percentage of a Fund’s assets invested in securities in a particular
rating category will vary. Following is a description of Moody’s, S&P’s and Fitch’s ratings
applicable to fixed income securities.
Moody’s Investors Service, Inc.
Ratings assigned on Moody’s global long-term rating scales are forward-looking opinions of the
relative credit risks of financial obligations issued by non-financial corporates, financial
institutions, structured finance vehicles, project finance vehicles, and public sector entities.
Long-term ratings are assigned to issuers or obligations with an original maturity of one year or
more and reflect both on the likelihood of a default on contractually promised payments and the
expected financial loss suffered in the event of default.
Long-Term Obligation Ratings
Aaa: Obligations rated Aaa are judged to be of the highest quality, subject to the lowest
level of credit risk.
Aa: Obligations rated Aa are judged to be of high quality and are subject to very low credit
risk.
A: Obligations rated A are judged to be upper-medium grade and are subject to low credit risk.
Baa: Obligations rated Baa are judged to be medium-grade and subject to moderate credit risk
and as such may possess certain speculative characteristics.
Ba: Obligations rated Ba are judged to be speculative and are subject to substantial credit
risk.
B: Obligations rated B are considered speculative and are subject to high credit risk.
Caa: Obligations rated Caa are judged to be speculative of poor standing and are subject to
very high credit risk.
Ca: Obligations rated Ca are highly speculative and are likely in, or very near, default, with
some prospect of recovery of principal and interest.
C: Obligations rated C are the lowest rated and are typically in default, with little prospect
for recovery of principal or interest.
Moody’s appends numerical modifiers, 1, 2, and 3 to each generic rating classification from Aa
through Caa. The modifier 1 indicates that the obligation ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates a
ranking in the lower end of that generic rating category. Additionally, a “(hyb)” indicator is
appended to all ratings of hybrid securities issued by banks, insurers, finance companies, and
securities firms.*
|
|
|
|
|
*
|
|
By their terms, hybrid securities allow for the omission of scheduled dividends, interest, or
principal payments, which can potentially result in impairment if such an omission occurs.
Hybrid securities may also be subject to contractually allowable write-downs of principal that
could result in impairment. Together with the hybrid indicator, the long-term obligation
rating assigned to a hybrid security is an expression of the relative credit risk associated
with that security.
|
A-1
Short-Term Obligation Ratings
Ratings assigned on Moody’s global short-term rating scales are forward-looking opinions of
the relative credit risks of financial obligations issued by non-financial corporates, financial
institutions, structured finance vehicles, project finance vehicles, and public sector entities.
Short-term ratings are assigned to obligations with an original maturity of thirteen months or less
and reflect the likelihood of a default on contractually promised payments.
P-1: Issuers (or supporting institutions) rated Prime-1 have a superior ability to repay
short-term debt obligations.
P-2: Issuers (or supporting institutions) rated Prime-2 have a strong ability to repay
short-term debt obligations.
P-3: Issuers (or supporting institutions) rated Prime-3 have an acceptable ability to repay
short-term obligations.
NP: Issuers (or supporting institutions) rated Not Prime do not fall within any of the Prime
rating categories.
Standard & Poor’s Ratings Services
Issue Credit Rating Definitions
A Standard & Poor’s issue credit rating is a forward-looking opinion about the
creditworthiness of an obligor with respect to a specific financial obligation, a specific class of
financial obligations, or a specific financial program (including ratings on medium term note
programs and commercial paper programs). It takes into consideration the creditworthiness of
guarantors, insurers, or other forms of credit enhancement on the obligation and takes into account
the currency in which the obligation is denominated. The opinion reflects Standard & Poor’s view of
the obligor’s capacity and willingness to meet its financial commitments as they come due, and may
assess terms, such as collateral security and subordination, which could affect ultimate payment in
the event of default.
Issue credit ratings can be either long-term or short-term. Short-term ratings are generally
assigned to those obligations considered short term in the relevant market. In the U.S., for
example, that means obligations with an original maturity of no more than 365 days — including
commercial paper. Short-term ratings are also used to indicate the creditworthiness of an obligor
with respect to put features on long-term obligations. Medium-term notes are assigned long-term
ratings.
Issue credit ratings are based, in varying degrees, on Standard & Poor’s analysis of the
following considerations: likelihood of payment — capacity and willingness of the obligor to meet
its financial commitment on an obligation in accordance with the terms of the obligation; nature of
and provisions of the obligation, and the promise Standard & Poor’s imputes; protection afforded
by, and relative position of, the obligation in the event of bankruptcy, reorganization, or other
arrangement under the laws of bankruptcy and other laws affecting creditors’ rights.
Issue ratings are an assessment of default risk, but may incorporate an assessment of relative
seniority or ultimate recovery in the event of default. Junior obligations are typically rated
lower than senior obligations, to reflect the lower priority in bankruptcy, as noted above. (Such
differentiation may apply when an entity has both senior and subordinated obligations, secured and
unsecured obligations, or operating company and holding company obligations.)
Long-Term Issue Credit Ratings
Investment Grade
AAA: An obligation rated ‘AAA’ has the highest rating assigned by Standard & Poor’s. The
obligor’s capacity to meet its financial commitment on the obligation is extremely strong.
AA: An obligation rated ‘AA’ differs from the highest-rated obligations only to a small
degree. The obligor’s capacity to meet its financial commitment on the obligation is very strong.
A: An obligation rated ‘A’ is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than obligations in higher-rated categories. However, the
obligor’s capacity to meet its financial commitment on the obligation is still strong.
BBB: An obligation rated ‘BBB’ exhibits adequate protection parameters. However, adverse
economic conditions or changing circumstances are more likely to lead to a weakened capacity of the
obligor to meet its financial commitment on the obligation.
A-2
Speculative Grade
Obligations rated ‘BB’, ‘B’, ‘CCC’, ‘CC’, and ‘C’ are regarded as having significant
speculative characteristics. ‘BB’ indicates the least degree of speculation and ‘C’ the highest.
While such obligations will likely have some quality and protective characteristics, these may be
outweighed by large uncertainties or major exposures to adverse conditions.
BB: An obligation rated ‘BB’ is less vulnerable to nonpayment than other speculative issues.
However, it faces major ongoing uncertainties or exposure to adverse business, financial, or
economic conditions which could lead to the obligor’s inadequate capacity to meet its financial
commitment on the obligation.
B: An obligation rated ‘B’ is more vulnerable to nonpayment than obligations rated ‘BB’, but
the obligor currently has the capacity to meet its financial commitment on the obligation. Adverse
business, financial, or economic conditions will likely impair the obligor’s capacity or
willingness to meet its financial commitment on the obligation.
CCC: An obligation rated ‘CCC’ is currently vulnerable to nonpayment and is dependent upon
favorable business, financial, and economic conditions for the obligor to meet its financial
commitment on the obligation. In the event of adverse business, financial, or economic conditions,
the obligor is not likely to have the capacity to meet its financial commitment on the obligation.
CC: An obligation rated ‘CC’ is currently highly vulnerable to nonpayment. The ‘CC’ rating is
used when a default has not yet occurred, but Standard & Poor’s expects default to be a virtual
certainty, regardless of the anticipated time to default.
C: An obligation rated ‘C’ is currently highly vulnerable to nonpayment,and the obligation is
expected to have lower relative seniority or lower ultimate recovery compared to obligations that
are rated higher.
D: An obligation rated ‘D’ is in default or in breach of an imputed promise. For non-hybrid
capital instruments, the ‘D’ rating category is used when payments on an obligation are not made on
the date due, unless Standard & Poor’s believes that such payments will be made within five
business days in the absence of a stated grace period or within the earlier of the stated grace
period or 30 calendar days. The ‘D’ rating also will be used upon the filing of a bankruptcy
petition or the taking of similar action and where default on an obligation is a virtual certainty,
for example due to automatic stay provisions. An obligation’s rating is lowered to ‘D’ if it is
subject to a distressed exchange offer.
NR: This indicates that no rating has been requested, or that there is insufficient
information on which to base a rating, or that Standard & Poor’s does not rate a particular
obligation as a matter of policy.
Plus (+) or Minus (-): The ratings from ‘AA’ to ‘CCC’ may be modified by the addition of a
plus (+) or minus (-) sign to show relative standing within the major rating categories.
Active Qualifiers
L: Ratings qualified with ‘L’ apply only to amounts invested up to federal deposit insurance
limits.
p: This suffix is used for issues in which the credit factors, the terms, or both, that
determine the likelihood of receipt of payment of principal are different from the credit factors,
terms or both that determine the likelihood of receipt of interest on the obligation. The ‘p’
suffix indicates that the rating addresses the principal portion of the obligation only and that
the interest is not rated.
pi: Ratings with a ‘pi’ suffix are based on an analysis of an issuer’s published financial
information, as well as additional information in the public domain. They do not, however, reflect
in-depth meetings with an issuer’s management and therefore may be based on less comprehensive
information than ratings without a ‘pi’ suffix. Ratings with a ‘pi’ suffix are reviewed annually
based on a new year’s financial statements, but may be reviewed on an interim basis if a major
event occurs that may affect the issuer’s credit quality.
Preliminary: Preliminary ratings, with the ‘prelim’ suffix, may be assigned to obligors or
obligations, including financial programs, in the circumstances described below. Assignment of a
final rating is conditional on the receipt by Standard & Poor’s of appropriate documentation.
Standard & Poor’s reserves the right not to issue a final rating. Moreover, if a final rating is
issued, it may differ from the preliminary rating.
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Preliminary ratings may be assigned to obligations, most commonly structured and project
finance issues, pending receipt of final documentation and legal opinions.
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Preliminary ratings are assigned to Rule 415 Shelf Registrations. As specific issues,
with defined terms, are offered from the master registration, a final rating may be assigned
to them in accordance with Standard & Poor’s policies.
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Preliminary ratings may be assigned to obligations that will likely be issued upon the
obligor’s emergence from bankruptcy or similar reorganization, based on late-stage
reorganization plans, documentation and discussions with the obligor. Preliminary ratings
may also be assigned to the obligors. These ratings consider the anticipated general credit
quality of the reorganized or post-bankruptcy issuer as well as attributes of the
anticipated obligation(s).
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Preliminary ratings may be assigned to entities that are being formed or that are in the
process of being independently established when, in Standard & Poor’s opinion, documentation
is close to final. Preliminary ratings may also be assigned to the obligations of these
entities.
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Preliminary ratings may be assigned when a previously unrated entity is undergoing a
well-formulated restructuring, recapitalization, significant financing or other
transformative event, generally at the point that investor or lender commitments are
invited. The preliminary rating may be assigned to the entity and to its proposed
obligation(s). These preliminary ratings consider the anticipated general credit quality of
the obligor, as well as attributes of the anticipated obligation(s), assuming successful
completion of the transformative event. Should the transformative event not occur, Standard
& Poor’s would likely withdraw these preliminary ratings.
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A preliminary recovery rating may be assigned to an obligation that has a preliminary
issue credit rating.
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t: This symbol indicates termination structures that are designed to honor their contracts to
full maturity or, should certain events occur, to terminate and cash settle all their contracts
before their final maturity date.
Active Identifiers
Unsolicited: The ‘u’ identifier and ‘unsolicited’ designation are unsolicited credit ratings
assigned at the initiative of Standard & Poor’s and not at the request of the issuer or its agents.
sf: The (sf) suffix is assigned to certain issues and issuers to distinguish instruments or
obligors considered by regulation to be structured finance instruments or obligors from any other
instrument or obligor. The addition of this suffix to a credit rating does not change the
definition of that rating or our opinion about the issue’s or issuer’s creditworthiness.
jr: The ‘JR’ identifier is assigned to all issues and issuers ratings assigned by either
Standard & Poor’s Ratings Japan K.K. or Nippon Standard & Poor’s K.K., each of which is a
registered credit rating agency in Japan, as ratings registered under the Japanese regulation. The
addition of the identifier does not change the definition of that rating or our opinion about the
issue’s or issuer’s creditworthiness.
EU: Standard & Poor’s assigns the ‘EU’ identifier to global scale ratings assigned by Standard
& Poor’s rating entities (or branches thereof) regulated in the European Union. The addition of the
‘EU’ identifier to a rating does not change that rating’s definition or our opinion about the
issue’s or issuer’s creditworthiness.
EE: Standard & Poor’s assigns the ‘EE’ identifier to global scale ratings assigned by Standard
& Poor’s rating entities established outside the European Union which are endorsed by a Standard &
Poor’s rating entity regulated in the European Union. The addition of the ‘EE’ identifier to a
rating does not change that rating’s definition or our opinion about the issue’s or issuer’s
creditworthiness.
XN: Nippon Standard & Poor’s K.K. (Nippon KK) assigns the ‘XN’ identifier to credit ratings
assigned by Nippon KK. Nippon KK is not a Nationally Recognized Statistical Rating Organization.
The addition of the ‘XN’ identifier to a rating does not change that rating’s definition or our
opinion about the issue’s or issuer’s creditworthiness.
uco: The ‘uco’ identifier may (or shall, if an EU regulatory requirement) be assigned to
credit ratings under review as a result of a criteria revision. The addition of the ‘uco’
identifier to a rating does not change that rating’s definition or our opinion about the issue’s or
issuer’s creditworthiness.
A-4
Short Term Issue Credit Ratings
Short-term ratings are generally assigned to those obligations considered short-term in the
relevant market. In the U.S., for example, that means obligations with an original maturity of no
more than 365 days—including commercial paper. Short-term ratings are also used to indicate the
creditworthiness of an obligor with respect to put features on long-term obligations. Medium-term
notes are assigned long-term ratings.
A-1: A short-term obligation rated ‘A-1’ is rated in the highest category by Standard &
Poor’s. The obligor’s capacity to meet its financial commitment on the obligation is strong. Within
this category, certain obligations are designated with a plus sign (+). This indicates that the
obligor’s capacity to meet its financial commitment on these obligations is extremely strong.
A-2: A short-term obligation rated ‘A-2’ is somewhat more susceptible to the adverse effects
of changes in circumstances and economic conditions than obligations in higher rating categories.
However, the obligor’s capacity to meet its financial commitment on the obligation is satisfactory.
A-3: A short-term obligation rated ‘A-3’ exhibits adequate protection parameters. However,
adverse economic conditions or changing circumstances are more likely to lead to a weakened
capacity of the obligor to meet its financial commitment on the obligation.
B: A short-term obligation rated ‘B’ is regarded as vulnerable and has significant speculative
characteristics. The obligor currently has the capacity to meet its financial commitments; however,
it faces major ongoing uncertainties which could lead to the obligor’s inadequate capacity to meet
its financial commitments.
C: A short-term obligation rated ‘C’ is currently vulnerable to nonpayment and is dependent
upon favorable business, financial, and economic conditions for the obligor to meet its financial
commitment on the obligation.
D: A short-term obligation rated ‘D’ is in default or in breach of an imputed promise. For
non-hybrid capital instruments, the ‘D’ rating category is used when payments on an obligation are
not made on the date due, unless Standard & Poor’s believes that such payments will be made within
any stated grace period. However, any stated grace period longer than five business days will be
treated as five business days. The ‘D’ rating also will be used upon the filing of a bankruptcy
petition or the taking of a similar action and where default on an obligation is a virtual
certainty, for example due to automatic stay provisions. An obligation’s rating is lowered to ‘D’
if it is subject to a distressed exchange offer.
Dual Ratings: Dual ratings may be assigned to debt issues that have a put option or demand
feature. The first component of the rating addresses the likelihood of repayment of principal and
interest as due, and the second component of the rating addresses only the demand feature. The
first component of the rating can relate to either a short-term or long-term transaction and
accordingly use either short-term or long-term rating symbols. The second component of the rating
relates to the put option and is assigned a short-term rating symbol (for example, ‘AAA/A-1+’ or
‘A-1+A-1’). With U.S. municipal short-term demand debt, the U.S. municipal short-term note rating
symbols are used for the first component of the rating (for example, ‘SP-1+/A-1+’).
The analyses, including ratings, of Standard & Poor’s and its affiliates (together, “Standard
& Poor’s”) are statements of opinion as of the date they are expressed and not statements of fact
or recommendations to purchase, hold, or sell any securities or make any investment decisions.
Standard & Poor’s assumes no obligation to update any information following publication. Users of
ratings or other analyses should not rely on them in making any investment decision. Standard &
Poor’s opinions and analyses do not address the suitability of any security. Standard & Poor’s does
not act as a fiduciary or an investment advisor except where registered as such. While Standard &
Poor’s has obtained information from sources it believes to be reliable, Standard & Poor’s does not
perform an audit and undertakes no duty of due diligence or independent verification of any
information it receives. Ratings and other opinions may be changed, suspended, or withdrawn at any
time.
Fitch, Inc.
Long-Term Rating Scales
Issuer Credit Rating Scales
Rated entities in a number of sectors, including financial and non-financial corporations,
sovereigns and insurance companies, are generally assigned Issuer Default Ratings (IDRs). IDRs
opine on an entity’s relative vulnerability to default on financial obligations. The “threshold”
default risk addressed by the IDR is generally that of the financial obligations whose non-payment
would best reflect the uncured failure of that entity. As such, IDRs also address relative
vulnerability to bankruptcy, administrative receivership or similar concepts, although the agency
recognizes that issuers may also make pre-emptive and therefore voluntary use of such mechanisms.
A-5
In aggregate, IDRs provide an ordinal ranking of issuers based on the agency’s view of their
relative vulnerability to default, rather than a prediction of a specific percentage likelihood of
default. For historical information on the default experience of Fitch-rated issuers, please
consult the transition and default performance studies available from the Fitch Ratings website.
Investment Grade
AAA: Highest credit quality. ‘AAA’ ratings denote the lowest expectation of default risk. They
are assigned only in cases of exceptionally strong capacity for payment of financial commitments.
This capacity is highly unlikely to be adversely affected by foreseeable events.
AA: Very high credit quality. ‘AA’ ratings denote expectations of very low default risk. They
indicate very strong capacity for payment of financial commitments. This capacity is not
significantly vulnerable to foreseeable events.
A: High credit quality. ‘A’ ratings denote expectations of low default risk. The capacity for
payment of financial commitments is considered strong. This capacity may, nevertheless, be more
vulnerable to adverse business or economic conditions than is the case for higher ratings.
BBB: Good credit quality. ‘BBB’ ratings indicate that expectations of default risk are
currently low. The capacity for payment of financial commitments is considered adequate but adverse
business or economic conditions are more likely to impair this capacity.
Speculative Grade
BB: Speculative. ‘BB’ ratings indicate an elevated vulnerability to default risk, particularly
in the event of adverse changes in business or economic conditions over time; however, business or
financial flexibility exists which supports the servicing of financial commitments.
B: Highly speculative. ‘B’ ratings indicate that material default risk is present, but a
limited margin of safety remains. Financial commitments are currently being met; however, capacity
for continued payment is vulnerable to deterioration in the business and economic environment.
CCC: Substantial credit risk. Default is a real possibility.
CC: Very high levels of credit risk. Default of some kind appears probable.
C: Exceptionally high levels of credit risk. Default is imminent or inevitable, or the issuer
is in standstill. Conditions that are indicative of a ‘C’ category rating for an issuer include:
(a) the issuer has entered into a grace or cure period following non-payment of a material
financial obligation;
(b) the issuer has entered into a temporary negotiated waiver or standstill agreement following a
payment default on a material financial obligation; or
(c) Fitch Ratings otherwise believes a condition of ‘RD’ or ‘D’ to be imminent or inevitable,
including through the formal announcement of a distressed debt exchange.
RD: Restricted default. ‘RD’ ratings indicate an issuer that in Fitch Ratings’ opinion has
experienced an uncured payment default on a bond, loan or other material financial obligation but
which has not entered into bankruptcy filings, administration, receivership, liquidation or other
formal winding-up procedure, and which has not otherwise ceased operating. This would include:
(a) the selective payment default on a specific class or currency of debt;
(b) the uncured expiry of any applicable grace period, cure period or default forbearance period
following a payment default on a bank loan, capital markets security or other material financial
obligation;
(c) the extension of multiple waivers or forbearance periods upon a payment default on one or
more material financial obligations, either in series or in parallel; or
(d) execution of a distressed debt exchange on one or more material financial obligations.
A-6
D: Default. ‘D’ ratings indicate an issuer that in Fitch Ratings’ opinion has entered into
bankruptcy filings, administration, receivership, liquidation or other formal winding-up procedure,
or which has otherwise ceased business.
Default ratings are not assigned prospectively to entities or their obligations; within this
context, non-payment on an instrument that contains a deferral feature or grace period will
generally not be considered a default until after the expiration of the deferral or grace period,
unless a default is otherwise driven by bankruptcy or other similar circumstance, or by a
distressed debt exchange.
“Imminent” default typically refers to the occasion where a payment default has been intimated by
the issuer, and is all but inevitable. This may, for example, be where an issuer has missed a
scheduled payment, but (as is typical) has a grace period during which it may cure the payment
default. Another alternative would be where an issuer has formally announced a distressed debt
exchange, but the date of the exchange still lies several days or weeks in the immediate future.
In all cases, the assignment of a default rating reflects the agency’s opinion as to the most
appropriate rating category consistent with the rest of its universe of ratings, and may differ
from the definition of default under the terms of an issuer’s financial obligations or local
commercial practice.
Note: The modifiers “+” or “-” may be appended to a rating to denote relative status within major
rating categories. Such suffixes are not added to the ‘AAA’ Long-Term IDR category, or to Long-Term
IDR categories below ‘B’.
Corporate Finance Obligations
Ratings of individual securities or financial obligations of a corporate issuer address
relative vulnerability to default on an ordinal scale. In addition, for financial obligations in
corporate finance, a measure of recovery given default on that liability is also included in the
rating assessment. This notably applies to covered bonds ratings, which incorporate both an
indication of the probability of default and of the recovery given a default of this debt
instrument.
The relationship between issuer scale and obligation scale assumes an historical average
recovery of between 30%-50% on the senior, unsecured obligations of an issuer. As a result,
individual obligations of entities, such as corporations, are assigned ratings higher, lower, or
the same as that entity’s issuer rating or IDR. At the lower end of the ratings scale, Fitch
Ratings now additionally publishes explicit Recovery Ratings in many cases to complement issuer and
obligation ratings.
Investment Grade
AAA: Highest credit quality. ‘AAA’ ratings denote the lowest expectation of credit risk. They
are assigned only in cases of exceptionally strong capacity for payment of financial commitments.
This capacity is highly unlikely to be adversely affected by foreseeable events.
AA: Very high credit quality. ‘AA’ ratings denote expectations of very low credit risk. They
indicate very strong capacity for payment of financial commitments. This capacity is not
significantly vulnerable to foreseeable events.
A: High credit quality. ‘A’ ratings denote expectations of low credit risk. The capacity for
payment of financial commitments is considered strong. This capacity may, nevertheless, be more
vulnerable to adverse business or economic conditions than is the case for higher ratings.
BBB: Good credit quality. ‘BBB’ ratings indicate that expectations of credit risk are
currently low. The capacity for payment of financial commitments is considered adequate but adverse
business or economic conditions are more likely to impair this capacity.
Speculative Grade
BB: Speculative. ‘BB’ ratings indicate an elevated vulnerability to credit risk, particularly
in the event of adverse changes in business or economic conditions over time; however, business or
financial alternatives may be available to allow financial commitments to be met.
B: Highly speculative. ‘B’ ratings indicate that material credit risk is present.
CCC: Substantial credit risk. ‘CCC’ ratings indicate that substantial credit risk is present.
CC: Very high levels of credit risk. ‘CC’ ratings indicate very high levels of credit risk.
C: Exceptionally high levels of credit risk. ‘C’ indicates exceptionally high levels of credit
risk.
A-7
Defaulted obligations typically are not assigned ‘RD’ or ‘D’ ratings, but are instead rated in
the ‘B’ to ‘C’ rating categories, depending upon their recovery prospects and other relevant
characteristics. This approach better aligns obligations that have comparable overall expected loss
but varying vulnerability to default and loss.
Note: The modifiers “+” or “-” may be appended to a rating to denote relative status within major
rating categories. Such suffixes are not added to the ‘AAA’ obligation rating category, or to
corporate finance obligation ratings in the categories below ‘CCC’.
The subscript ‘emr’ is appended to a rating to denote embedded market risk which is beyond the
scope of the rating. The designation is intended to make clear that the rating solely addresses the
counterparty risk of the issuing bank. It is not meant to indicate any limitation in the analysis
of the counterparty risk, which in all other respects follows published Fitch criteria for
analyzing the issuing financial institution. Fitch does not rate these instruments where the
principal is to any degree subject to market risk.
Structured, Project & Public Finance Obligations
Ratings of structured finance, project finance and public finance obligations on the long-term
scale, including the financial obligations of sovereigns, consider the obligations’ relative
vulnerability to default. These ratings are typically assigned to an individual security or tranche
in a transaction and not to an issuer.
Investment Grade
AAA: Highest credit quality. ‘AAA’ ratings denote the lowest expectation of default risk. They
are assigned only in cases of exceptionally strong capacity for payment of financial commitments.
This capacity is highly unlikely to be adversely affected by foreseeable events.
AA: Very high credit quality. ‘AA’ ratings denote expectations of very low default risk. They
indicate very strong capacity for payment of financial commitments. This capacity is not
significantly vulnerable to foreseeable events.
A: High credit quality. ‘A’ ratings denote expectations of low default risk. The capacity for
payment of financial commitments is considered strong. This capacity may, nevertheless, be more
vulnerable to adverse business or economic conditions than is the case for higher ratings.
BBB: Good credit quality. ‘BBB’ ratings indicate that expectations of default risk are
currently low. The capacity for payment of financial commitments is considered adequate but adverse
business or economic conditions are more likely to impair this capacity.
Speculative Grade
BB: Speculative. ‘BB’ ratings indicate an elevated vulnerability to default risk, particularly
in the event of adverse changes in business or economic conditions over time.
B: Highly speculative. ‘B’ ratings indicate that material default risk is present, but a
limited margin of safety remains. Financial commitments are currently being met; however, capacity
for continued payment is vulnerable to deterioration in the business and economic environment.
CCC: Substantial credit risk. Default is a real possibility.
CC: Very high levels of credit risk. Default of some kind appears probable.
C: Exceptionally high levels of credit risk. Default appears imminent or inevitable.
D: Indicates a default. Default generally is defined as one of the following:
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Failure to make payment of principal and/or interest under the contractual terms of the
rated obligation;
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The bankruptcy filings, administration, receivership, liquidation or other winding-up or
cessation of the business of an issuer/obligor; or
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The distressed exchange of an obligation, where creditors were offered securities with
diminished structural or economic terms compared with the existing obligation to avoid a
probable payment default.
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Structured Finance Defaults. “Imminent” default, categorized under ‘C’, typically refers to the
occasion where a payment default has been intimated by the issuer, and is all but inevitable.
Alternatively where an issuer has formally announced a distressed debt exchange, but the date of
the exchange still lies several days or weeks in the immediate future.
Additionally, in structured finance transactions, where analysis indicates that an instrument is
irrevocably impaired such that it is not expected to pay interest and/or principal in full in
accordance with the terms of the obligation’s documentation during the life of the transaction, but
where no payment default in accordance with the terms of the documentation is imminent, the
obligation will typically be rated in the ‘C’ category.
Structured Finance Write-downs. Where an instrument has experienced an involuntary and, in the
agency’s opinion, irreversible “write-down” of principal (i.e. other than through amortization, and
resulting in a loss to the investor), a credit rating of ‘D’ will be assigned to the instrument.
Where the agency believes the “write-down” may prove to be temporary (and the loss may be “written
up” again in future if and when performance improves), then a credit rating of ‘C’ will typically
be assigned. Should the “write-down” then later be reversed, the credit rating will be raised to an
appropriate level for that instrument. Should the “write-down” later be deemed as irreversible, the
credit rating will be lowered to ‘D’.
Notes:
In the case of structured and project finance, while the ratings do not address the loss
severity given default of the rated liability, loss severity assumptions on the underlying assets
are nonetheless typically included as part of the analysis. Loss severity assumptions are used to
derive pool cash flows available to service the rated liability.
The suffix ‘sf’ denotes an issue that is a structured finance transaction. For an explanation
of how Fitch determines structured finance ratings, please see our criteria available at
www.Fitchratings.com.
In the case of public finance, the ratings do not address the loss given default of the rated
liability, focusing instead on the vulnerability to default of the rated liability.
The modifiers “+” or “-” may be appended to a rating to denote relative status within major
rating categories. Such suffixes are not added to the ‘AAA’ Long-Term Rating category, or
categories below ‘B’.
Enhanced Equipment Trust Certificates (EETCs) are corporate-structured hybrid debt securities
that airlines typically use to finance aircraft equipment. Due to the hybrid characteristics of
these bonds, Fitch’s rating approach incorporates elements of both the structured finance and
corporate rating methodologies. Although rated as asset-backed securities, unlike other structured
finance ratings, EETC ratings involve a measure of recovery given default akin to ratings of
financial obligations in corporate finance, as described under “Corporate Finance Obligations.”
Recovery Ratings
Recovery Ratings are assigned to selected individual securities and obligations. These
currently are published for most individual obligations of corporate issuers with IDRs in the ‘B’
rating category and below.
Among the factors that affect recovery rates for securities are the collateral, the seniority
relative to other obligations in the capital structure (where appropriate), and the expected value
of the company or underlying collateral in distress.
The Recovery Rating scale is based upon the expected relative recovery characteristics of an
obligation upon the curing of a default, emergence from insolvency or following the liquidation or
termination of the obligor or its associated collateral.
Recovery Ratings are an ordinal scale and do not attempt to precisely predict a given level of
recovery. As a guideline in developing the rating assessments, the agency employs broad theoretical
recovery bands in its ratings approach based on historical averages, but actual recoveries for a
given security may deviate materially from historical averages.
Recovery Ratings Scale
RR1: Outstanding recovery prospects given default.
RR2: Superior recovery prospects given default.
A-9
RR3: Good recovery prospects given default.
RR4: Average recovery prospects given default.
RR5: Below average recovery prospects given default.
RR6: Poor recovery prospects given default.
RR1 rated securities have characteristics consistent with securities historically recovering
91%-100% of current principal and related interest.
RR2 rated securities have characteristics consistent with securities historically recovering
71%-90% of current principal and related interest.
RR3 rated securities have characteristics consistent with securities historically recovering
51%-70% of current principal and related interest.
RR4 rated securities have characteristics consistent with securities historically recovering
31%-50% of current principal and related interest.
RR5 rated securities have characteristics consistent with securities historically recovering
11%-30% of current principal and related interest.
RR6 rated securities have characteristics consistent with securities historically recovering
0%-10% of current principal and related interest.
Short-Term Credit Ratings
A short-term issuer or obligation rating is based in all cases on the short-term vulnerability
to default of the rated entity or security stream and relates to the capacity to meet financial
obligations in accordance with the documentation governing the relevant obligation. Short-Term
Ratings are assigned to obligations whose initial maturity is viewed as “short term” based on
market convention. Typically, this means up to 13 months for corporate, sovereign, and structured
obligations, and up to 36 months for obligations in U.S. public finance markets.
F1: Highest short-term credit quality. Indicates the strongest intrinsic capacity for timely
payment of financial commitments; may have an added “+” to denote any exceptionally strong credit
feature.
F2: Good short-term credit quality. Good intrinsic capacity for timely payment of financial
commitments.
F3: Fair short-term credit quality. The intrinsic capacity for timely payment of financial
commitments is adequate.
B: Speculative short-term credit quality. Minimal capacity for timely payment of financial
commitments, plus heightened vulnerability to near term adverse changes in financial and economic
conditions.
C: High short-term default risk. Default is a real possibility.
RD: Restricted default. Indicates an entity that has defaulted on one or more of its financial
commitments, although it continues to meet other financial obligations. Typically applicable to
entity ratings only.
D: Default. Indicates a broad-based default event for an entity, or the default of a
short-term obligation.
Qualifiers
“NR”: Denotes securities not rated by Fitch where Fitch has rated some, but not all,
securities comprising an issuance capital structure.
“WD”: Indicates that the rating has been withdrawn and the issue or issuer is no longer rated
by Fitch Ratings.
A-10
Rating Watch: Rating Watches indicate that there is a heightened probability of a rating
change and the likely direction of such a change. These are designated as “Positive”, indicating a
potential upgrade, “Negative”, for a potential downgrade, or “Evolving”, if ratings may be raised,
lowered or affirmed. However, ratings that are not on Rating Watch can be raised or lowered without
being placed on Rating Watch first, if circumstances warrant such an action.
A Rating Watch is typically event-driven and, as such, it is generally resolved over a
relatively short period. The event driving the Watch may be either anticipated or have already
occurred, but in both cases, the exact rating implications remain undetermined. The Watch period is
typically used to gather further information and/or subject the information to further analysis.
Additionally, a Watch may be used where the rating implications are already clear, but where a
triggering event (e.g. shareholder or regulatory approval) exists. The Watch will typically extend
to cover the period until the triggering event is resolved or its outcome is predictable with a
high enough degree of certainty to permit resolution of the Watch.
Rating Watches can be employed by all analytical groups and are applied to the ratings of
individual entities and/or individual instruments. At the lowest categories of speculative grade
(‘CCC’, ‘CC’ and ‘C’) the high volatility of credit profiles may imply that almost all ratings
should carry a Watch. Watches are nonetheless only applied selectively in these categories, where a
committee decides that particular events or threats are best communicated by the addition of the
Watch designation.
Rating Outlook: Rating Outlooks indicate the direction a rating is likely to move over a one-
to two-year period. They reflect financial or other trends that have not yet reached the level that
would trigger a rating action, but which may do so if such trends continue. The majority of
Outlooks are generally Stable, which is consistent with the historical migration experience of
ratings over a one- to two-year period. Positive or Negative rating Outlooks do not imply that a
rating change is inevitable and, similarly, ratings with Stable Outlooks can be raised or lowered
without a prior revision to the Outlook, if circumstances warrant such an action. Occasionally,
where the fundamental trend has strong, conflicting elements of both positive and negative, the
Rating Outlook may be described as Evolving.
Outlooks are currently applied on the long-term scale to issuer ratings in corporate finance
(including sovereigns, industrials, utilities, financial institutions and insurance companies) and
public finance outside the U.S.; to issue ratings in public finance in the U.S.; to certain issues
in project finance; to Insurer Financial Strength Ratings; to issuer and/or issue ratings in a
number of National Rating scales; and to the ratings of structured finance transactions and covered
bonds. Outlooks are not applied to ratings assigned on the short-term scale and are applied
selectively to ratings in the ‘CCC’, ‘CC’ and ‘C’ categories. Defaulted ratings typically do not
carry an Outlook.
A-11
APPENDIX B
CERTAIN OWNERSHIP TRUST SHARES
As of February 28, 2014, the following persons owned of record or beneficially 5% or more of the
noted class of shares of the Funds:
a = Entity owned 25% or more of the outstanding shares of beneficial interest of the Funds, and
therefore may be presumed to “control” the Funds, as that term is defined in the 1940 Act.
b = Shares are believed to be held only as nominee.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount &
|
|
Percentage of
|
|
|
|
|
|
|
|
Beneficial Nature
|
|
Outstanding Share of
|
|
|
|
Fund Name
|
|
Registration
|
|
of Ownership
|
|
Ownership
|
|
|
|
ALLIANZGI BEHAVIORAL ADV LARGE CAP A
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI BEHAVIORAL ADV LARGE CAP A
|
|
MLPF&S FOR THE SOLE BENEFIT OF ITS CUSTOMERS ATTN FUND ADMN/#97M 4800 DEER LAKE DR E FL
3 JACKSONVILLE FL 32246-6484
|
|
|
356,086.205
|
|
|
|
89.26
|
%
|
|
|
|
ALLIANZGI BEHAVIORAL ADV LARGE CAP C
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI BEHAVIORAL ADV LARGE CAP C
|
|
RAYMOND JAMES OMNIBUS FOR MUTUAL FUNDS HOUSE ACCT FIRM 92500015 ATTN COURTNEY WALLER 880
CARILLON PKWY ST PETERSBURG FL 33716-1100
|
|
|
7,309.525
|
|
|
|
47.27
|
%
|
|
b
|
|
ALLIANZGI BEHAVIORAL ADV LARGE CAP C
|
|
PERSHING LLC PO BOX 2052 JERSEY CITY NJ 07303-2052
|
|
|
3,260.401
|
|
|
|
21.09
|
%
|
|
|
|
ALLIANZGI BEHAVIORAL ADV LARGE CAP C
|
|
SSB&T CUST SIMPLE IRA VETERINARY ASSOCIATES FBO LISA B WOOD PO BOX 839 KAMUELA HI
96743-0839
|
|
|
1,310.591
|
|
|
|
8.48
|
%
|
|
|
|
ALLIANZGI BEHAVIORAL ADV LARGE CAP D
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI BEHAVIORAL ADV LARGE CAP D
|
|
NATIONAL FINANCIAL SERVICES LLC FOR THE BENEFIT OF OUR CUSTOMERS ATTN MUTUAL FUNDS DEPT
5TH FL 200 LIBERTY ST ONE WORLD FINANCIAL CENTER NEW YORK NY 10281-1003
|
|
|
3,506.319
|
|
|
|
37.24
|
%
|
|
b
|
|
ALLIANZGI BEHAVIORAL ADV LARGE CAP D
|
|
CAPITAL ONE SHAREBUILDER INC —OMNIBUS ACCOUNT— 83 S KING ST STE 700 SEATTLE WA
98104-2851
|
|
|
2,693.424
|
|
|
|
28.61
|
%
|
|
b
|
|
ALLIANZGI BEHAVIORAL ADV LARGE CAP D
|
|
CHARLES SCHWAB & CO INC SPECIAL CUSTODY ACCOUNT FOR THE EXCLUSIVE BENEFIT OF OUR
CUSTOMERS ATTN MUTUAL FUND DEPT 211 MAIN ST SAN FRANCISCO CA 94105-1905
|
|
|
1,973.259
|
|
|
|
20.96
|
%
|
|
|
|
ALLIANZGI BEHAVIORAL ADV LARGE CAP D
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
753.242
|
|
|
|
8.00
|
%
|
|
|
|
ALLIANZGI BEHAVIORAL ADV LRG CAP INST
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANZGI BEHAVIORAL ADV LRG CAP INST
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
755,096.143
|
|
|
|
25.27
|
%
|
|
|
|
ALLIANZGI BEHAVIORAL ADV LRG CAP INST
|
|
ALLIANZ FUNDS MULTI-STRATEGY TRUST ON BEHALF OF ALLIANZGI GLOBAL ALLOCATION FUND ATTN
STEPHEN SEXAUER 600 W BROADWAY FL 34 SAN DIEGO CA 92101-3398
|
|
|
363,052.347
|
|
|
|
12.15
|
%
|
|
|
|
ALLIANZGI BEHAVIORAL ADV LRG CAP INST
|
|
M J MURDOCK CHARITABLE TRUST PO BOX 1618 VANCOUVER WA 98668-1618
|
|
|
314,719.006
|
|
|
|
10.53
|
%
|
|
|
|
ALLIANZGI BEHAVIORAL ADV LRG CAP INST
|
|
STATE STREET AS CUSTODIAN FOR SOUTH DAKOTA COLLEGEACCESS 529 PLAN DIVERSIFIED EQUITY
P52D ATTN: TRUST OPERATIONS 801 PENNSYLVANIA KANSAS CITY MO 64105-1307
|
|
|
207,903.451
|
|
|
|
6.96
|
%
|
|
|
|
ALLIANZGI BEHAVIORAL ADV LRG CAP INST
|
|
STATE STREET BANK & TRUST CO CUST FOR MI 529 ADVISOR PLAN AGE-BASED PORTFOLIO 1 P75A 801
PENNSYLVANIA AVE KANSAS CITY MO 64105-1307
|
|
|
202,357.459
|
|
|
|
6.77
|
%
|
|
|
|
ALLIANZGI BEHAVIORAL ADV LRG CAP P
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANZGI BEHAVIORAL ADV LRG CAP P
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
752.144
|
|
|
|
100.00
|
%
|
|
|
|
ALLIANZGI BEST STYLES GLOBAL EQUITY R6
|
|
|
|
|
|
|
|
|
|
|
|
a
|
|
ALLIANZGI BEST STYLES GLOBAL EQUITY R6
|
|
ALLIANZ FUNDS MULTI-STRATEGY TRUST ON BEHALF OF ALLIANZGI GLOBAL 600 W BROADWAY FL 34
SAN DIEGO CA 92101-3398
|
|
|
562,067.152
|
|
|
|
27.01
|
%
|
|
|
|
ALLIANZGI CHINA EQUITY A
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI CHINA EQUITY A
|
|
PERSHING LLC PO BOX 2052 JERSEY CITY NJ 07303-2052
|
|
|
2,628.100
|
|
|
|
33.38
|
%
|
|
|
|
ALLIANZGI CHINA EQUITY A
|
|
TD AMERITRADE FBO MARY E O’NEILL ROLLOVER IRA TD AMERITRADE CLEARING, CUSTODIAN 207 LAKE
ST EVANSTON IL 60201-4615
|
|
|
1,167.107
|
|
|
|
14.82
|
%
|
|
|
|
ALLIANZGI CHINA EQUITY A
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
784.295
|
|
|
|
9.96
|
%
|
|
|
|
ALLIANZGI CHINA EQUITY A
|
|
SSB&T CUST 403B WOODLAND HILLS SCHOOL DISTRICT FBO MARCIA ANN MURELLO 2757 COLUMBIA AVE
PITTSBURGH PA 15221-4551
|
|
|
702.610
|
|
|
|
8.92
|
%
|
|
b
|
|
ALLIANZGI CHINA EQUITY A
|
|
NATIONAL FINANCIAL SERVICES LLC FOR THE BENEFIT OF OUR CUSTOMERS ATTN: MUTUAL FUNDS DEPT
4TH FL 499 WASHINGTON BLVD JERSEY CITY NJ 07310-2010
|
|
|
624.591
|
|
|
|
7.93
|
%
|
|
|
|
ALLIANZGI CHINA EQUITY A
|
|
OPPENHEIMER & CO INC. FBO ROBERT J PASSANTINO 105 IVY HILL RD MAHOPAC NY 10541-1219
|
|
|
464.425
|
|
|
|
5.90
|
%
|
|
|
|
ALLIANZGI CHINA EQUITY C
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANZGI CHINA EQUITY C
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
765.191
|
|
|
|
24.81
|
%
|
|
b
|
|
ALLIANZGI CHINA EQUITY C
|
|
SSB&T CUST SEP IRA MORRIS ENTERPRISES 11860 ABNERS RIDGE DR KNOXVILLE TN 37934-4700
|
|
|
621.876
|
|
|
|
20.17
|
%
|
|
b
|
|
ALLIANZGI CHINA EQUITY C
|
|
NATIONAL FINANCIAL SERVICES LLC FOR THE BENEFIT OF OUR CUSTOMERS ATTN: MUTUAL FUNDS DEPT
4TH FL 499 WASHINGTON BLVD JERSEY CITY NJ 07310-2010
|
|
|
473.810
|
|
|
|
15.36
|
%
|
|
b
|
|
ALLIANZGI CHINA EQUITY C
|
|
LPL FINANCIAL FBO: CUSTOMER ACCOUNTS ATTN: MUTUAL FUND OPERATIONS P O BOX 509046 SAN
DIEGO CA 92150-9046
|
|
|
357.371
|
|
|
|
11.59
|
%
|
|
|
|
ALLIANZGI CHINA EQUITY C
|
|
SSB&T CUST ROTH CONV IRA FBO JOHN B MORRIS 11860 ABNERS RIDGE DR KNOXVILLE TN 37934-4700
|
|
|
188.195
|
|
|
|
6.10
|
%
|
|
|
|
ALLIANZGI CHINA EQUITY C
|
|
SSB&T CUST ROTH IRA FBO JENNIFER BETH MORRIS 11860 ABNERS RIDGE DR KNOXVILLE TN
37934-4700
|
|
|
188.195
|
|
|
|
6.10
|
%
|
|
|
|
ALLIANZGI CHINA EQUITY D
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI CHINA EQUITY D
|
|
NATIONAL FINANCIAL SERVICES LLC FOR THE BENEFIT OF OUR CUSTOMERS ATTN MUTUAL FUNDS DEPT
5TH FL 200 LIBERTY ST ONE WORLD FINANCIAL CENTER NEW YORK NY 10281-1003
|
|
|
5,245.373
|
|
|
|
38.42
|
%
|
|
b
|
|
ALLIANZGI CHINA EQUITY D
|
|
CAPITAL ONE SHAREBUILDER INC —OMNIBUS ACCOUNT— 83 S KING ST STE 700 SEATTLE WA
98104-2851
|
|
|
2,913.500
|
|
|
|
21.34
|
%
|
|
b
|
|
ALLIANZGI CHINA EQUITY D
|
|
CHARLES SCHWAB & CO INC SPECIAL CUSTODY ACCOUNTS FBO CUSTOMERS ATTN MUTUAL FUNDS 211
MAIN ST SAN FRANCISCO CA 94105-1905
|
|
|
2,836.671
|
|
|
|
20.78
|
%
|
|
b
|
|
ALLIANZGI CHINA EQUITY D
|
|
TD AMERITRADE INC FEBO OUR CLIENTS PO BOX 2226 OMAHA NE 68103-2226
|
|
|
1,876.403
|
|
|
|
13.74
|
%
|
|
|
|
ALLIANZGI CHINA EQUITY D
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
781.854
|
|
|
|
5.73
|
%
|
|
|
|
ALLIANZGI CHINA EQUITY INST
|
|
|
|
|
|
|
|
|
|
|
|
a
|
|
ALLIANZGI CHINA EQUITY INST
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
236,529.525
|
|
|
|
97.59
|
%
|
|
b
|
|
ALLIANZGI CHINA EQUITY P
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANZGI CHINA EQUITY P
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
782.931
|
|
|
|
100.00
|
%
|
|
|
|
ALLIANZGI CONVERTIBLE A
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI CONVERTIBLE A
|
|
AMERICAN ENTERPRISE INVESTMENT SVC FBO #41999970 707 2ND AVE S MINNEAPOLIS MN 55402-2405
|
|
|
4,057,943.873
|
|
|
|
35.66
|
%
|
|
b
|
|
ALLIANZGI CONVERTIBLE A
|
|
PERSHING LLC PO BOX 2052 JERSEY CITY NJ 07303-2052
|
|
|
1,730,087.200
|
|
|
|
15.20
|
%
|
|
b
|
|
ALLIANZGI CONVERTIBLE A
|
|
UBS WM USA 0O0 11011 6100 OMNI A/C M/F ATTN DEPT MANAGER 499 WASHINGTON BLVD FL 9 JERSEY
CITY NJ 07310-2055
|
|
|
1,286,171.964
|
|
|
|
11.30
|
%
|
|
b
|
|
ALLIANZGI CONVERTIBLE A
|
|
NATIONAL FINANCIAL SERVICES LLC FOR THE BENEFIT OF OUR CUSTOMERS ATTN: MUTUAL FUNDS DEPT
4TH FL 499 WASHINGTON BLVD JERSEY CITY NJ 07310-2010
|
|
|
826,368.799
|
|
|
|
7.26
|
%
|
|
b
|
|
ALLIANZGI CONVERTIBLE A
|
|
MORGAN STANLEY &CO HARBORSIDE FINANCIAL CENTER PLAZA II 3RD FL JERSEY CITY NJ 07311
|
|
|
719,005.563
|
|
|
|
6.32
|
%
|
|
|
|
ALLIANZGI CONVERTIBLE ADMIN
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI CONVERTIBLE ADMIN
|
|
AMERITRADE INC FOR THE EXCLUSIVE BENEFIT OF OUR CLIENTS PO BOX 2226 OMAHA NE 68103-2226
|
|
|
274,103.919
|
|
|
|
80.27
|
%
|
|
b
|
|
ALLIANZGI CONVERTIBLE ADMIN
|
|
VANGUARD MARKETING CORPORATION 100 VANGUARD BLVD MALVERN PA 19355-2331
|
|
|
26,831.020
|
|
|
|
7.86
|
%
|
|
b
|
|
ALLIANZGI CONVERTIBLE ADMIN
|
|
PERSHING LLC PO BOX 2052 JERSEY CITY NJ 07303-2052
|
|
|
19,853.657
|
|
|
|
5.81
|
%
|
|
b
|
|
ALLIANZGI CONVERTIBLE ADMIN
|
|
NFS FOR EXCLUSIVE BENEFIT OF OUR CUSTOMER ATTN MUTUAL FUNDS DEPT 4TH FL 499 WASHINGTON
BLVD JERSEY CITY NJ 07310-1995
|
|
|
17,328.941
|
|
|
|
5.07
|
%
|
|
|
|
ALLIANZGI CONVERTIBLE C
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI CONVERTIBLE C
|
|
MLPF&S FOR THE SOLE BENEFIT OF ITS CUSTOMERS ATTN FUND ADMN/#97M 4800 DEER LAKE DR E FL
3 JACKSONVILLE FL 32246-6484
|
|
|
1,361,412.241
|
|
|
|
36.24
|
%
|
|
b
|
|
ALLIANZGI CONVERTIBLE C
|
|
MORGAN STANLEY &CO HARBORSIDE FINANCIAL CENTER PLAZA II 3RD FL JERSEY CITY NJ 07311
|
|
|
571,526.364
|
|
|
|
15.21
|
%
|
|
b
|
|
ALLIANZGI CONVERTIBLE C
|
|
PERSHING LLC PO BOX 2052 JERSEY CITY NJ 07303-2052
|
|
|
470,868.185
|
|
|
|
12.53
|
%
|
|
b
|
|
ALLIANZGI CONVERTIBLE C
|
|
UBS WM USA 0O0 11011 6100 OMNI A/C M/F ATTN DEPT MANAGER 499 WASHINGTON BLVD 9TH FL
JERSEY CITY NJ 07310-2055
|
|
|
317,157.491
|
|
|
|
8.44
|
%
|
|
b
|
|
ALLIANZGI CONVERTIBLE C
|
|
FIRST CLEARING, LLC SPECIAL CUSTODY ACCT FOR THE EXCLUSIVE BENEFIT OF CUSTOMER 2801
MARKET ST SAINT LOUIS MO 63103-2523
|
|
|
254,659.703
|
|
|
|
6.78
|
%
|
|
|
|
ALLIANZGI CONVERTIBLE D
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI CONVERTIBLE D
|
|
NATIONAL FINANCIAL SERVICES LLC FOR THE BENEFIT OF OUR CUSTOMERS ATTN MUTUAL FUNDS DEPT
5TH FL 200 LIBERTY ST ONE WORLD FINANCIAL CENTER NEW YORK NY 10281-1003
|
|
|
2,004,467.730
|
|
|
|
49.35
|
%
|
|
b
|
|
ALLIANZGI CONVERTIBLE D
|
|
CHARLES SCHWAB & CO INC SPECIAL CUSTODY ACCOUNTS FBO CUSTOMERS ATTN MUTUAL FUNDS 211
MAIN ST SAN FRANCISCO CA 94105-1905
|
|
|
1,148,753.073
|
|
|
|
28.28
|
%
|
|
b
|
|
ALLIANZGI CONVERTIBLE D
|
|
AMERITRADE INC FEBO OUR CLIENT PO BOX 2226 OMAHA NE 68103-2226
|
|
|
407,469.525
|
|
|
|
10.03
|
%
|
|
b
|
|
ALLIANZGI CONVERTIBLE D
|
|
C/O ID 370 SEI PRIVATE TR CO ONE FREEDOM VALLEY DRIVE OAKS PA 19456-9989
|
|
|
222,183.424
|
|
|
|
5.47
|
%
|
|
|
|
ALLIANZGI CONVERTIBLE INST
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANZGI CONVERTIBLE INST
|
|
STATE OF WYOMING WYOMING STATE TREASURER ATTN ERICA LEGERSKI 200 W 24TH ST CHEYENNE WY
82001-3642
|
|
|
15,063,049.578
|
|
|
|
31.86
|
%
|
|
b
|
|
ALLIANZGI CONVERTIBLE INST
|
|
NFS FOR EXCLUSIVE BENEFIT OF OUR CUSTOMER ATTN: MUTUAL FUNDS DEPT 4TH FL 499 WASHINGTON
BLVD JERSEY CITY NJ 07310-1995
|
|
|
6,346,263.800
|
|
|
|
13.42
|
%
|
|
b
|
|
ALLIANZGI CONVERTIBLE INST
|
|
CHARLES SCHWAB & CO INC SPECIAL CUSTODY ACCOUNT FOR THE EXCLUSIVE BENEFIT OF OUR
CUSTOMERS ATTN: MUTUAL FUNDS DEPT 211 MAIN ST SAN FRANCISCO CA 94105-1905
|
|
|
6,019,699.249
|
|
|
|
12.73
|
%
|
|
b
|
|
ALLIANZGI CONVERTIBLE INST
|
|
MAC & CO A/C RAYF6182002 MUTUAL FUND OPERATIONS ATTN MUTUAL FUNDS OPS PO BOX 3198
PITTSBURGH PA 15230-3198
|
|
|
4,761,095.336
|
|
|
|
10.07
|
%
|
|
b
|
|
ALLIANZGI CONVERTIBLE INST
|
|
PERSHING LLC PO BOX 2052 JERSEY CITY NJ 07303-2052
|
|
|
2,410,300.419
|
|
|
|
5.10
|
%
|
|
|
|
ALLIANZGI CONVERTIBLE P
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI CONVERTIBLE P
|
|
MERRILL LYNCH PIERCE FENNER & SMITH INC FOR THE SOLE BENEFIT OF ITS CUSTOMERS 4800 DEER
LAKE DR E JACKSONVILLE FL 32246-6484
|
|
|
2,503,245.715
|
|
|
|
35.72
|
%
|
|
b
|
|
ALLIANZGI CONVERTIBLE P
|
|
FIRST CLEARING, LLC SPECIAL CUSTODY ACCT FOR THE EXCLUSIVE BENEFIT OF CUSTOMER 2801
MARKET ST SAINT LOUIS MO 63103-2523
|
|
|
1,251,907.010
|
|
|
|
17.86
|
%
|
|
b
|
|
ALLIANZGI CONVERTIBLE P
|
|
MORGAN STANLEY &CO HARBORSIDE FINANCIAL CENTER PLAZA II 3RD FL JERSEY CITY NJ 07311
|
|
|
1,200,624.329
|
|
|
|
17.13
|
%
|
|
b
|
|
ALLIANZGI CONVERTIBLE P
|
|
LPL FBO LPL CUSTOMERS ATTN: MUTUAL FUND OPERATIONS 1 BEACON ST FL 22 BOSTON MA
02108-3106
|
|
|
727,243.267
|
|
|
|
10.38
|
%
|
|
b
|
|
ALLIANZGI CONVERTIBLE P
|
|
RBC CAPITAL MARKETS LLC MUTUAL FUND OMNIBUS PROCESSING OMNIBUS ATTN MUTUAL FUND OPS
MANAGER 60 S 6TH ST STE 700 # STREET-P08 MINNEAPOLIS MN 55402-4413
|
|
|
568,645.346
|
|
|
|
8.11
|
%
|
|
|
|
ALLIANZGI CONVERTIBLE R
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI CONVERTIBLE R
|
|
CBNA CUST FBO FRINGE BENEFITS
DESIGN RETIREMENT P 6 RHOADS DRIVE SUITE 7 UTICA NY
13502-6317
|
|
|
12,489.843
|
|
|
|
40.67
|
%
|
|
|
|
ALLIANZGI CONVERTIBLE R
|
|
FRONTIER TR CO FBO T F HUDGINS INC 401K P O BOX 10758 FARGO ND 58106-0758
|
|
|
6,563.387
|
|
|
|
21.37
|
%
|
|
b
|
|
ALLIANZGI CONVERTIBLE R
|
|
RELIANCE TR CO FBO CITY OF LENOIR PO BOX 48529 ATLANTA GA 30362-1529
|
|
|
5,638.537
|
|
|
|
18.36
|
%
|
|
b
|
|
ALLIANZGI CONVERTIBLE R
|
|
MLPF & S FOR THE SOLE BENEFIT OF ITS CUSTOMERS ATTN FUND ADMN/#97M 4800 DEER LAKE DR E
FL 3 JACKSONVILLE FL 32246-6484
|
|
|
3,619.755
|
|
|
|
11.79
|
%
|
|
|
|
ALLIANZGI DISCIPLINED EQUITY A
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI DISCIPLINED EQUITY A
|
|
NATIONAL FINANCIAL SERVICES LLC FOR THE BENEFIT OF OUR CUSTOMERS ATTN: MUTUAL FUNDS DEPT
4TH FL 499 WASHINGTON BLVD JERSEY CITY NJ 07310-2010
|
|
|
52,266.207
|
|
|
|
38.10
|
%
|
|
b
|
|
ALLIANZGI DISCIPLINED EQUITY A
|
|
PERSHING LLC PO BOX 2052 JERSEY CITY NJ 07303-2052
|
|
|
22,915.258
|
|
|
|
16.70
|
%
|
|
b
|
|
ALLIANZGI DISCIPLINED EQUITY A
|
|
FIRST CLEARING, LLC SPECIAL CUSTODY ACCT FOR THE EXCLUSIVE BENEFIT OF CUSTOMER 2801
MARKET ST SAINT LOUIS MO 63103-2523
|
|
|
12,663.797
|
|
|
|
9.23
|
%
|
|
b
|
|
ALLIANZGI DISCIPLINED EQUITY A
|
|
JP MORGAN CLEARING CORP OMINIBUS ACCOUNT FOR THE EXCLUSIVE BENEFIT OF CUSTOMERS 3 CHASE
METROTECH CENTER 3RD FLOOR MUTUAL FUND DEPARTMENT BROOKLYN NY 11245-0001
|
|
|
7,105.089
|
|
|
|
5.18
|
%
|
|
|
|
ALLIANZGI DISCIPLINED EQUITY C
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI DISCIPLINED EQUITY C
|
|
PERSHING LLC PO BOX 2052 JERSEY CITY NJ 07303-2052
|
|
|
9,153.167
|
|
|
|
18.47
|
%
|
|
b
|
|
ALLIANZGI DISCIPLINED EQUITY C
|
|
MLPF&S FOR THE SOLE BENEFIT OF ITS CUSTOMERS ATTN FUND ADMN/#97M 4800 DEER LAKE DR E FL
3 JACKSONVILLE FL 32246-6484
|
|
|
5,730.533
|
|
|
|
11.57
|
%
|
|
b
|
|
ALLIANZGI DISCIPLINED EQUITY C
|
|
NATIONAL FINANCIAL SERVICES LLC FOR THE BENEFIT OF OUR CUSTOMERS ATTN: MUTUAL FUNDS DEPT
4TH FL 499 WASHINGTON BLVD JERSEY CITY NJ 07310-2010
|
|
|
4,046.818
|
|
|
|
8.17
|
%
|
|
b
|
|
ALLIANZGI DISCIPLINED EQUITY C
|
|
LPL FINANCIAL A/C 1000-0005 9785 TOWNE CENTRE DRIVE SAN DIEGO CA 92121-1968
|
|
|
3,109.871
|
|
|
|
6.28
|
%
|
|
|
|
ALLIANZGI DISCIPLINED EQUITY D
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI DISCIPLINED EQUITY D
|
|
CHARLES SCHWAB & CO INC SPECIAL CUSTODY ACCOUNTS FBO CUSTOMERS ATTN MUTUAL FUNDS 211
MAIN ST SAN FRANCISCO CA 94105-1905
|
|
|
5,370.805
|
|
|
|
54.23
|
%
|
|
b
|
|
ALLIANZGI DISCIPLINED EQUITY D
|
|
NATIONAL FINANCIAL SERVICES LLC FOR THE BENEFIT OF CUSTOMER ATTN MUTUAL FUNDS DEPT 5TH
FL NEWPORT OFFICE CENTER III 499 WASHINGTON BLVD FL 5 JERSEY CITY NJ 07310-2010
|
|
|
2,561.697
|
|
|
|
25.86
|
%
|
|
|
|
ALLIANZGI DISCIPLINED EQUITY D
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
847.224
|
|
|
|
8.55
|
%
|
|
b
|
|
ALLIANZGI DISCIPLINED EQUITY D
|
|
TD AMERITRADE PO BOX 2226 OMAHA NE 68103-2226
|
|
|
599.998
|
|
|
|
6.06
|
%
|
|
b
|
|
ALLIANZGI DISCIPLINED EQUITY D
|
|
CAPITAL ONE SHAREBUILDER INC —OMNIBUS ACCOUNT— 83 S KING ST STE 700 SEATTLE WA
98104-2851
|
|
|
524.741
|
|
|
|
5.30
|
%
|
|
|
|
ALLIANZGI DISCIPLINED EQUITY INST
|
|
|
|
|
|
|
|
|
|
|
|
a, b
|
|
ALLIANZGI DISCIPLINED EQUITY INST
|
|
STATE STREET BANK & TRUST CO AS CUSTODIAN FOR MI 529 ADVISOR PLAN RCM LARGE CAP EQUITY
P76D 801 PENNSYLVANIA AVE KANSAS CITY MO 64105-1307
|
|
|
207,499.889
|
|
|
|
80.61
|
%
|
|
|
|
ALLIANZGI DISCIPLINED EQUITY INST
|
|
STATE STREET BANK & TRUST CO AS CUSTODIAN FOR OKLAHOMA ADVISOR 529 PROGRAM (ALLIANZ RCM
LARGE CAP EQUITY) P43Q 801 PENNSYLVANIA AVE KANSAS CITY MO 64105-1307
|
|
|
47,671.285
|
|
|
|
18.52
|
%
|
|
|
|
ALLIANZGI DISCIPLINED EQUITY P
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANZGI DISCIPLINED EQUITY P
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
865.597
|
|
|
|
62.87
|
%
|
|
b
|
|
ALLIANZGI DISCIPLINED EQUITY P
|
|
STIFEL NICOLAUS & CO INC EXCLUSIVE BENEFIT OF CUSTOMERS 501 N BROADWAY SAINT LOUIS MO
63102-2188
|
|
|
312.141
|
|
|
|
22.67
|
%
|
|
b
|
|
ALLIANZGI DISCIPLINED EQUITY P
|
|
LPL FINANCIAL A/C 1000-0005 9785 TOWNE CENTRE DRIVE SAN DIEGO CA 92121-1968
|
|
|
199.095
|
|
|
|
14.46
|
%
|
|
|
|
ALLIANZGI DYNAMIC EM MULTI-ASSET A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANZGI DYNAMIC EM MULTI-ASSET A
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
677.830
|
|
|
|
100.00
|
%
|
|
|
|
ALLIANZGI DYNAMIC EM MULTI-ASSET C
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANZGI DYNAMIC EM MULTI-ASSET C
|
|
SSB&T CUST SIMPLE IRA TOWNE & COUNTRY AUTO BODY INC FBO DANIEL J SANDER 3859 EASTBROOK
DR MUSKEGON MI 49444-4175
|
|
|
1,945.394
|
|
|
|
40.77
|
%
|
|
|
|
ALLIANZGI DYNAMIC EM MULTI-ASSET C
|
|
SSB&T CUST SIMPLE IRA TOWNE & COUNTRY AUTO BODY INC FBO JEFFREY THOMAS HUEBNER 6281
CANNONSBURG RD NE BELMONT MI 49306-9176
|
|
|
1,083.418
|
|
|
|
22.71
|
%
|
|
|
|
ALLIANZGI DYNAMIC EM MULTI-ASSET C
|
|
SSB&T CUST SIMPLE IRA TOWNE & COUNTRY AUTO BODY INC FBO MICHAEL LYNN SCATURRO 1032 61ST
ST SE GRAND RAPIDS MI 49508-7063
|
|
|
892.001
|
|
|
|
18.69
|
%
|
|
|
|
ALLIANZGI DYNAMIC EM MULTI-ASSET C
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
680.709
|
|
|
|
14.27
|
%
|
|
|
|
ALLIANZGI DYNAMIC EM MULTI-ASSET D
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANZGI DYNAMIC EM MULTI-ASSET D
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
678.152
|
|
|
|
62.04
|
%
|
|
b
|
|
ALLIANZGI DYNAMIC EM MULTI-ASSET D
|
|
CHARLES SCHWAB & CO INC SPECIAL CUSTODY ACCOUNTS FBO CUSTOMERS ATTN MUTUAL FUNDS 211
MAIN ST SAN FRANCISCO CA 94105-1905
|
|
|
407.979
|
|
|
|
37.32
|
%
|
|
|
|
ALLIANZGI DYNAMIC EM MULTI-ASSET I
|
|
|
|
|
|
|
|
|
|
|
|
a, b
|
|
ALLIANZGI DYNAMIC EM MULTI-ASSET I
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
339,794.656
|
|
|
|
97.93
|
%
|
|
|
|
ALLIANZGI DYNAMIC EM MULTI-ASSET P
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANZGI DYNAMIC EM MULTI-ASSET
P
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
678.885
|
|
|
|
100.00
|
%
|
|
|
|
ALLIANZGI GLOBAL ALLOCATION A
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI GLOBAL ALLOCATION A
|
|
MORGAN STANLEY SMITH BARNEY HARBORSIDE FINANCIAL CENTER PLAZA 2, 3RD FLOOR JERSEY CITY
NJ 07311
|
|
|
832,066.896
|
|
|
|
14.26
|
%
|
|
b
|
|
ALLIANZGI GLOBAL ALLOCATION A
|
|
MLPF&S FOR THE SOLE BENEFIT OF ITS CUSTOMERS ATTN FUND ADMN/#97M 4800 DEER LAKE DR E FL
3 JACKSONVILLE FL 32246-6484
|
|
|
783,155.478
|
|
|
|
13.42
|
%
|
|
b
|
|
ALLIANZGI GLOBAL ALLOCATION A
|
|
FIRST CLEARING, LLC SPECIAL CUSTODY ACCT FOR THE EXCLUSIVE BENEFIT OF CUSTOMER 2801
MARKET ST SAINT LOUIS MO 63103-2523
|
|
|
647,275.873
|
|
|
|
11.09
|
%
|
|
b
|
|
ALLIANZGI GLOBAL ALLOCATION A
|
|
RAYMOND JAMES OMNIBUS FOR MUTUAL FUNDS HOUSE ACCT FIRM 92500015 ATTN COURTNEY WALLER 880
CARILLON PKWY ST PETERSBURG FL 33716-1100
|
|
|
583,432.610
|
|
|
|
10.00
|
%
|
|
b
|
|
ALLIANZGI GLOBAL ALLOCATION A
|
|
PERSHING LLC PO BOX 2052 JERSEY CITY NJ 07303-2052
|
|
|
581,519.726
|
|
|
|
9.97
|
%
|
|
|
|
ALLIANZGI GLOBAL ALLOCATION A
|
|
NATIONAL FINANCIAL SERVICES LLC FOR THE BENEFIT OF OUR CUSTOMERS ATTN MUTUAL FUNDS DEPT
5TH FLOOR 499 WASHINGTON BLVD JERSEY CITY NJ 07310-2010
|
|
|
410,878.574
|
|
|
|
7.04
|
%
|
|
|
|
ALLIANZGI GLOBAL ALLOCATION ADMIN
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANZGI GLOBAL ALLOCATION ADMIN
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
1,393.537
|
|
|
|
73.61
|
%
|
|
b
|
|
ALLIANZGI GLOBAL ALLOCATION ADMIN
|
|
AMERITRADE INC FOR THE EXCLUSIVE BENEFIT OF OUR CLIENTS PO BOX 2226 OMAHA NE 68103-2226
|
|
|
499.588
|
|
|
|
26.39
|
%
|
|
|
|
ALLIANZGI GLOBAL ALLOCATION B
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI GLOBAL ALLOCATION B
|
|
FIRST CLEARING, LLC SPECIAL CUSTODY ACCT FOR THE EXCLUSIVE BENEFIT OF CUSTOMER 2801
MARKET ST SAINT LOUIS MO 63103-2523
|
|
|
72,778.752
|
|
|
|
36.34
|
%
|
|
b
|
|
ALLIANZGI GLOBAL ALLOCATION B
|
|
PERSHING LLC PO BOX 2052 JERSEY CITY NJ 07303-2052
|
|
|
35,764.010
|
|
|
|
17.86
|
%
|
|
b
|
|
ALLIANZGI GLOBAL ALLOCATION B
|
|
MLPF&S FOR THE SOLE BENEFIT OF ITS CUSTOMERS ATTN FUND ADMN/#97M 4800 DEER LAKE DR E FL
3 JACKSONVILLE FL 32246-6484
|
|
|
15,111.868
|
|
|
|
7.55
|
%
|
|
b
|
|
ALLIANZGI GLOBAL ALLOCATION B
|
|
LPL FINANCIAL A/C 1000-0005 9785 TOWNE CENTRE DRIVE SAN DIEGO CA 92121-1968
|
|
|
13,727.198
|
|
|
|
6.85
|
%
|
|
|
|
ALLIANZGI GLOBAL ALLOCATION C
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI GLOBAL ALLOCATION C
|
|
MLPF&S FOR THE SOLE BENEFIT OF ITS CUSTOMERS ATTN FUND ADMN/#97M 4800 DEER LAKE DR E FL
3 JACKSONVILLE FL 32246-6484
|
|
|
864,091.316
|
|
|
|
15.71
|
%
|
|
b
|
|
ALLIANZGI GLOBAL ALLOCATION C
|
|
RAYMOND JAMES OMNIBUS FOR MUTUAL FUNDS HOUSE ACCT FIRM 92500015 ATTN COURTNEY WALLER 880
CARILLON PKWY ST PETERSBURG FL 33716-1100
|
|
|
862,542.676
|
|
|
|
15.68
|
%
|
|
b
|
|
ALLIANZGI GLOBAL ALLOCATION C
|
|
FIRST CLEARING, LLC SPECIAL CUSTODY ACCT FOR THE EXCLUSIVE BENEFIT OF CUSTOMER 2801
MARKET ST SAINT LOUIS MO 63103-2523
|
|
|
550,156.824
|
|
|
|
10.00
|
%
|
|
b
|
|
ALLIANZGI GLOBAL ALLOCATION C
|
|
MORGAN STANLEY SMITH BARNEY HARBORSIDE FINANCIAL CENTER PLAZA 2, 3RD FLOOR JERSEY CITY
NJ 07311
|
|
|
402,883.115
|
|
|
|
7.33
|
%
|
|
b
|
|
ALLIANZGI GLOBAL ALLOCATION C
|
|
PERSHING LLC PO BOX 2052 JERSEY CITY NJ 07303-2052
|
|
|
386,606.829
|
|
|
|
7.03
|
%
|
|
|
|
ALLIANZGI GLOBAL ALLOCATION D
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI GLOBAL ALLOCATION D
|
|
AMERITRADE INC FEBO OUR CLIENTS PO BOX 2226 OMAHA NE 68103-2226
|
|
|
89,617.968
|
|
|
|
74.37
|
%
|
|
b
|
|
ALLIANZGI GLOBAL ALLOCATION D
|
|
NATIONAL FINANCIAL SERVICES LLC FOR THE BENEFIT OF OUR CUSTOMERS ATTN MUTUAL FUNDS DEPT
5TH FL 200 LIBERTY ST ONE WORLD FINANCIAL CENTER NEW YORK NY 10281-1003
|
|
|
18,969.667
|
|
|
|
15.74
|
%
|
|
|
|
ALLIANZGI GLOBAL ALLOCATION INST
|
|
|
|
|
|
|
|
|
|
|
|
a, b
|
|
ALLIANZGI GLOBAL ALLOCATION INST
|
|
CHARLES SCHWAB & CO INC SPECIAL CUSTODY ACCOUNT FOR THE EXCLUSIVE BENEFIT OF OUR
CUSTOMERS ATTN MUTUAL FUND DEPT 211 MAIN ST SAN FRANCISCO CA 94105-1905
|
|
|
5,259,189.099
|
|
|
|
87.73
|
%
|
|
b
|
|
ALLIANZGI GLOBAL ALLOCATION INST
|
|
NFS FOR EXCLUSIVE BENEFIT OF OUR CUSTOMER ATTN: MUTUAL FUNDS DEPT 4TH FL 499 WASHINGTON
BLVD JERSEY CITY NJ 07310-1995
|
|
|
486,882.403
|
|
|
|
8.12
|
%
|
|
|
|
ALLIANZGI GLOBAL ALLOCATION P
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI GLOBAL ALLOCATION P
|
|
MERRILL LYNCH PIERCE FENNER & SMITH INC FOR THE SOLE BENEFIT OF ITS CUSTOMERS 4800 DEER
LAKE DR E FL 3 JACKSONVILLE FL 32246-6484
|
|
|
132,152.931
|
|
|
|
74.26
|
%
|
|
b
|
|
ALLIANZGI GLOBAL ALLOCATION P
|
|
LPL FINANCIAL A/C 1000-0005 9785 TOWNE CENTRE DRIVE SAN DIEGO CA 92121-1968
|
|
|
32,913.988
|
|
|
|
18.50
|
%
|
|
|
|
ALLIANZGI GLOBAL ALLOCATION R
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANZGI GLOBAL ALLOCATION R
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
1,415.731
|
|
|
|
100.00
|
%
|
|
|
|
ALLIANZGI GLOBAL FUNDAMENTAL STRAT A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANZGI GLOBAL FUNDAMENTAL STRAT A
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
674.502
|
|
|
|
100.00
|
%
|
B-1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount &
|
|
Percentage of
|
|
|
|
|
|
|
|
Beneficial Nature
|
|
Outstanding Share of
|
|
|
|
Fund Name
|
|
Registration
|
|
of Ownership
|
|
Ownership
|
|
|
|
ALLIANZGI GLOBAL FUNDAMENTAL STRAT C
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANZGI GLOBAL FUNDAMENTAL STRAT C
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
672.000
|
|
|
|
100.00
|
%
|
|
|
|
ALLIANZGI GLOBAL FUNDAMENTAL STRAT D
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI GLOBAL FUNDAMENTAL STRAT D
|
|
NATIONAL FINANCIAL SERVICES LLC FOR THE BENEFIT OF OUR CUSTOMERS ATTN MUTUAL FUNDS DEPT
5TH FL 200 LIBERTY ST ONE WORLD FINANCIAL CENTER NEW YORK NY 10281-1003
|
|
|
948.208
|
|
|
|
58.43
|
%
|
|
|
|
ALLIANZGI GLOBAL FUNDAMENTAL STRAT D
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
674.502
|
|
|
|
41.57
|
%
|
|
|
|
ALLIANZGI GLOBAL FUNDAMENTAL STRAT I
|
|
|
|
|
|
|
|
|
|
|
|
a
|
|
ALLIANZGI GLOBAL FUNDAMENTAL STRAT I
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
1,350,720.790
|
|
|
|
99.23
|
%
|
|
|
|
ALLIANZGI GLOBAL FUNDAMENTAL STRAT P
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANZGI GLOBAL FUNDAMENTAL STRAT P
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
674.999
|
|
|
|
100.00
|
%
|
|
|
|
ALLIANZGI GLBL GROWTH ALLOCATION ADMIN
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANZGI GLBL GROWTH ALLOCATION ADMIN
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
921.493
|
|
|
|
100.00
|
%
|
|
|
|
ALLIANZGI GLOBAL GROWTH ALLOCATION A
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI GLOBAL GROWTH ALLOCATION A
|
|
NATIONAL FINANCIAL SERVICES LLC FOR THE BENEFIT OF OUR CUSTOMERS ATTN: MUTUAL FUNDS DEPT
4TH FL 499 WASHINGTON BLVD JERSEY CITY NJ 07310-2010
|
|
|
19,195.973
|
|
|
|
30.40
|
%
|
|
b
|
|
ALLIANZGI GLOBAL GROWTH ALLOCATION A
|
|
PERSHING LLC PO BOX 2052 JERSEY CITY NJ 07303-2052
|
|
|
11,315.014
|
|
|
|
17.92
|
%
|
|
b
|
|
ALLIANZGI GLOBAL GROWTH ALLOCATION A
|
|
LPL FINANCIAL A/C 1000-0005 9785 TOWNE CENTRE DRIVE SAN DIEGO CA 92121-1968
|
|
|
4,044.619
|
|
|
|
6.41
|
%
|
|
|
|
ALLIANZGI GLOBAL GROWTH ALLOCATION A
|
|
FREDERICK M STELL UNIT 3230, BOX 0047 DPO AA 34031-0047
|
|
|
3,269.044
|
|
|
|
5.18
|
%
|
|
|
|
ALLIANZGI GLOBAL GROWTH ALLOCATION C
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANZGI GLOBAL GROWTH ALLOCATION C
|
|
JUNE M GARRISON & WALTER E GARRISON TTEES WALTER E GARRISON AND JUNE M GARRISON LIVING
TRUST U/A DTD 6300 STEPHENS RANCH RD LA VERNE CA 91750-1139
|
|
|
12,076.789
|
|
|
|
18.73
|
%
|
|
b
|
|
ALLIANZGI GLOBAL GROWTH ALLOCATION C
|
|
PERSHING LLC PO BOX 2052 JERSEY CITY NJ 07303-2052
|
|
|
10,989.397
|
|
|
|
17.04
|
%
|
|
b
|
|
ALLIANZGI GLOBAL GROWTH ALLOCATION C
|
|
JP MORGAN CLEARING CORP OMINIBUS ACCOUNT FOR THE EXCLUSIVE BENEFIT OF CUSTOMERS 3 CHASE
METROTECH CENTER 3RD FLOOR MUTUAL FUND DEPARTMENT BROOKLYN NY 11245-0001
|
|
|
5,484.401
|
|
|
|
8.51
|
%
|
|
|
|
ALLIANZGI GLOBAL GROWTH ALLOCATION C
|
|
SSB&T CUST SIMPLE IRA MERCHCO SERVICES INC FBO SCOTT A JOHNSON 207 PINEVIEW DR GOOSE
CREEK SC 29445-3067
|
|
|
4,063.118
|
|
|
|
6.30
|
%
|
|
|
|
ALLIANZGI GLOBAL GROWTH ALLOCATION C
|
|
SSB&T CUST SIMPLE IRA CLAESSON JANITORIAL SERVICE FBO KEVIN J CLAESSON 0S039 SURREY DR
ELBURN IL 60119-9690
|
|
|
3,348.738
|
|
|
|
5.19
|
%
|
|
|
|
ALLIANZGI GLOBAL GROWTH ALLOCATION D
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI GLOBAL GROWTH ALLOCATION D
|
|
NATIONAL FINANCIAL SERVICES LLC FOR THE BENEFIT OF OUR CUSTOMERS ATTN MUTUAL FUNDS DEPT
5TH FL 200 LIBERTY ST ONE WORLD FINANCIAL CENTER NEW YORK NY 10281-1003
|
|
|
14,061.758
|
|
|
|
88.92
|
%
|
|
|
|
ALLIANZGI GLOBAL GROWTH ALLOCATION D
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
924.569
|
|
|
|
5.85
|
%
|
|
|
|
ALLIANZGI GLOBAL GROWTH ALLOCATION P
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI GLOBAL GROWTH ALLOCATION P
|
|
PERSHING LLC PO BOX 2052 JERSEY CITY NJ 07303-2052
|
|
|
1,023.406
|
|
|
|
52.46
|
%
|
|
|
|
ALLIANZGI GLOBAL GROWTH ALLOCATION P
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
927.590
|
|
|
|
47.54
|
%
|
|
|
|
ALLIANZGI GLOBAL GROWTH ALLOCATION R
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANZGI GLOBAL GROWTH ALLOCATION R
|
|
MID ATLANTIC TR CO FBO VANTAGE PARTNERS LLC 401K PSP & TR 1251 WATERFRONT PL STE 525
PITTSBURGH PA 15222-4228
|
|
|
4,607.358
|
|
|
|
80.55
|
%
|
|
|
|
ALLIANZGI GLOBAL GROWTH ALLOCATION R
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
912.238
|
|
|
|
15.95
|
%
|
|
|
|
ALLIANZGI GLOBAL GRWTH ALLOCATION INST
|
|
|
|
|
|
|
|
|
|
|
|
a
|
|
ALLIANZGI GLOBAL GRWTH ALLOCATION INST
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
143,632.287
|
|
|
|
93.55
|
%
|
|
|
|
ALLIANZGI GLBL MANAGED VOLATILITY INST
|
|
|
|
|
|
|
|
|
|
|
|
a
|
|
ALLIANZGI GLBL MANAGED VOLATILITY INST
|
|
ALLIANZ FUNDS MULTI-STRATEGY TRUST ON BEHALF OF ALLIANZGI GLOBAL ALLOCATION FUND ATTN
STEPHEN SEXAUER 600 W BROADWAY FL 34 SAN DIEGO CA 92101-3398
|
|
|
374,512.894
|
|
|
|
38.88
|
%
|
|
|
|
ALLIANZGI GLBL MANAGED VOLATILITY INST
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
147,603.992
|
|
|
|
15.32
|
%
|
|
|
|
ALLIANZGI GLBL MANAGED VOLATILITY INST
|
|
ALLIANZ FUNDS MULTI-STRATEGY TRUST ON BEHALF OF ALLIANZGI RETIREMENT 2030 FUND ATTN
STEPHEN SEXAUER 600 W BROADWAY FL 34 SAN DIEGO CA 92101-3398
|
|
|
81,132.936
|
|
|
|
8.42
|
%
|
|
|
|
ALLIANZGI GLBL MANAGED VOLATILITY INST
|
|
ALLIANZ FUNDS MULTI-STRATEGY TRUST ON BEHALF OF ALLIANZGI RETIREMENT 2025 FUND ATTN
STEPHEN SEXAUER 600 W BROADWAY FL 34 SAN DIEGO CA 92101-3398
|
|
|
67,197.614
|
|
|
|
6.98
|
%
|
|
|
|
ALLIANZGI GLBL MANAGED VOLATILITY INST
|
|
ALLIANZ FUNDS MULTI-STRATEGY TRUST ON BEHALF OF ALLIANZGI RETIREMENT 2035 FUND ATTN
STEPHEN SEXAUER 600 W BROADWAY FL 34 SAN DIEGO CA 92101-3398
|
|
|
61,200.670
|
|
|
|
6.35
|
%
|
|
|
|
ALLIANZGI GLBL MANAGED VOLATILITY INST
|
|
ALLIANZ FUNDS MULTI-STRATEGY TRUST ON BEHALF OF ALLIANZGI RETIREMENT 2040 FUND ATTN
STEPHEN SEXAUER 600 W BROADWAY FL 34 SAN DIEGO CA 92101-3398
|
|
|
57,194.421
|
|
|
|
5.94
|
%
|
|
|
|
ALLIANZGI GLOBAL MANAGED VOLATILITY A
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI GLOBAL MANAGED VOLATILITY A
|
|
PERSHING LLC PO BOX 2052 JERSEY CITY NJ 07303-2052
|
|
|
2,304.172
|
|
|
|
33.17
|
%
|
|
|
|
ALLIANZGI GLOBAL MANAGED VOLATILITY A
|
|
MARJORIE I KELLOGG TTEE KELLOGG LIVING TRUST U/A DTD 08/22/2007 3301 N VILLARD ST TACOMA
WA 98407-3429
|
|
|
1,895.940
|
|
|
|
27.29
|
%
|
|
b
|
|
ALLIANZGI GLOBAL MANAGED VOLATILITY A
|
|
NATIONAL FINANCIAL SERVICES LLC FOR THE BENEFIT OF OUR CUSTOMERS ATTN MUTUAL FUNDS DEPT
5TH FLOOR 499 WASHINGTON BLVD JERSEY CITY NJ 07310-2010
|
|
|
1,667.323
|
|
|
|
24.00
|
%
|
|
|
|
ALLIANZGI GLOBAL MANAGED VOLATILITY A
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
735.594
|
|
|
|
10.59
|
%
|
|
|
|
ALLIANZGI GLOBAL MANAGED VOLATILITY C
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANZGI GLOBAL MANAGED VOLATILITY C
|
|
SSB&T CUST ROLLOVER IRA FBO RIPP BUROKER N9688 ARGUE RD NEW GLARUS WI 53574-9741
|
|
|
3,098.313
|
|
|
|
28.95
|
%
|
|
|
|
ALLIANZGI GLOBAL MANAGED VOLATILITY C
|
|
SSB&T CUST IRA DCD ELEANOR E CARBERRY FBO ELLEN R SCHNEIDER BENE 9431 COUNTY ROAD Y SAUK
CITY WI 53583-9566
|
|
|
1,964.883
|
|
|
|
18.36
|
%
|
|
|
|
ALLIANZGI GLOBAL MANAGED VOLATILITY C
|
|
SSB&T CUST ROLLOVER IRA FBO DUANE A ELLER 7225 CLOVER HILL DR WAUNAKEE WI 53597-9393
|
|
|
1,594.362
|
|
|
|
14.90
|
%
|
|
|
|
ALLIANZGI GLOBAL MANAGED VOLATILITY C
|
|
SSB&T CUST IRA FBO CAROL M MACK 7190 BERGMAN RD SAUK CITY WI 53583-9714
|
|
|
1,234.309
|
|
|
|
11.53
|
%
|
|
|
|
ALLIANZGI GLOBAL MANAGED VOLATILITY C
|
|
JEROME P MEYERS & RUTH R MEYERS JT TEN WROS NOT TC 3829 SUNNY WOOD DR DE FOREST WI
53532-2878
|
|
|
898.505
|
|
|
|
8.40
|
%
|
|
b
|
|
ALLIANZGI GLOBAL MANAGED VOLATILITY C
|
|
PERSHING LLC PO BOX 2052 JERSEY CITY NJ 07303-2052
|
|
|
815.507
|
|
|
|
7.62
|
%
|
|
|
|
ALLIANZGI GLOBAL MANAGED VOLATILITY C
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
738.472
|
|
|
|
6.90
|
%
|
|
|
|
ALLIANZGI GLOBAL MANAGED VOLATILITY D
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI GLOBAL MANAGED VOLATILITY D
|
|
NATIONAL FINANCIAL SERVICES LLC FOR THE BENEFIT OF OUR CUSTOMERS ATTN MUTUAL FUNDS DEPT
5TH FL 200 LIBERTY ST ONE WORLD FINANCIAL CENTER NEW YORK NY 10281-1003
|
|
|
1,295.240
|
|
|
|
45.84
|
%
|
|
|
|
ALLIANZGI GLOBAL MANAGED VOLATILITY D
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
736.433
|
|
|
|
26.06
|
%
|
|
b
|
|
ALLIANZGI GLOBAL MANAGED VOLATILITY D
|
|
CAPITAL ONE SHAREBUILDER INC —OMNIBUS ACCOUNT— 83 S KING ST STE 700 SEATTLE WA
98104-2851
|
|
|
595.238
|
|
|
|
21.07
|
%
|
|
b
|
|
ALLIANZGI GLOBAL MANAGED VOLATILITY D
|
|
VANGUARD BROKERAGE SERVICES A/C 1012-8130 PO BOX 1170 VALLEY FORGE PA 19482-1170
|
|
|
198.797
|
|
|
|
7.04
|
%
|
|
|
|
ALLIANZGI GLOBAL MANAGED VOLATILITY P
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANZGI GLOBAL MANAGED VOLATILITY P
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
735.970
|
|
|
|
100.00
|
%
|
|
|
|
ALLIANZGI GLOBAL WATER A
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI GLOBAL WATER A
|
|
MORGAN STANLEY SMITH BARNEY HARBORSIDE FINANCIAL CENTER PLAZA 2, 3RD FLOOR JERSEY CITY
NJ 07311
|
|
|
2,343,931.916
|
|
|
|
22.63
|
%
|
|
b
|
|
ALLIANZGI GLOBAL WATER A
|
|
MLPF&S FOR THE SOLE BENEFIT OF ITS CUSTOMERS ATTN FUND ADMN/#97M 4800 DEER LAKE DR E FL
3 JACKSONVILLE FL 32246-6484
|
|
|
2,107,637.576
|
|
|
|
20.35
|
%
|
|
b
|
|
ALLIANZGI GLOBAL WATER A
|
|
UBS WM USA 0O0 11011 6100 OMNI A/C M/F ATTN DEPT MANAGER 499 WASHINGTON BLVD FL 9 JERSEY
CITY NJ 07310-2055
|
|
|
1,284,904.534
|
|
|
|
12.40
|
%
|
|
b
|
|
ALLIANZGI GLOBAL WATER A
|
|
AMERICAN ENTERPRISE INVESTMENT SVC FBO #41999970 707 2ND AVE SOUTH MINNEAPOLIS MN
55402-2405
|
|
|
1,088,306.715
|
|
|
|
10.51
|
%
|
|
b
|
|
ALLIANZGI GLOBAL WATER A
|
|
PERSHING LLC PO BOX 2052 JERSEY CITY NJ 07303-2052
|
|
|
675,385.331
|
|
|
|
6.52
|
%
|
|
b
|
|
ALLIANZGI GLOBAL WATER A
|
|
FIRST CLEARING, LLC SPECIAL CUSTODY ACCT FOR THE EXCLUSIVE BENEFIT OF CUSTOMER 2801
MARKET ST SAINT LOUIS MO 63103-2523
|
|
|
651,691.488
|
|
|
|
6.29
|
%
|
|
|
|
ALLIANZGI GLOBAL WATER C
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI GLOBAL WATER C
|
|
MLPF&S FOR THE SOLE BENEFIT OF ITS CUSTOMERS ATTN FUND ADMN/#97M 4800 DEER LAKE DR E FL
3 JACKSONVILLE FL 32246-6484
|
|
|
2,163,819.337
|
|
|
|
43.50
|
%
|
|
b
|
|
ALLIANZGI GLOBAL WATER C
|
|
MORGAN STANLEY SMITH BARNEY HARBORSIDE FINANCIAL CENTER PLAZA 2, 3RD FLOOR JERSEY CITY
NJ 07311
|
|
|
865,536.315
|
|
|
|
17.40
|
%
|
|
b
|
|
ALLIANZGI GLOBAL WATER C
|
|
FIRST CLEARING, LLC SPECIAL CUSTODY ACCT FOR THE EXCLUSIVE BENEFIT OF CUSTOMER 2801
MARKET ST SAINT LOUIS MO 63103-2523
|
|
|
393,648.327
|
|
|
|
7.91
|
%
|
|
b
|
|
ALLIANZGI GLOBAL WATER C
|
|
PERSHING LLC PO BOX 2052 JERSEY CITY NJ 07303-2052
|
|
|
347,490.836
|
|
|
|
6.99
|
%
|
|
b
|
|
ALLIANZGI GLOBAL WATER C
|
|
UBS WM USA 0O0 11011 6100 OMNI A/C M/F ATTN DEPT MANAGER 499 WASHINGTON BLVD 9TH FL
JERSEY CITY NJ 07310-2055
|
|
|
290,227.929
|
|
|
|
5.83
|
%
|
|
|
|
ALLIANZGI GLOBAL WATER D
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI GLOBAL WATER D
|
|
NATIONAL FINANCIAL SERVICES LLC FOR THE BENEFIT OF OUR CUSTOMERS ATTN MUTUAL FUNDS DEPT
5TH FL 200 LIBERTY ST ONE WORLD FINANCIAL CENTER NEW YORK NY 10281-1003
|
|
|
698,361.384
|
|
|
|
45.97
|
%
|
|
b
|
|
ALLIANZGI GLOBAL WATER D
|
|
CHARLES SCHWAB & CO INC SPECIAL CUSTODY A/C FBO CUSTOMERS ATTN MUTUAL FUNDS 211 MAIN ST
SAN FRANCISCO CA 94105-1905
|
|
|
566,968.384
|
|
|
|
37.32
|
%
|
|
|
|
ALLIANZGI GLOBAL WATER INST
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI GLOBAL WATER INST
|
|
ATTN MUTUAL FUND OPS CHARLES SCHWAB & CO INC 211 MAIN ST SAN FRANCISCO CA 94105-1905
|
|
|
1,086,860.122
|
|
|
|
61.39
|
%
|
|
b
|
|
ALLIANZGI GLOBAL WATER INST
|
|
NFS FOR EXCLUSIVE BENEFIT OF OUR CUSTOMER ATTN: MUTUAL FUNDS DEPT 4TH FL 499 WASHINGTON
BLVD JERSEY CITY NJ 07310-1995
|
|
|
366,134.817
|
|
|
|
20.68
|
%
|
|
b
|
|
ALLIANZGI GLOBAL WATER INST
|
|
TD AMERITRADE INC FOR THE EXCLUSIVE BENEFIT OF OUR CLIENTS PO BOX 2226 OMAHA NE
68103-2226
|
|
|
178,616.170
|
|
|
|
10.09
|
%
|
|
b
|
|
ALLIANZGI GLOBAL WATER INST
|
|
PERSHING LLC PO BOX 2052 JERSEY CITY NJ 07303-2052
|
|
|
122,290.347
|
|
|
|
6.91
|
%
|
|
|
|
ALLIANZGI GLOBAL WATER P
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI GLOBAL WATER P
|
|
MERRILL LYNCH PIERCE FENNER & SMITH INC FOR THE SOLE BENEFIT OF ITS CUSTOMERS 4800 DEER
LAKE DR E FL 3 JACKSONVILLE FL 32246-6484
|
|
|
2,890,384.673
|
|
|
|
72.51
|
%
|
|
b
|
|
ALLIANZGI GLOBAL WATER P
|
|
FIRST CLEARING, LLC SPECIAL CUSTODY ACCT FOR THE EXCLUSIVE BENEFIT OF CUSTOMER 2801
MARKET ST SAINT LOUIS MO 63103-2523
|
|
|
706,500.382
|
|
|
|
17.72
|
%
|
|
|
|
ALLIANZGI HIGH YIELD BOND A
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI HIGH YIELD BOND A
|
|
UBS WM USA 0O0 11011 6100 OMNI A/C M/F ATTN DEPT MANAGER 499 WASHINGTON BLVD 9TH FL
JERSEY CITY NJ 07310-2055
|
|
|
1,452,568.237
|
|
|
|
27.72
|
%
|
|
b
|
|
ALLIANZGI HIGH YIELD BOND A
|
|
LPL FINANCIAL A/C 1000-0005 9785 TOWNE CENTRE DRIVE SAN DIEGO CA 92121-1968
|
|
|
607,629.090
|
|
|
|
11.59
|
%
|
|
b
|
|
ALLIANZGI HIGH YIELD BOND A
|
|
MORGAN STANLEY &CO HARBORSIDE FINANCIAL CENTER PLAZA II 3RD FL JERSEY CITY NJ 07311
|
|
|
465,607.457
|
|
|
|
8.88
|
%
|
|
b
|
|
ALLIANZGI HIGH YIELD BOND A
|
|
MLPF&S FOR THE SOLE BENEFIT OF ITS CUSTOMERS ATTN FUND ADMN/#97M 4800 DEER LAKE DR E FL
3 JACKSONVILLE FL 32246-6484
|
|
|
374,177.885
|
|
|
|
7.14
|
%
|
|
b
|
|
ALLIANZGI HIGH YIELD BOND A
|
|
PERSHING LLC PO BOX 2052 JERSEY CITY NJ 07303-2052
|
|
|
297,039.690
|
|
|
|
5.67
|
%
|
|
|
|
ALLIANZGI HIGH YIELD BOND ADMIN
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANZGI HIGH YIELD BOND ADMIN
|
|
RELIANCE TRUST COMPANY CUSTODIAN FBO INSPERITY 401K PLAN PO BOX 48529 ATLANTA GA
30362-1529
|
|
|
3,211,073.878
|
|
|
|
94.02
|
%
|
|
|
|
ALLIANZGI HIGH YIELD BOND C
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI HIGH YIELD BOND C
|
|
MLPF&S FOR THE SOLE BENEFIT OF ITS CUSTOMERS ATTN FUND ADMN/#97M 4800 DEER LAKE DR E FL
3 JACKSONVILLE FL 32246-6484
|
|
|
540,594.041
|
|
|
|
20.83
|
%
|
|
b
|
|
ALLIANZGI HIGH YIELD BOND C
|
|
MORGAN STANLEY &CO HARBORSIDE FINANCIAL CENTER PLAZA II 3RD FL JERSEY CITY NJ 07311
|
|
|
420,160.675
|
|
|
|
16.19
|
%
|
|
b
|
|
ALLIANZGI HIGH YIELD BOND C
|
|
UBS WM USA 0O0 11011 6100 OMNI A/C M/F ATTN DEPT MANAGER 499 WASHINGTON BLVD 9TH FL
JERSEY CITY NJ 07310-2055
|
|
|
286,533.064
|
|
|
|
11.04
|
%
|
|
b
|
|
ALLIANZGI HIGH YIELD BOND C
|
|
PERSHING LLC PO BOX 2052 JERSEY CITY NJ 07303-2052
|
|
|
276,774.804
|
|
|
|
10.67
|
%
|
|
b
|
|
ALLIANZGI HIGH YIELD BOND C
|
|
AMERICAN ENTERPRISE INVESTMENT SVC FBO #41999970 707 2ND AVE S MINNEAPOLIS MN 55402-2405
|
|
|
173,137.972
|
|
|
|
6.67
|
%
|
|
b
|
|
ALLIANZGI HIGH YIELD BOND C
|
|
RAYMOND JAMES OMNIBUS FOR MUTUAL FUNDS HOUSE ACCT FIRM 92500015 ATTN COURTNEY WALLER 880
CARILLON PKWY ST PETERSBURG FL 33716-1100
|
|
|
170,933.599
|
|
|
|
6.59
|
%
|
|
b
|
|
ALLIANZGI HIGH YIELD BOND C
|
|
LPL FINANCIAL A/C 1000-0005 9785 TOWNE CENTRE DRIVE SAN DIEGO CA 92121-1968
|
|
|
160,662.924
|
|
|
|
6.19
|
%
|
|
b
|
|
ALLIANZGI HIGH YIELD BOND C
|
|
NATIONAL FINANCIAL SERVICES LLC FOR THE BENEFIT OF OUR CUSTOMERS ATTN: MUTUAL FUNDS DEPT
4TH FL 499 WASHINGTON BLVD JERSEY CITY NJ 07310-2010
|
|
|
141,120.282
|
|
|
|
5.44
|
%
|
|
|
|
ALLIANZGI HIGH YIELD BOND D
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI HIGH YIELD BOND D
|
|
NATIONAL FINANCIAL SERVICES LLC FOR THE BENEFIT OF OUR CUSTOMERS ATTN MUTUAL FUNDS DEPT
5TH FL 200 LIBERTY ST ONE WORLD FINANCIAL CENTER NEW YORK NY 10281-1003
|
|
|
4,039,962.119
|
|
|
|
61.92
|
%
|
|
b
|
|
ALLIANZGI HIGH YIELD BOND D
|
|
TD AMERITRADE INC FOR THE EXCLUSIVE BENEFIT OF OUR CLIENTS PO BOX 2226 OMAHA NE
68103-2226
|
|
|
918,588.540
|
|
|
|
14.08
|
%
|
|
b
|
|
ALLIANZGI HIGH YIELD BOND D
|
|
CHARLES SCHWAB & CO INC SPECIAL CUSTODY ACCOUNTS FBO CUSTOMERS ATTN MUTUAL FUNDS 211
MAIN ST SAN FRANCISCO CA 94105-1905
|
|
|
792,966.231
|
|
|
|
12.15
|
%
|
|
|
|
ALLIANZGI HIGH YIELD BOND INST
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI HIGH YIELD BOND INST
|
|
NATIONAL FINANCIAL SERVICES FOR EXCLUSIVE BEN OF OUR CUSTOMERS 499 WASHINGTON BLVD MAIL
ZONE NJ4C JERSEY CITY NJ 07310-2010
|
|
|
6,706,978.966
|
|
|
|
40.69
|
%
|
|
b
|
|
ALLIANZGI HIGH YIELD BOND INST
|
|
CHARLES SCHWAB & CO INC SPECIAL CUSTODY ACCOUNT FOR THE EXCLUSIVE BENEFIT OF OUR
CUSTOMERS ATTN: MUTUAL FUNDS DEPT 211 MAIN ST SAN FRANCISCO CA 94105-1905
|
|
|
2,697,779.358
|
|
|
|
16.37
|
%
|
|
b
|
|
ALLIANZGI HIGH YIELD BOND INST
|
|
WELLS FARGO BANK NA FBO MDU MASTER TR HIGH YIELD BOND PO BOX 1533 MINNEAPOLIS MN
55480-1533
|
|
|
1,136,670.415
|
|
|
|
6.90
|
%
|
|
b
|
|
ALLIANZGI HIGH YIELD BOND INST
|
|
JP MORGAN CLEARING CORP OMINIBUS ACCOUNT FOR THE EXCLUSIVE BENEFIT OF CUSTOMERS 3 CHASE
METROTECH CENTER 3RD FLOOR MUTUAL FUND DEPARTMENT BROOKLYN NY 11245-0001
|
|
|
827,059.794
|
|
|
|
5.02
|
%
|
|
|
|
ALLIANZGI HIGH YIELD BOND P
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI HIGH YIELD BOND P
|
|
MERRILL LYNCH PIERCE FENNER & SMITH INC FOR THE SOLE BENEFIT OF ITS CUSTOMERS 4800 DEER
LAKE DR E JACKSONVILLE FL 32246-6484
|
|
|
7,114,947.365
|
|
|
|
90.49
|
%
|
|
b
|
|
ALLIANZGI HIGH YIELD BOND P
|
|
MORGAN STANLEY &CO HARBORSIDE FINANCIAL CENTER PLAZA II 3RD FL JERSEY CITY NJ 07311
|
|
|
553,107.317
|
|
|
|
7.03
|
%
|
|
|
|
ALLIANZGI HIGH YIELD BOND R
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI HIGH YIELD BOND R
|
|
MG TRUST COMPANY CUST. FBO WORLD
RESOURCES INSTITUTE PENSION P 717 17TH STREET SUITE
1300 DENVER CO 80202-3304
|
|
|
113,364.775
|
|
|
|
38.23
|
%
|
|
b
|
|
ALLIANZGI HIGH YIELD BOND R
|
|
MLPF & S FOR THE SOLE BENEFIT OF ITS CUSTOMERS ATTN FUND ADMN/#97M 4800 DEER LAKE DR E
FL 3 JACKSONVILLE FL 32246-6484
|
|
|
99,142.933
|
|
|
|
33.43
|
%
|
|
b
|
|
ALLIANZGI HIGH YIELD BOND R
|
|
MID ATLANTIC TR CO FBO CARL BELT INC 2021-2030 MODERATE MAP-R FUND 1251 WATERFRONT PL
STE 525 PITTSBURGH PA 15222-4228
|
|
|
27,813.753
|
|
|
|
9.38
|
%
|
|
b
|
|
ALLIANZGI HIGH YIELD BOND R
|
|
MID ATLANTIC TR CO FBO CARL BELT INC 2011-2020 MODERATE MAP-R FUND 1251 WATERFRONT PL
STE 525 PITTSBURGH PA 15222-4228
|
|
|
24,170.450
|
|
|
|
8.15
|
%
|
|
|
|
ALLIANZGI INTERNATIONAL SMALL-CAP A
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI INTERNATIONAL SMALL-CAP A
|
|
MLPF&S FOR THE SOLE BENEFIT OF ITS CUSTOMERS ATTN FUND ADMN/#97M 4800 DEER LAKE DR E FL
3 JACKSONVILLE FL 32246-6484
|
|
|
83,994.482
|
|
|
|
69.38
|
%
|
|
b
|
|
ALLIANZGI INTERNATIONAL SMALL-CAP A
|
|
PERSHING LLC PO BOX 2052 JERSEY CITY NJ 07303-2052
|
|
|
7,711.438
|
|
|
|
6.37
|
%
|
|
|
|
ALLIANZGI INTERNATIONAL SMALL-CAP C
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI INTERNATIONAL SMALL-CAP C
|
|
ATTN NPIO TRADE DESK DCGT TRUSTEE & OR CUSTODIAN FBO PRINCIPAL FINANCIAL GROUP QUALI
FIED FIA OMNIBUS 711 HIGH ST DES MOINES IA 50392-0001
|
|
|
12,502.999
|
|
|
|
52.56
|
%
|
|
b
|
|
ALLIANZGI INTERNATIONAL SMALL-CAP C
|
|
PERSHING LLC PO BOX 2052 JERSEY CITY NJ 07303-2052
|
|
|
1,719.123
|
|
|
|
7.23
|
%
|
|
|
|
ALLIANZGI INTERNATIONAL SMALL-CAP C
|
|
D A DAVIDSON & CO DCG&T TTEE SUSAN M GERSTNER 8 THIRD STREET NORTH GREAT FALLS MT
59401-3155
|
|
|
1,248.301
|
|
|
|
5.25
|
%
|
|
|
|
ALLIANZGI INTERNATIONAL SMALL-CAP D
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI INTERNATIONAL SMALL-CAP D
|
|
AMERITRADE INC FEBO OUR CLIENT PO BOX 2226 OMAHA NE 68103-2226
|
|
|
28,083.511
|
|
|
|
78.97
|
%
|
|
b
|
|
ALLIANZGI INTERNATIONAL SMALL-CAP D
|
|
INTERACTIVE BROKERS LLC 2 PICKWICK PLAZA GREENWICH CT 06830-5576
|
|
|
3,321.573
|
|
|
|
9.34
|
%
|
|
b
|
|
ALLIANZGI INTERNATIONAL SMALL-CAP D
|
|
NATIONAL FINANCIAL SERVICES LLC FOR THE BENEFIT OF OUR CUSTOMERS ATTN MUTUAL FUNDS DEPT
5TH FL 200 LIBERTY ST ONE WORLD FINANCIAL CENTER NEW YORK NY 10281-1003
|
|
|
1,800.277
|
|
|
|
5.06
|
%
|
|
|
|
ALLIANZGI INTERNATIONAL SMALL-CAP R
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANZGI INTERNATIONAL SMALL-CAP R
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
398.824
|
|
|
|
54.17
|
%
|
|
b
|
|
ALLIANZGI INTERNATIONAL SMALL-CAP R
|
|
ATTN NPIO TRADE DESK DCGT TRUSTEE & OR CUSTODIAN FBO PRINCIPAL FINANCIAL GROUP QUALI
FIED PRIN ADVTG OMNIBUS 711 HIGH ST DES MOINES IA 50392-0001
|
|
|
185.927
|
|
|
|
25.25
|
%
|
|
b
|
|
ALLIANZGI INTERNATIONAL SMALL-CAP R
|
|
ATTN NPIO TRADE DESK DCGT TRUSTEE & OR CUSTODIAN FBO PRINCIPAL FINANCIAL GROUP QUALI
FIED FIA OMNIBUS 711 HIGH ST DES MOINES IA 50392-0001
|
|
|
151.538
|
|
|
|
20.58
|
%
|
|
|
|
ALLIANZGI INTL SMALL-CAP ADMIN
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANZGI INTL SMALL-CAP ADMIN
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
394.805
|
|
|
|
100.00
|
%
|
|
|
|
ALLIANZGI INTL SMALL-CAP INST
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI INTL SMALL-CAP INST
|
|
CHARLES SCHWAB & CO INC SPECIAL CUSTODY ACCOUNT FOR THE EXCLUSIVE BENEFIT OF OUR
CUSTOMERS ATTN: MUTUAL FUNDS DEPT 211 MAIN ST SAN FRANCISCO CA 94105-1905
|
|
|
643,387.159
|
|
|
|
38.11
|
%
|
|
|
|
ALLIANZGI INTL SMALL-CAP INST
|
|
ALLIANZ FUNDS MULTI-STRATEGY TRUST ON BEHALF OF ALLIANZGI GLOBAL ALLOCATION FUND ATTN
STEPHEN SEXAUER 600 W BROADWAY FL 34 SAN DIEGO CA 92101-3398
|
|
|
211,330.050
|
|
|
|
12.52
|
%
|
|
|
|
ALLIANZGI INTL SMALL-CAP INST
|
|
STATE STREET AS CUSTODIAN FOR SOUTH DAKOTA COLLEGEACCESS 529 PLAN AGE-BASED PORTFOLIO
7-10 P51B ATTN STATE STREET TRUST OPERATIONS 801 PENNSYLVANIA AVE KANSAS CITY MO
64105-1307
|
|
|
104,520.997
|
|
|
|
6.19
|
%
|
|
|
|
ALLIANZGI INTL SMALL-CAP INST
|
|
STATE STREET AS CUSTODIAN FOR SOUTH DAKOTA COLLEGEACESS 529 PLAN AGE-BASED PORTFOLIO
11-14 P51D ATTN: TRUST OPERATIONS 801 PENNSYLVANIA KANSAS CITY MO 64105-1307
|
|
|
98,951.433
|
|
|
|
5.86
|
%
|
|
|
|
ALLIANZGI INTL SMALL-CAP INST
|
|
STATE STREET AS CUSTODIAN FOR SOUTH DAKOTA COLLEGEACCESS 529 PLAN DIVERSIFIED EQUITY
P52D ATTN: TRUST OPERATIONS 801 PENNSYLVANIA KANSAS CITY MO 64105-1307
|
|
|
95,803.748
|
|
|
|
5.68
|
%
|
|
|
|
ALLIANZGI INTL SMALL-CAP P
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI INTL SMALL-CAP P
|
|
CHARLES SCHWAB & CO INC SPECIAL CUSTODY ACCOUNT FOR THE EXCLUSIVE BENEFIT OF OUR
CUSTOMERS ATTN: MUTUAL FUNDS DEPT 211 MAIN ST SAN FRANCISCO CA 94105-1905
|
|
|
345,596.681
|
|
|
|
41.00
|
%
|
|
b
|
|
ALLIANZGI INTL SMALL-CAP P
|
|
NATIONAL FINANCIAL SERVICES FOR EXCLUSIVE BENEFIT OF OUR CUSTOM 499 WASHINGTON BLVD MAIL
ZONE NJ4C JERSEY CITY NJ 07310-2010
|
|
|
255,717.338
|
|
|
|
30.34
|
%
|
|
|
|
ALLIANZGI INTL SMALL-CAP P
|
|
ELIZABETH C CONSIDINE TR TERRY CONSIDINE CARBONDALE CORP RET TRUST 4582 S ULSTER ST STE
310 DENVER CO 80237-2634
|
|
|
80,435.283
|
|
|
|
9.54
|
%
|
|
b
|
|
ALLIANZGI INTL SMALL-CAP P
|
|
TAYNIK & CO C/O INVESTORS BANK & TRUST 200 CLARENDON ST FCG 124 BOSTON MA 02116-5097
|
|
|
44,942.594
|
|
|
|
5.33
|
%
|
|
|
|
ALLIANZGI MICRO CAP A
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI MICRO CAP A
|
|
PERSHING LLC PO BOX 2052 JERSEY CITY NJ 07303-2052
|
|
|
67,366.827
|
|
|
|
35.30
|
%
|
|
b
|
|
ALLIANZGI MICRO CAP A
|
|
UBS WM USA 0O0 11011 6100 OMNI A/C M/F ATTN DEPT MANAGER 499 WASHINGTON BLVD 9TH FL
JERSEY CITY NJ 07310-2055
|
|
|
37,185.746
|
|
|
|
19.49
|
%
|
|
b
|
|
ALLIANZGI MICRO CAP A
|
|
LPL FINANCIAL FBO COSTUMER ACCOUNTS ATTN MUTUAL FUND OPERATIONS PO BOX 509046 SAN DIEGO
CA 92150-9046
|
|
|
19,654.056
|
|
|
|
10.30
|
%
|
|
b
|
|
ALLIANZGI MICRO CAP A
|
|
AMERICAN ENTERPRISE INVESTMENT SVC FBO #41999970 707 2ND AVE SOUTH MINNEAPOLIS MN
55402-2405
|
|
|
18,878.671
|
|
|
|
9.89
|
%
|
|
|
|
ALLIANZGI MICRO CAP A
|
|
BILLY R BENTLEY & SHIRLEY M BENTLEY JTWROS 177 GREENLAWN DR NE MERIDIANVILLE AL
35759-2426
|
|
|
9,881.313
|
|
|
|
5.18
|
%
|
|
|
|
ALLIANZGI MICRO CAP INST
|
|
|
|
|
|
|
|
|
|
|
|
a, b
|
|
ALLIANZGI MICRO CAP INST
|
|
CHARLES SCHWAB & CO INC SPECIAL CUSTODY ACCOUNT FOR THE EXCLUSIVE BENEFIT OF OUR
CUSTOMERS ATTN: MUTUAL FUNDS DEPT 211 MAIN ST SAN FRANCISCO CA 94105-1905
|
|
|
1,221,246.659
|
|
|
|
51.04
|
%
|
|
b
|
|
ALLIANZGI MICRO CAP INST
|
|
NEW YORK LIFE TRUST CO CLIENT ACCT 169 LACKAWANNA AVE PARSIPPANY NJ 07054-1007
|
|
|
449,173.342
|
|
|
|
18.77
|
%
|
|
b
|
|
ALLIANZGI MICRO CAP INST
|
|
MERCER TRUST COMPANY TTEE FBO HD SUPPLY 401 K RETIREMENT PLAN 1 INVESTORS WAY MSC N-1-D
NORWOOD MA 02062-1599
|
|
|
364,735.650
|
|
|
|
15.24
|
%
|
|
b
|
|
ALLIANZGI MICRO CAP INST
|
|
NATIONAL FINANCIAL SERVICES FOR EXCLUSIVE BENEFIT OF OUR CUSTOM 499 WASHINGTON BLVD MAIL
ZONE NJ4C JERSEY CITY NJ 07310-2010
|
|
|
143,208.211
|
|
|
|
5.99
|
%
|
|
|
|
ALLIANZGI MICRO CAP P
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI MICRO CAP P
|
|
MORGAN STANLEY SMITH BARNEY HARBORSIDE FINANCIAL CENTER PLAZA 2 3RD FLOOR JERSEY CITY NJ
07311
|
|
|
123,366.857
|
|
|
|
78.32
|
%
|
|
b
|
|
ALLIANZGI MICRO CAP P
|
|
LPL FBO LPL CUSTOMERS ATTN: MUTUAL FUND OPERATIONS 1 BEACON ST FL 22 BOSTON MA
02108-3106
|
|
|
28,532.868
|
|
|
|
18.11
|
%
|
|
|
|
ALLIANZGI MULTI-ASSET REAL RETURN A
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI MULTI-ASSET REAL RETURN A
|
|
PERSHING LLC PO BOX 2052 JERSEY CITY NJ 07303-2052
|
|
|
875.196
|
|
|
|
29.41
|
%
|
|
|
|
ALLIANZGI MULTI-ASSET REAL RETURN A
|
|
SSB&T CUST IRA FBO RICHARD D ESTABROOK 58 LIME KILN RD BUTTE MT 59701-9778
|
|
|
745.779
|
|
|
|
25.06
|
%
|
|
|
|
ALLIANZGI MULTI-ASSET REAL RETURN A
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
679.488
|
|
|
|
22.83
|
%
|
|
|
|
ALLIANZGI MULTI-ASSET REAL RETURN A
|
|
EDWARD D JONES & CO CUSTODIAN FBO SANDRA LYNN VAUGHAN IRA PO BOX 130 AVERY CA
95224-0130
|
|
|
296.480
|
|
|
|
9.96
|
%
|
|
|
|
ALLIANZGI MULTI-ASSET REAL RETURN A
|
|
SSB&T CUST ROTH IRA FBO JEFFREY R GYURASICS 9955 N BLUE PRAIRIE DR WHITEHOUSE OH
43571-9490
|
|
|
194.323
|
|
|
|
6.53
|
%
|
|
|
|
ALLIANZGI MULTI-ASSET REAL RETURN A
|
|
SSB&T CUST ROTH IRA FBO JODI L GYURASICS 9955 N BLUE PRAIRIE DR WHITEHOUSE OH 43571-9490
|
|
|
185.005
|
|
|
|
6.22
|
%
|
B-2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount &
|
|
Percentage of
|
|
|
|
|
|
|
|
Beneficial Nature
|
|
Outstanding Share of
|
|
|
|
Fund Name
|
|
Registration
|
|
of Ownership
|
|
Ownership
|
|
|
|
ALLIANZGI MULTI-ASSET REAL RETURN C
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI MULTI-ASSET REAL RETURN C
|
|
PERSHING LLC PO BOX 2052 JERSEY CITY NJ 07303-2052
|
|
|
4,241.395
|
|
|
|
78.40
|
%
|
|
|
|
ALLIANZGI MULTI-ASSET REAL RETURN C
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
678.029
|
|
|
|
12.53
|
%
|
|
b
|
|
ALLIANZGI MULTI-ASSET REAL RETURN C
|
|
NATIONAL FINANCIAL SERVICES LLC FOR THE BENEFIT OF OUR CUSTOMERS ATTN MUTUAL FUNDS DEPT
4TH FLOOR 499 WASHINGTON BLVD JERSEY CITY NJ 07310-2010
|
|
|
386.219
|
|
|
|
7.14
|
%
|
|
|
|
ALLIANZGI MULTI-ASSET REAL RETURN D
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANZGI MULTI-ASSET REAL RETURN D
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
678.263
|
|
|
|
66.75
|
%
|
|
b
|
|
ALLIANZGI MULTI-ASSET REAL RETURN D
|
|
NATIONAL FINANCIAL SERVICES LLC FOR THE BENEFIT OF OUR CUSTOMERS ATTN MUTUAL FUNDS DEPT
5TH FL 200 LIBERTY ST ONE WORLD FINANCIAL CENTER NEW YORK NY 10281-1003
|
|
|
260.288
|
|
|
|
25.62
|
%
|
|
b
|
|
ALLIANZGI MULTI-ASSET REAL RETURN D
|
|
USAA INVESTMENT MANAGEMENT CO FBO 167793811 9800 FREDERICKSBURG ROAD SAN ANTONIO TX
78288-0001
|
|
|
77.569
|
|
|
|
7.63
|
%
|
|
|
|
ALLIANZGI MULTI-ASSET REAL RETURN I
|
|
|
|
|
|
|
|
|
|
|
|
a
|
|
ALLIANZGI MULTI-ASSET REAL RETURN I
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
340,093.887
|
|
|
|
93.75
|
%
|
|
b
|
|
ALLIANZGI MULTI-ASSET REAL RETURN I
|
|
CHARLES SCHWAB & CO INC SPECIAL CUSTODY ACCOUNT FOR THE EXCLUSIVE BENEFIT OF OUR
CUSTOMERS ATTN MUTUAL FUND DEPT 211 MAIN ST SAN FRANCISCO CA 94105-1905
|
|
|
22,658.980
|
|
|
|
6.25
|
%
|
|
|
|
ALLIANZGI MULTI-ASSET REAL RETURN P
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANZGI MULTI-ASSET REAL RETURN P
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
679.278
|
|
|
|
100.00
|
%
|
|
|
|
ALLIANZGI NFJ EMERGING MARKETS VALUE A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANZGI NFJ EMERGING MARKETS VALUE A
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
685.627
|
|
|
|
53.58
|
%
|
|
|
|
ALLIANZGI NFJ EMERGING MARKETS VALUE A
|
|
EDWARD D JONES & CO CUST FBO MICHAEL CHAD PARSONS RTH 3824 W BIDDISON ST FORT WORTH TX
76109-2707
|
|
|
340.932
|
|
|
|
26.64
|
%
|
|
|
|
ALLIANZGI NFJ EMERGING MARKETS VALUE A
|
|
SSB&T CUST 403B PLAN FBO COLLEGE OF LAW CHARLES W COLLIER UNIVERSITY OF FLORIDA
GAINESVILLE FL 32611-0001
|
|
|
170.882
|
|
|
|
13.35
|
%
|
|
b
|
|
ALLIANZGI NFJ EMERGING MARKETS VALUE A
|
|
NATIONAL FINANCIAL SERVICES LLC FOR THE BENEFIT OF OUR CUSTOMERS ATTN MUTUAL FUNDS DEPT
4TH FLOOR 499 WASHINGTON BLVD JERSEY CITY NJ 07310-2010
|
|
|
82.202
|
|
|
|
6.42
|
%
|
|
|
|
ALLIANZGI NFJ EMERGING MARKETS VALUE C
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI NFJ EMERGING MARKETS VALUE C
|
|
RBC CAPITAL MARKETS LLC MUTUAL FUND OMNIBUS PROCESSING OMNIBUS ATTN MUTUAL FUND OPS
MANAGER 60 S 6TH ST STE 700 # STREET-P08 MINNEAPOLIS MN 55402-4413
|
|
|
979.620
|
|
|
|
35.59
|
%
|
|
b
|
|
ALLIANZGI NFJ EMERGING MARKETS VALUE C
|
|
NATIONAL FINANCIAL SERVICES LLC FOR THE BENEFIT OF OUR CUSTOMERS ATTN MUTUAL FUNDS DEPT
4TH FLOOR 499 WASHINGTON BLVD JERSEY CITY NJ 07310-2010
|
|
|
688.705
|
|
|
|
25.02
|
%
|
|
|
|
ALLIANZGI NFJ EMERGING MARKETS VALUE C
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
682.219
|
|
|
|
24.79
|
%
|
|
|
|
ALLIANZGI NFJ EMERGING MARKETS VALUE C
|
|
ROBERT W BAIRD & CO INC A/C 3181-1926 777 EAST WISCONSIN AVENUE MILWAUKEE WI 53202-5391
|
|
|
200.803
|
|
|
|
7.30
|
%
|
|
|
|
ALLIANZGI NFJ EMERGING MARKETS VALUE C
|
|
ROBERT W BAIRD & CO INC A/C 6999-9941 777 EAST WISCONSIN AVENUE MILWAUKEE WI 53202-5391
|
|
|
200.803
|
|
|
|
7.30
|
%
|
|
|
|
ALLIANZGI NFJ EMERGING MARKETS VALUE D
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI NFJ EMERGING MARKETS VALUE D
|
|
CHARLES SCHWAB & CO INC ATTN MUTUAL FUNDS 211 MAIN ST SAN FRANCISCO CA 94105-1905
|
|
|
76,166.210
|
|
|
|
81.75
|
%
|
|
b
|
|
ALLIANZGI NFJ EMERGING MARKETS VALUE D
|
|
TD AMERITRADE INC FOR THE EXCLUSIVE BENEFIT OF OUR CLIENTS PO BOX 2226 OMAHA NE
68103-2226
|
|
|
11,971.594
|
|
|
|
12.85
|
%
|
|
|
|
ALLIANZGI NFJ EMERGING MARKETS VALUE P
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANZGI NFJ EMERGING MARKETS VALUE P
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
685.380
|
|
|
|
100.00
|
%
|
|
|
|
ALLIANZGI NFJ EMERGING MKT VALUE INST
|
|
|
|
|
|
|
|
|
|
|
|
a
|
|
ALLIANZGI NFJ EMERGING MKT VALUE INST
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
205,767.399
|
|
|
|
47.36
|
%
|
|
a, b
|
|
ALLIANZGI NFJ EMERGING MKT VALUE INST
|
|
CHARLES SCHWAB & CO INC SPECIAL CUSTODY ACCOUNT FOR THE EXCLUSIVE BENEFIT OF OUR
CUSTOMERS ATTN MUTUAL FUND DEPT 211 MAIN ST SAN FRANCISCO CA 94105-1905
|
|
|
196,191.956
|
|
|
|
45.16
|
%
|
|
|
|
ALLIANZGI NFJ EMERGING MKT VALUE INST
|
|
M J MURDOCK CHARITABLE TRUST PO BOX 1618 VANCOUVER WA 98668-1618
|
|
|
23,079.719
|
|
|
|
5.31
|
%
|
|
|
|
ALLIANZGI NFJ GLBL DIVIDEND VALUE INST
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANZGI NFJ GLBL DIVIDEND VALUE INST
|
|
ALLIANZ FUNDS MULTI-STRATEGY TRUST ON BEHALF OF ALLIANZGI GLOBAL ALLOCATION FUND ATTN
STEPHEN SEXAUER 600 W BROADWAY FL 34 SAN DIEGO CA 92101-3398
|
|
|
561,319.462
|
|
|
|
22.56
|
%
|
|
b
|
|
ALLIANZGI NFJ GLBL DIVIDEND VALUE INST
|
|
CHARLES SCHWAB & CO INC SPECIAL CUSTODY ACCOUNT FOR THE EXCLUSIVE BENEFIT OF OUR
CUSTOMERS ATTN: MUTUAL FUNDS DEPT 211 MAIN ST SAN FRANCISCO CA 94105-1905
|
|
|
513,748.028
|
|
|
|
20.64
|
%
|
|
|
|
ALLIANZGI NFJ GLBL DIVIDEND VALUE INST
|
|
STATE STREET AS CUSTODIAN FOR SOUTH DAKOTA COLLEGEACESS 529 PLAN AGE-BASED PORTFOLIO
11-14 P51D ATTN: TRUST OPERATIONS 801 PENNSYLVANIA KANSAS CITY MO 64105-1307
|
|
|
191,201.964
|
|
|
|
7.68
|
%
|
|
|
|
ALLIANZGI NFJ GLBL DIVIDEND VALUE INST
|
|
STATE STREET AS CUSTODIAN FOR SOUTH DAKOTA COLLEGEACCESS 529 PLAN AGE-BASED PORTFOLIO
7-10 P51B ATTN STATE STREET TRUST OPERATIONS 801 PENNSYLVANIA AVE KANSAS CITY MO
64105-1307
|
|
|
161,570.950
|
|
|
|
6.49
|
%
|
|
|
|
ALLIANZGI NFJ GLOBAL DIVIDEND VALUE A
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI NFJ GLOBAL DIVIDEND VALUE A
|
|
MLPF&S FOR THE SOLE BENEFIT OF ITS CUSTOMERS ATTN FUND ADMN/#97M 4800 DEER LAKE DR E FL
3 JACKSONVILLE FL 32246-6484
|
|
|
271,439.130
|
|
|
|
51.57
|
%
|
|
b
|
|
ALLIANZGI NFJ GLOBAL DIVIDEND VALUE A
|
|
AMERICAN ENTERPRISE INVESTMENT SVC FBO #41999970 707 2ND AVE SOUTH MINNEAPOLIS MN
55402-2405
|
|
|
51,865.943
|
|
|
|
9.85
|
%
|
|
b
|
|
ALLIANZGI NFJ GLOBAL DIVIDEND VALUE A
|
|
PERSHING LLC PO BOX 2052 JERSEY CITY NJ 07303-2052
|
|
|
44,546.481
|
|
|
|
8.46
|
%
|
|
b
|
|
ALLIANZGI NFJ GLOBAL DIVIDEND VALUE A
|
|
NATIONAL FINANCIAL SERVICES LLC FOR THE BENEFIT OF OUR CUSTOMERS ATTN: MUTUAL FUNDS DEPT
4TH FL 499 WASHINGTON BLVD JERSEY CITY NJ 07310-2010
|
|
|
34,913.857
|
|
|
|
6.63
|
%
|
|
|
|
ALLIANZGI NFJ GLOBAL DIVIDEND VALUE C
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI NFJ GLOBAL DIVIDEND VALUE C
|
|
MORGAN STANLEY SMITH BARNEY HARBORSIDE FINANCIAL CENTER PLAZA 2, 3RD FLOOR JERSEY CITY
NJ 07311
|
|
|
69,587.215
|
|
|
|
25.16
|
%
|
|
b
|
|
ALLIANZGI NFJ GLOBAL DIVIDEND VALUE C
|
|
LPL FINANCIAL A/C 1000-0005 9785 TOWNE CENTRE DRIVE SAN DIEGO CA 92121-1968
|
|
|
21,332.645
|
|
|
|
7.71
|
%
|
|
b
|
|
ALLIANZGI NFJ GLOBAL DIVIDEND VALUE C
|
|
NATIONAL FINANCIAL SERVICES LLC FOR THE BENEFIT OF OUR CUSTOMERS ATTN: MUTUAL FUNDS DEPT
4TH FL 499 WASHINGTON BLVD JERSEY CITY NJ 07310-2010
|
|
|
20,409.283
|
|
|
|
7.38
|
%
|
|
b
|
|
ALLIANZGI NFJ GLOBAL DIVIDEND VALUE C
|
|
PERSHING LLC PO BOX 2052 JERSEY CITY NJ 07303-2052
|
|
|
19,986.450
|
|
|
|
7.23
|
%
|
|
|
|
ALLIANZGI NFJ GLOBAL DIVIDEND VALUE D
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI NFJ GLOBAL DIVIDEND VALUE D
|
|
NATIONAL FINANCIAL SERVICES LLC FOR THE BENEFIT OF OUR CUSTOMERS ATTN MUTUAL FUNDS DEPT
5TH FL 200 LIBERTY ST ONE WORLD FINANCIAL CENTER NEW YORK NY 10281-1003
|
|
|
13,210.334
|
|
|
|
38.08
|
%
|
|
b
|
|
ALLIANZGI NFJ GLOBAL DIVIDEND VALUE D
|
|
CHARLES SCHWAB & CO INC SPECIAL CUSTODY ACCOUNTS FBO CUSTOMERS ATTN MUTUAL FUNDS 211
MAIN ST SAN FRANCISCO CA 94105-1905
|
|
|
10,858.811
|
|
|
|
31.30
|
%
|
|
b
|
|
ALLIANZGI NFJ GLOBAL DIVIDEND VALUE D
|
|
PERSHING LLC PO BOX 2052 JERSEY CITY NJ 07303-2052
|
|
|
4,191.019
|
|
|
|
12.08
|
%
|
|
b
|
|
ALLIANZGI NFJ GLOBAL DIVIDEND VALUE D
|
|
CAPITAL ONE SHAREBUILDER INC —OMNIBUS ACCOUNT— 83 S KING ST STE 700 SEATTLE WA
98104-2851
|
|
|
2,895.448
|
|
|
|
8.35
|
%
|
|
|
|
ALLIANZGI NFJ GLOBAL DIVIDEND VALUE P
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI NFJ GLOBAL DIVIDEND VALUE P
|
|
MORGAN STANLEY SMITH BARNEY HARBORSIDE FINANCIAL CENTER PLAZA 2 3RD FLOOR JERSEY CITY NJ
07311
|
|
|
73,530.385
|
|
|
|
86.94
|
%
|
|
b
|
|
ALLIANZGI NFJ GLOBAL DIVIDEND VALUE P
|
|
MERRILL LYNCH PIERCE FENNER & SMITH INC FOR THE SOLE BENEFIT OF ITS CUSTOMERS 4800 DEER
LAKE DR E FL 3 JACKSONVILLE FL 32246-6484
|
|
|
8,204.963
|
|
|
|
9.70
|
%
|
|
|
|
ALLIANZGI NFJ INTL SMALL-CAP VAL INST
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANZGI NFJ INTL SMALL-CAP VAL INST
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
210,260.532
|
|
|
|
29.25
|
%
|
|
|
|
ALLIANZGI NFJ INTL SMALL-CAP VAL INST
|
|
ALLIANZ FUNDS MULTI-STRATEGY TRUST ON BEHALF OF ALLIANZGI GLOBAL ALLOCATION FUND ATTN
STEPHEN SEXAUER 600 W BROADWAY FL 34 SAN DIEGO CA 92101-3398
|
|
|
100,167.710
|
|
|
|
13.93
|
%
|
|
b
|
|
ALLIANZGI NFJ INTL SMALL-CAP VAL INST
|
|
CHARLES SCHWAB & CO INC SPECIAL CUSTODY ACCOUNT FOR THE EXCLUSIVE BENEFIT OF OUR
CUSTOMERS ATTN MUTUAL FUND DEPT 211 MAIN ST SAN FRANCISCO CA 94105-1905
|
|
|
91,798.777
|
|
|
|
12.77
|
%
|
|
|
|
ALLIANZGI NFJ INTL SMALL-CAP VAL INST
|
|
M J MURDOCK CHARITABLE TRUST PO BOX 1618 VANCOUVER WA 98668-1618
|
|
|
82,026.295
|
|
|
|
11.41
|
%
|
|
|
|
ALLIANZGI NFJ INTL SMALL-CAP VAL INST
|
|
ALLIANZ FUNDS MULTI-STRATEGY TRUST ON BEHALF OF ALLIANZGI RETIREMENT 2040 FUND ATTN
STEPHEN SEXAUER 600 W BROADWAY FL 34 SAN DIEGO CA 92101-3398
|
|
|
36,579.847
|
|
|
|
5.09
|
%
|
|
|
|
ALLIANZGI NFJ INTL SMALL-CAP VALUE A
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI NFJ INTL SMALL-CAP VALUE A
|
|
CITY NATIONAL BANK A/C # 200097202 FBO WGA ASSURANCE TRUST/ AT SURPLUS 555 S FLOWER ST
STE 1000 LOS ANGELES CA 90071-2429
|
|
|
61,771.547
|
|
|
|
53.40
|
%
|
|
b
|
|
ALLIANZGI NFJ INTL SMALL-CAP VALUE A
|
|
LPL FINANCIAL FBO: CUSTOMER ACCOUNTS ATTN: MUTUAL FUND OPERATIONS P O BOX 509046 SAN
DIEGO CA 92150-9046
|
|
|
43,157.779
|
|
|
|
37.31
|
%
|
|
|
|
ALLIANZGI NFJ INTL SMALL-CAP VALUE C
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI NFJ INTL SMALL-CAP VALUE C
|
|
RBC CAPITAL MARKETS LLC MUTUAL FUND OMNIBUS PROCESSING OMNIBUS ATTN MUTUAL FUND OPS
MANAGER 60 S 6TH ST STE 700 # STREET-P08 MINNEAPOLIS MN 55402-4413
|
|
|
41,805.499
|
|
|
|
95.08
|
%
|
|
|
|
ALLIANZGI NFJ INTL SMALL-CAP VALUE D
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI NFJ INTL SMALL-CAP VALUE D
|
|
CHARLES SCHWAB & CO INC SPECIAL CUSTODY ACCOUNTS FBO CUSTOMERS ATTN MUTUAL FUNDS 211
MAIN ST SAN FRANCISCO CA 94105-1905
|
|
|
26,028.581
|
|
|
|
55.26
|
%
|
|
b
|
|
ALLIANZGI NFJ INTL SMALL-CAP VALUE D
|
|
NATIONAL FINANCIAL SERVICES LLC FOR THE BENEFIT OF OUR CUSTOMERS ATTN MUTUAL FUNDS DEPT
5TH FL 200 LIBERTY ST ONE WORLD FINANCIAL CENTER NEW YORK NY 10281-1003
|
|
|
17,583.657
|
|
|
|
37.33
|
%
|
|
|
|
ALLIANZGI NFJ INTL SMALL-CAP VALUE P
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANZGI NFJ INTL SMALL-CAP VALUE P
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
695.894
|
|
|
|
66.82
|
%
|
|
b
|
|
ALLIANZGI NFJ INTL SMALL-CAP VALUE P
|
|
RAYMOND JAMES OMNIBUS FOR MUTUAL FUNDS HOUSE ACCT FIRM 92500015 ATTN COURTNEY WALLER 880
CARILLON PKWY ST PETERSBURG FL 33716-1100
|
|
|
345.485
|
|
|
|
33.18
|
%
|
|
|
|
ALLIANZGI NFJ INTERNATIONAL VALUE II A
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI NFJ INTERNATIONAL VALUE II A
|
|
AMERICAN ENTERPRISE INVESTMENT SVC FBO #41999970 707 2ND AVE SOUTH MINNEAPOLIS MN
55402-2405
|
|
|
3,335.722
|
|
|
|
60.05
|
%
|
|
|
|
ALLIANZGI NFJ INTERNATIONAL VALUE II A
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
723.984
|
|
|
|
13.03
|
%
|
|
b
|
|
ALLIANZGI NFJ INTERNATIONAL VALUE II A
|
|
FIIOC FBO RESTIVO MONACELLI LLP 401(K) PLAN 52959 100 MAGELLAN WAY COVINGTON KY
41015-1987
|
|
|
615.313
|
|
|
|
11.08
|
%
|
|
|
|
ALLIANZGI NFJ INTERNATIONAL VALUE II C
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI NFJ INTERNATIONAL VALUE II C
|
|
STIFEL NICHOLAUS & CO INC EXCLUSIVE BENEFIT OF CUTOMERS 501 N BROADWAY EXCLUSIVE BENEFIT
OF CUSTOMERS 501 N BROADWAY SAINT LOUIS MO 63102-2131
|
|
|
1,514.887
|
|
|
|
58.07
|
%
|
|
|
|
ALLIANZGI NFJ INTERNATIONAL VALUE II C
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
717.080
|
|
|
|
27.49
|
%
|
|
b
|
|
ALLIANZGI NFJ INTERNATIONAL VALUE II C
|
|
RAYMOND JAMES OMNIBUS FOR MUTUAL FUNDS HOUSE ACCT FIRM 92500015 ATTN COURTNEY WALLER 880
CARILLON PKWY ST PETERSBURG FL 33716-1100
|
|
|
267.174
|
|
|
|
10.24
|
%
|
|
|
|
ALLIANZGI NFJ INTERNATIONAL VALUE II D
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANZGI NFJ INTERNATIONAL VALUE II D
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
722.883
|
|
|
|
99.73
|
%
|
|
|
|
ALLIANZGI NFJ INTERNATIONAL VALUE II P
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANZGI NFJ INTERNATIONAL VALUE II P
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
724.618
|
|
|
|
100.00
|
%
|
|
|
|
ALLIANZGI NFJ INTL VALUE II INST
|
|
|
|
|
|
|
|
|
|
|
|
a, b
|
|
ALLIANZGI NFJ INTL VALUE II INST
|
|
MORGAN STANLEY SMITH BARNEY HARBORSIDE FINANCIAL CENTER PLAZA 2 3RD FLOOR JERSEY CITY NJ
07311
|
|
|
1,094,642.509
|
|
|
|
82.77
|
%
|
|
|
|
ALLIANZGI NFJ INTL VALUE II INST
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
217,640.295
|
|
|
|
16.46
|
%
|
|
|
|
ALLIANZGI REDWOOD A
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI REDWOOD A
|
|
PERSHING LLC PO BOX 2052 JERSEY CITY NJ 07303-2052
|
|
|
60,248.467
|
|
|
|
89.77
|
%
|
|
|
|
ALLIANZGI REDWOOD C
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANZGI REDWOOD C
|
|
JOHN M LARGE ET AL TTEES U/A DTD 04/09/1999 MARJORIE LARGE SURVIVOR’S TR MARJORIE LARGE
7202 KENOSHA PASS AUSTIN TX 78749-1712
|
|
|
1,316.035
|
|
|
|
28.59
|
%
|
|
|
|
ALLIANZGI REDWOOD C
|
|
SSB&T CUST ROTH IRA FBO STEVEN H TIGGES 4433 BUR OAK DR VADNAIS HTS MN 55127-3521
|
|
|
1,123.395
|
|
|
|
24.40
|
%
|
|
b
|
|
ALLIANZGI REDWOOD C
|
|
PERSHING LLC PO BOX 2052 JERSEY CITY NJ 07303-2052
|
|
|
1,052.060
|
|
|
|
22.85
|
%
|
|
|
|
ALLIANZGI REDWOOD C
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
693.228
|
|
|
|
15.06
|
%
|
|
b
|
|
ALLIANZGI REDWOOD C
|
|
NATIONAL FINANCIAL SERVICES LLC FOR THE BENEFIT OF OUR CUSTOMERS ATTN: MUTUAL FUNDS DEPT
4TH FL 499 WASHINGTON BLVD JERSEY CITY NJ 07310-2010
|
|
|
251.319
|
|
|
|
5.46
|
%
|
|
|
|
ALLIANZGI REDWOOD D
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI REDWOOD D
|
|
CHARLES SCHWAB & CO INC SPECIAL CUSTODY ACCOUNTS FBO CUSTOMERS ATTN MUTUAL FUNDS 211
MAIN ST SAN FRANCISCO CA 94105-1905
|
|
|
1,580.040
|
|
|
|
57.70
|
%
|
|
|
|
ALLIANZGI REDWOOD D
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
691.190
|
|
|
|
25.24
|
%
|
|
b
|
|
ALLIANZGI REDWOOD D
|
|
NATIONAL FINANCIAL SERVICES LLC FOR THE BENEFIT OF OUR CUSTOMERS ATTN MUTUAL FUNDS DEPT
5TH FL 200 LIBERTY ST ONE WORLD FINANCIAL CENTER NEW YORK NY 10281-1003
|
|
|
398.620
|
|
|
|
14.56
|
%
|
|
|
|
ALLIANZGI REDWOOD INST
|
|
|
|
|
|
|
|
|
|
|
|
a
|
|
ALLIANZGI REDWOOD INST
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
208,598.777
|
|
|
|
75.27
|
%
|
|
b
|
|
ALLIANZGI REDWOOD INST
|
|
CHARLES SCHWAB & CO INC SPECIAL CUSTODY ACCOUNT FOR THE EXCLUSIVE BENEFIT OF OUR
CUSTOMERS ATTN: MUTUAL FUNDS DEPT 211 MAIN ST SAN FRANCISCO CA 94105-1905
|
|
|
58,591.540
|
|
|
|
21.14
|
%
|
|
|
|
ALLIANZGI REDWOOD P
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANZGI REDWOOD P
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
694.598
|
|
|
|
100.00
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2015 A
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI RETIREMENT 2015 A
|
|
CHARLES SCHWAB & CO SPECIAL CUSTODY ACCOUNT OF THE EXCLUSIVE BENEFIT OF CUSTOMERS ATTN
MUTUAL FUNDS 211 MAIN ST SAN FRANCISCO CA 94105-1905
|
|
|
245,169.565
|
|
|
|
51.72
|
%
|
|
b
|
|
ALLIANZGI RETIREMENT 2015 A
|
|
WELLS FARGO FBO VARIOUS RETIREMENT PLANS 1525 WEST WT HARRIS BLVD CHARLOTTE NC
28288-1076
|
|
|
127,613.112
|
|
|
|
26.92
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2015 A
|
|
FRONTIER TR CO FBO HORIZON MEDICAL GROUP PC 401K PS P O BOX 10758 FARGO ND 58106-0758
|
|
|
26,538.329
|
|
|
|
5.60
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2015 ADMIN
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANZGI RETIREMENT 2015 ADMIN
|
|
FIIOC FBO SMC CORPORATION RETIREMENT SAVINGS PLAN -19456 ATTN JAKE BEIL 100 MAGELLAN WAY
KW1C COVINGTON KY 41015-1987
|
|
|
160,180.640
|
|
|
|
84.11
|
%
|
|
b
|
|
ALLIANZGI RETIREMENT 2015 ADMIN
|
|
AMERICAN UNITED LIFE INSURANCE CO UNIT INVESTMENT TRUST SEPARATE ACCOUNTS ADMINISTRATION
PO BOX 368 INDIANAPOLIS IN 46206-0368
|
|
|
24,907.394
|
|
|
|
13.08
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2015 C
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI RETIREMENT 2015 C
|
|
LPL FINANCIAL A/C 1000-0005 9785 TOWNE CENTRE DRIVE SAN DIEGO CA 92121-1968
|
|
|
25,426.314
|
|
|
|
35.28
|
%
|
|
b
|
|
ALLIANZGI RETIREMENT 2015 C
|
|
NATIONAL FINANCIAL SERVICES LLC FOR THE BENEFIT OF OUR CUSTOMERS ATTN: MUTUAL FUNDS DEPT
4TH FL 499 WASHINGTON BLVD JERSEY CITY NJ 07310-2010
|
|
|
8,397.535
|
|
|
|
11.65
|
%
|
|
b
|
|
ALLIANZGI RETIREMENT 2015 C
|
|
RAYMOND JAMES OMNIBUS FOR MUTUAL FUNDS HOUSE ACCT FIRM 92500015 ATTN COURTNEY WALLER 880
CARILLON PKWY ST PETERSBURG FL 33716-1100
|
|
|
5,956.536
|
|
|
|
8.27
|
%
|
|
b
|
|
ALLIANZGI RETIREMENT 2015 C
|
|
SSB&T CUST IRA FBO MARILYN M FOLTS 216 COUNTY HIGHWAY 26 COOPERSTOWN NY 13326-6404
|
|
|
4,811.788
|
|
|
|
6.68
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2015 C
|
|
SSB&T CUST SIMPLE IRA WEST FINANCIAL FBO W ALAN KING 3304 PERRINS CHASE VIRGINIA BCH VA
23452-6258
|
|
|
4,565.003
|
|
|
|
6.33
|
%
|
|
b
|
|
ALLIANZGI RETIREMENT 2015 C
|
|
PERSHING LLC PO BOX 2052 JERSEY CITY NJ 07303-2052
|
|
|
3,640.801
|
|
|
|
5.05
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2015 D
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI RETIREMENT 2015 D
|
|
NATIONAL FINANCIAL SERVICES LLC FOR THE BENEFIT OF OUR CUSTOMERS ATTN MUTUAL FUNDS DEPT
5TH FL 200 LIBERTY ST ONE WORLD FINANCIAL CENTER NEW YORK NY 10281-1003
|
|
|
4,462.098
|
|
|
|
49.72
|
%
|
|
b
|
|
ALLIANZGI RETIREMENT 2015 D
|
|
CHARLES SCHWAB & CO INC SPECIAL CUSTODY ACCOUNTS FBO CUSTOMERS ATTN MUTUAL FUNDS 211
MAIN ST SAN FRANCISCO CA 94105-1905
|
|
|
2,391.886
|
|
|
|
26.65
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2015 D
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
812.973
|
|
|
|
9.06
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2015 D
|
|
SSB&T CUST ROTH IRA FBO NANCY ANDERSON WELTY 138 GRIST MILL RD SCHUYKL HAVN PA
17972-8523
|
|
|
583.963
|
|
|
|
6.51
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2015 P
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI RETIREMENT 2015 P
|
|
NFS FOR EXCLUSIVE BENEFIT OF OUR CUSTOMER ATTN: MUTUAL FUNDS DEPT 4TH FL 499 WASHINGTON
BLVD JERSEY CITY NJ 07310-1995
|
|
|
256,637.791
|
|
|
|
98.04
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2015 R
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANZGI RETIREMENT 2015 R
|
|
WILMINGTON TR RISC TTEE FBO 3 DIMENSIONAL SERVICES GROUP 401K PO BOX 52129 PHOENIX AZ
85072-2129
|
|
|
7,941.090
|
|
|
|
81.54
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2015 R
|
|
FRONTIER TR CO FBO CARBONE METAL FABRICATOR INC 401K S P O BOX 10758 FARGO ND
58106-0758
|
|
|
986.159
|
|
|
|
10.13
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2015 R
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
802.304
|
|
|
|
8.24
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2015 R6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANZGI RETIREMENT 2015 R6
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
189,861.372
|
|
|
|
45.20
|
%
|
|
b
|
|
ALLIANZGI RETIREMENT 2015 R6
|
|
CHARLES SCHWAB & CO INC SPECIAL CUSTODY ACCOUNT FOR THE EXCLUSIVE BENEFIT OF OUR
CUSTOMERS ATTN: MUTUAL FUNDS DEPT 211 MAIN ST SAN FRANCISCO CA 94105-1905
|
|
|
96,915.901
|
|
|
|
23.07
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2015 R6
|
|
FRONTIER TRUST CO FBO POWERS & SONS LLC 401K PLAN #215707 PO BOX 10758 FARGO ND
58106-0758
|
|
|
73,444.524
|
|
|
|
17.48
|
%
|
|
b
|
|
ALLIANZGI RETIREMENT 2015 R6
|
|
FRONTIER TRUST CO FBO GREENE ESPEL PLLP RETIREMENT PLAN # 210841 PO BOX 10758 FARGO ND
58106-0758
|
|
|
34,631.318
|
|
|
|
8.24
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2020 A
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI RETIREMENT 2020 A
|
|
CHARLES SCHWAB & CO SPECIAL CUSTODY ACCOUNT OF THE EXCLUSIVE BENEFIT OF CUSTOMERS ATTN
MUTUAL FUNDS 211 MAIN ST SAN FRANCISCO CA 94105-1905
|
|
|
521,462.159
|
|
|
|
52.61
|
%
|
|
b
|
|
ALLIANZGI RETIREMENT 2020 A
|
|
WELLS FARGO FBO VARIOUS RETIREMENT PLANS 1525 WEST WT HARRIS BLVD CHARLOTTE NC
28288-1076
|
|
|
361,755.316
|
|
|
|
36.50
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2020 A
|
|
FRONTIER TR CO FBO HORIZON MEDICAL GROUP PC 401K PS P O BOX 10758 FARGO ND 58106-0758
|
|
|
65,494.026
|
|
|
|
6.61
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2020 ADMIN
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANZGI RETIREMENT 2020 ADMIN
|
|
FIIOC FBO SMC CORPORATION RETIREMENT SAVINGS PLAN -19456 ATTN JAKE BEIL 100 MAGELLAN WAY
KW1C COVINGTON KY 41015-1987
|
|
|
322,738.951
|
|
|
|
84.36
|
%
|
|
b
|
|
ALLIANZGI RETIREMENT 2020 ADMIN
|
|
AMERICAN UNITED LIFE INSURANCE CO UNIT INVESTMENT TRUST SEPARATE ACCOUNTS ADMINISTRATION
PO BOX 368 INDIANAPOLIS IN 46206-0368
|
|
|
27,563.346
|
|
|
|
7.20
|
%
|
|
b
|
|
ALLIANZGI RETIREMENT 2020 ADMIN
|
|
AMERICAN UNITED LIFE INSURANCE CO SEPARATE ACCOUNTS ADMINISTRATION PO BOX 368
INDIANAPOLIS IN 46206-0368
|
|
|
23,459.980
|
|
|
|
6.13
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2020 C
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI RETIREMENT 2020 C
|
|
CHARLES SCHWAB & CO INC SPECIAL CUSTODY ACCT FBO CUSTOMERS ATTN MUTUAL FUNDS 211 MAIN ST
SAN FRANCISCO CA 94105-1905
|
|
|
3,013.106
|
|
|
|
13.06
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2020 C
|
|
PERSHING LLC PO BOX 2052 JERSEY CITY NJ 07303-2052
|
|
|
2,582.130
|
|
|
|
11.19
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2020 C
|
|
SSB&T CUST SIMPLE IRA TALON DESIGN GROUP INC FBO ALAN C PAGE ATTN PAM PAGE 222 RAILROAD
AVE STE A DANVILLE CA 94526-3826
|
|
|
2,131.216
|
|
|
|
9.24
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2020 C
|
|
SSB&T CUST ROLLOVER IRA FBO DANIEL K MOYE 601 CONNECTICUT AVE SAINT CLOUD FL 34769-2734
|
|
|
1,749.632
|
|
|
|
7.59
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2020 D
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI RETIREMENT 2020 D
|
|
NATIONAL FINANCIAL SERVICES LLC FOR THE BENEFIT OF OUR CUSTOMERS ATTN MUTUAL FUNDS DEPT
5TH FL 200 LIBERTY ST ONE WORLD FINANCIAL CENTER NEW YORK NY 10281-1003
|
|
|
9,549.539
|
|
|
|
60.76
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2020 D
|
|
FRONTIER TR CO FBO TS GRAY CONSTRUCTION 401K PLAN 218 P O BOX 10758 FARGO ND
58106-0758
|
|
|
2,600.810
|
|
|
|
16.55
|
%
|
|
b
|
|
ALLIANZGI RETIREMENT 2020 D
|
|
CHARLES SCHWAB & CO INC SPECIAL CUSTODY ACCOUNTS FBO CUSTOMERS ATTN MUTUAL FUNDS 211
MAIN ST SAN FRANCISCO CA 94105-1905
|
|
|
1,389.387
|
|
|
|
8.84
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2020 D
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
836.294
|
|
|
|
5.32
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2020 P
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI RETIREMENT 2020 P
|
|
NFS FOR EXCLUSIVE BENEFIT OF OUR CUSTOMER ATTN: MUTUAL FUNDS DEPT 4TH FL 499 WASHINGTON
BLVD JERSEY CITY NJ 07310-1995
|
|
|
481,063.470
|
|
|
|
78.83
|
%
|
|
b
|
|
ALLIANZGI RETIREMENT 2020 P
|
|
CHARLES SCHWAB & CO SPECIAL
CUSTODY ACCT FOR EXCLUSIVE BENEFIT OF OUR CUSTOMERS ATTN: CAROL WU/MUTUAL FUND OPS 211 MAIN ST SAN FRANCISCO CA 94105-1905
|
|
|
125,163.313
|
|
|
|
20.51
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2020 R
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANZGI RETIREMENT 2020 R
|
|
WILMINGTON TR RISC TTEE FBO 3 DIMENSIONAL SERVICES GROUP 401K PO BOX 52129 PHOENIX AZ
85072-2129
|
|
|
51,565.417
|
|
|
|
97.87
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2020 R6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANZGI RETIREMENT 2020 R6
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
194,985.684
|
|
|
|
47.44
|
%
|
|
b
|
|
ALLIANZGI RETIREMENT 2020 R6
|
|
CHARLES SCHWAB & CO INC SPECIAL CUSTODY ACCOUNT FOR THE EXCLUSIVE BENEFIT OF OUR
CUSTOMERS ATTN: MUTUAL FUNDS DEPT 211 MAIN ST SAN FRANCISCO CA 94105-1905
|
|
|
100,882.191
|
|
|
|
24.55
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2020 R6
|
|
FRONTIER TRUST CO FBO POWERS & SONS LLC 401K PLAN #215707 PO BOX 10758 FARGO ND
58106-0758
|
|
|
83,944.420
|
|
|
|
20.42
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2020 R6
|
|
RELIANCE TRUST COMPANY CUSTODIAN FBO TENNESSEE ORTHOPAEDIC A 401K PLAN PO BOX 48529
ATLANTA GA 30362-1529
|
|
|
26,021.042
|
|
|
|
6.33
|
%
|
B-3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount &
|
|
Percentage of
|
|
|
|
|
|
|
|
Beneficial Nature
|
|
Outstanding Share of
|
|
|
|
Fund Name
|
|
Registration
|
|
of Ownership
|
|
Ownership
|
|
|
|
ALLIANZGI RETIREMENT 2025 A
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI RETIREMENT 2025 A
|
|
WELLS FARGO BANK FBO VARIOUS RETIREMENT PLANS 1525 WEST WT HARRIS BLVD CHARLOTTE NC
28288-1076
|
|
|
591,067.803
|
|
|
|
43.65
|
%
|
|
b
|
|
ALLIANZGI RETIREMENT 2025 A
|
|
CHARLES SCHWAB & CO SPECIAL CUSTODY ACCOUNT OF THE EXCLUSIVE BENEFIT OF CUSTOMERS ATTN
MUTUAL FUNDS 211 MAIN ST SAN FRANCISCO CA 94105-1905
|
|
|
564,998.815
|
|
|
|
41.73
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2025 A
|
|
FRONTIER TR CO FBO HORIZON MEDICAL GROUP PC 401K PS P O BOX 10758 FARGO ND 58106-0758
|
|
|
140,755.179
|
|
|
|
10.40
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2025 ADMIN
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANZGI RETIREMENT 2025 ADMIN
|
|
FIIOC FBO SMC CORPORATION RETIREMENT SAVINGS PLAN -19456 ATTN JAKE BEIL 100 MAGELLAN WAY
KW1C COVINGTON KY 41015-1987
|
|
|
617,150.949
|
|
|
|
94.48
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2025 P
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI RETIREMENT 2025 P
|
|
NFS FOR EXCLUSIVE BENEFIT OF OUR CUSTOMER ATTN: MUTUAL FUNDS DEPT 4TH FL 499 WASHINGTON
BLVD JERSEY CITY NJ 07310-1995
|
|
|
672,356.641
|
|
|
|
99.40
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2025 R
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANZGI RETIREMENT 2025 R
|
|
WILMINGTON TR RISC TTEE FBO 3 DIMENSIONAL SERVICES GROUP 401K PO BOX 52129 PHOENIX AZ
85072-2129
|
|
|
71,479.042
|
|
|
|
97.66
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2025 R6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANZGI RETIREMENT 2025 R6
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
149,073.464
|
|
|
|
45.47
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2025 R6
|
|
FRONTIER TRUST CO FBO POWERS & SONS LLC 401K PLAN #215707 PO BOX 10758 FARGO ND
58106-0758
|
|
|
72,936.534
|
|
|
|
22.25
|
%
|
|
b
|
|
ALLIANZGI RETIREMENT 2025 R6
|
|
FRONTIER TRUST CO FBO GREENE ESPEL PLLP RETIREMENT PLAN # 210841 PO BOX 10758 FARGO ND
58106-0758
|
|
|
43,697.675
|
|
|
|
13.33
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2025 R6
|
|
RELIANCE TRUST COMPANY CUSTODIAN FBO TENNESSEE ORTHOPAEDIC A 401K PLAN PO BOX 48529
ATLANTA GA 30362-1529
|
|
|
37,899.930
|
|
|
|
11.56
|
%
|
|
b
|
|
ALLIANZGI RETIREMENT 2025 R6
|
|
MG TRUST COMPANY CUST FBO SMITH & GESTELAND CERTIFIED PUBLIC 717 17TH ST STE 1300 DENVER
CO 80202-3304
|
|
|
17,955.766
|
|
|
|
5.48
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2030 A
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI RETIREMENT 2030 A
|
|
CHARLES SCHWAB & CO SPECIAL CUSTODY ACCOUNT OF THE EXCLUSIVE BENEFIT OF CUSTOMERS ATTN
MUTUAL FUNDS 211 MAIN ST SAN FRANCISCO CA 94105-1905
|
|
|
404,900.221
|
|
|
|
44.75
|
%
|
|
b
|
|
ALLIANZGI RETIREMENT 2030 A
|
|
WELLS FARGO FBO VARIOUS RETIREMENT PLANS 1525 WEST WT HARRIS BLVD CHARLOTTE NC
28288-1076
|
|
|
362,242.827
|
|
|
|
40.03
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2030 A
|
|
FRONTIER TR CO FBO HORIZON MEDICAL GROUP PC 401K PS P O BOX 10758 FARGO ND 58106-0758
|
|
|
61,356.474
|
|
|
|
6.78
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2030 ADMIN
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANZGI RETIREMENT 2030 ADMIN
|
|
FIIOC FBO SMC CORPORATION RETIREMENT SAVINGS PLAN -19456 ATTN JAKE BEIL 100 MAGELLAN WAY
KW1C COVINGTON KY 41015-1987
|
|
|
393,827.488
|
|
|
|
92.13
|
%
|
|
b
|
|
ALLIANZGI RETIREMENT 2030 ADMIN
|
|
AMERICAN UNITED LIFE INSURANCE CO SEPARATE ACCOUNTS ADMINISTRATION PO BOX 368
INDIANAPOLIS IN 46206-0368
|
|
|
23,576.247
|
|
|
|
5.52
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2030 C
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANZGI RETIREMENT 2030 C
|
|
SSB&T CUST SIMPLE IRA MAPLEVIEW ANIMAL CLINIC FBO ROBERT J KRAPFL 13652 LARIMORE AVE
OMAHA NE 68164-6129
|
|
|
8,938.306
|
|
|
|
24.57
|
%
|
|
b
|
|
ALLIANZGI RETIREMENT 2030 C
|
|
RAYMOND JAMES OMNIBUS FOR MUTUAL FUNDS HOUSE ACCT FIRM 92500015 ATTN COURTNEY WALLER 880
CARILLON PKWY ST PETERSBURG FL 33716-1100
|
|
|
4,306.743
|
|
|
|
11.84
|
%
|
|
b
|
|
ALLIANZGI RETIREMENT 2030 C
|
|
PERSHING LLC PO BOX 2052 JERSEY CITY NJ 07303-2052
|
|
|
2,273.063
|
|
|
|
6.25
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2030 D
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANZGI RETIREMENT 2030 D
|
|
FRONTIER TR CO FBO TS GRAY CONSTRUCTION 401K PLAN 218 P O BOX 10758 FARGO ND
58106-0758
|
|
|
9,875.927
|
|
|
|
30.58
|
%
|
|
b
|
|
ALLIANZGI RETIREMENT 2030 D
|
|
CHARLES SCHWAB & CO INC SPECIAL CUSTODY ACCOUNTS FBO CUSTOMERS ATTN MUTUAL FUNDS 211
MAIN ST SAN FRANCISCO CA 94105-1905
|
|
|
5,888.895
|
|
|
|
18.24
|
%
|
|
b
|
|
ALLIANZGI RETIREMENT 2030 D
|
|
NATIONAL FINANCIAL SERVICES LLC FOR THE BENEFIT OF OUR CUSTOMERS ATTN MUTUAL FUNDS DEPT
5TH FL 200 LIBERTY ST ONE WORLD FINANCIAL CENTER NEW YORK NY 10281-1003
|
|
|
4,624.379
|
|
|
|
14.32
|
%
|
|
b
|
|
ALLIANZGI RETIREMENT 2030 D
|
|
AMERITRADE INC FOR THE EXCLUSIVE BENEFIT OF OUR CLIENTS PO BOX 2226 OMAHA NE 68103-2226
|
|
|
4,576.926
|
|
|
|
14.17
|
%
|
|
b
|
|
ALLIANZGI RETIREMENT 2030 D
|
|
FRONTIER TR CO FBO PECK SMILEY ETTLIN ARCHITECTS INC P O BOX 10758 FARGO ND 58106-0758
|
|
|
4,499.744
|
|
|
|
13.93
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2030 P
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI RETIREMENT 2030 P
|
|
NFS FOR EXCLUSIVE BENEFIT OF OUR CUSTOMER ATTN: MUTUAL FUNDS DEPT 4TH FL 499 WASHINGTON
BLVD JERSEY CITY NJ 07310-1995
|
|
|
583,507.747
|
|
|
|
82.10
|
%
|
|
b
|
|
ALLIANZGI RETIREMENT 2030 P
|
|
CHARLES SCHWAB & CO SPECIAL
CUSTODY ACCT FOR EXCLUSIVE BENEFIT OF OUR CUSTOMERS ATTN: CAROL WU/MUTUAL FUND OPS 211 MAIN ST SAN FRANCISCO CA 94105-1905
|
|
|
120,152.731
|
|
|
|
16.90
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2030 R
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANZGI RETIREMENT 2030 R
|
|
WILMINGTON TR RISC TTEE FBO 3 DIMENSIONAL SERVICES GROUP 401K PO BOX 52129 PHOENIX AZ
85072-2129
|
|
|
44,055.350
|
|
|
|
74.08
|
%
|
|
b
|
|
ALLIANZGI RETIREMENT 2030 R
|
|
MLPF & S FOR THE SOLE BENEFIT OF ITS CUSTOMERS ATTN FUND ADMN/#97M 4800 DEER LAKE DR E
FL 3 JACKSONVILLE FL 32246-6484
|
|
|
9,700.175
|
|
|
|
16.31
|
%
|
|
b
|
|
ALLIANZGI RETIREMENT 2030 R
|
|
PAI TR CO INC INNOVATIVE MARKETING RESOURCES PS 1300 ENTERPRISE DR DE PERE WI 54115-4934
|
|
|
4,856.944
|
|
|
|
8.17
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2030 R6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANZGI RETIREMENT 2030 R6
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
254,349.754
|
|
|
|
48.53
|
%
|
|
b
|
|
ALLIANZGI RETIREMENT 2030 R6
|
|
CHARLES SCHWAB & CO INC SPECIAL CUSTODY ACCOUNT FOR THE EXCLUSIVE BENEFIT OF OUR
CUSTOMERS ATTN: MUTUAL FUNDS DEPT 211 MAIN ST SAN FRANCISCO CA 94105-1905
|
|
|
143,366.696
|
|
|
|
27.35
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2030 R6
|
|
FRONTIER TRUST CO FBO POWERS & SONS LLC 401K PLAN #215707 PO BOX 10758 FARGO ND
58106-0758
|
|
|
45,308.220
|
|
|
|
8.64
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2030 R6
|
|
RELIANCE TRUST COMPANY CUSTODIAN FBO TENNESSEE ORTHOPAEDIC A 401K PLAN PO BOX 48529
ATLANTA GA 30362-1529
|
|
|
36,015.420
|
|
|
|
6.87
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2035 A
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI RETIREMENT 2035 A
|
|
CHARLES SCHWAB & CO SPECIAL CUSTODY ACCOUNT OF THE EXCLUSIVE BENEFIT OF CUSTOMERS ATTN
MUTUAL FUNDS 211 MAIN ST SAN FRANCISCO CA 94105-1905
|
|
|
395,344.968
|
|
|
|
51.06
|
%
|
|
b
|
|
ALLIANZGI RETIREMENT 2035 A
|
|
WELLS FARGO BANK FBO VARIOUS RETIREMENT PLANS 1525 WEST WT HARRIS BLVD CHARLOTTE NC
28288-1076
|
|
|
234,461.752
|
|
|
|
30.28
|
%
|
|
b
|
|
ALLIANZGI RETIREMENT 2035 A
|
|
MG TR CO CUST FBO BRITT HUNT CO LLC RETIREM 717 17TH STREET SUITE 1300 DENVER CO
80202-3304
|
|
|
63,885.250
|
|
|
|
8.25
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2035 A
|
|
FRONTIER TR CO FBO HORIZON MEDICAL GROUP PC 401K PS P O BOX 10758 FARGO ND 58106-0758
|
|
|
51,228.962
|
|
|
|
6.62
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2035 ADMIN
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANZGI RETIREMENT 2035 ADMIN
|
|
FIIOC FBO SMC CORPORATION RETIREMENT SAVINGS PLAN -19456 ATTN JAKE BEIL 100 MAGELLAN WAY
KW1C COVINGTON KY 41015-1987
|
|
|
577,505.416
|
|
|
|
97.17
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2035 P
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI RETIREMENT 2035 P
|
|
NFS FOR EXCLUSIVE BENEFIT OF OUR CUSTOMER ATTN: MUTUAL FUNDS DEPT 4TH FL 499 WASHINGTON
BLVD JERSEY CITY NJ 07310-1995
|
|
|
565,724.224
|
|
|
|
98.62
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2035 R
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANZGI RETIREMENT 2035 R
|
|
WILMINGTON TR RISC TTEE FBO 3 DIMENSIONAL SERVICES GROUP 401K PO BOX 52129 PHOENIX AZ
85072-2129
|
|
|
54,732.700
|
|
|
|
97.16
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2035 R6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANZGI RETIREMENT 2035 R6
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
213,035.413
|
|
|
|
64.09
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2035 R6
|
|
FRONTIER TRUST CO FBO POWERS & SONS LLC 401K PLAN #215707 PO BOX 10758 FARGO ND
58106-0758
|
|
|
80,740.909
|
|
|
|
24.29
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2035 R6
|
|
RELIANCE TRUST COMPANY CUSTODIAN FBO TENNESSEE ORTHOPAEDIC A 401K PLAN PO BOX 48529
ATLANTA GA 30362-1529
|
|
|
28,149.638
|
|
|
|
8.47
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2040 A
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI RETIREMENT 2040 A
|
|
CHARLES SCHWAB & CO SPECIAL CUSTODY ACCOUNT OF THE EXCLUSIVE BENEFIT OF CUSTOMERS ATTN
MUTUAL FUNDS 211 MAIN ST SAN FRANCISCO CA 94105-1905
|
|
|
265,054.407
|
|
|
|
44.31
|
%
|
|
b
|
|
ALLIANZGI RETIREMENT 2040 A
|
|
WELLS FARGO FBO VARIOUS RETIREMENT PLANS 1525 WEST WT HARRIS BLVD CHARLOTTE NC
28288-1076
|
|
|
173,585.117
|
|
|
|
29.02
|
%
|
|
b
|
|
ALLIANZGI RETIREMENT 2040 A
|
|
PERSHING LLC PO BOX 2052 JERSEY CITY NJ 07303-2052
|
|
|
76,725.800
|
|
|
|
12.83
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2040 A
|
|
FRONTIER TR CO FBO HORIZON MEDICAL GROUP PC 401K PS P O BOX 10758 FARGO ND 58106-0758
|
|
|
35,770.208
|
|
|
|
5.98
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2040 ADMIN
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANZGI RETIREMENT 2040 ADMIN
|
|
FIIOC FBO SMC CORPORATION RETIREMENT SAVINGS PLAN -19456 ATTN JAKE BEIL 100 MAGELLAN WAY
KW1C COVINGTON KY 41015-1987
|
|
|
218,294.808
|
|
|
|
90.73
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2040 C
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI RETIREMENT 2040 C
|
|
RAYMOND JAMES OMNIBUS FOR MUTUAL FUNDS HOUSE ACCT FIRM 92500015 ATTN COURTNEY WALLER 880
CARILLON PKWY ST PETERSBURG FL 33716-1100
|
|
|
2,769.953
|
|
|
|
18.58
|
%
|
|
b
|
|
ALLIANZGI RETIREMENT 2040 C
|
|
TD AMERITRADE FBO D A WUERSCH & T GERING TR WUERSCH & GERING LLP SAVING & INCENTIVE PLAN
FBO ANNAMARIA HACHMEISTER 644 AMSTERDAM AVE APT 5B NEW YORK NY 10025-7453
|
|
|
2,455.566
|
|
|
|
16.47
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2040 C
|
|
SSB&T CUST SIMPLE IRA OAK GROVE LLC FBO DANIEL J BENDLAGE 1420 E COUNTY ROAD 2680 NIOTA
IL 62358-2428
|
|
|
1,865.042
|
|
|
|
12.51
|
%
|
|
b
|
|
ALLIANZGI RETIREMENT 2040 C
|
|
PERSHING LLC PO BOX 2052 JERSEY CITY NJ 07303-2052
|
|
|
1,648.439
|
|
|
|
11.06
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2040 C
|
|
SSB&T CUST ROLLOVER IRA FBO BRYAN J KUHLMAN 9500 ROAD F9 LEIPSIC OH 45856-9435
|
|
|
1,123.099
|
|
|
|
7.53
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2040 C
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
867.378
|
|
|
|
5.82
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2040 C
|
|
SSB&T CUST ROTH IRA FBO ANGELA L KLAWES 3164 WEYBRIDGE DR SUN PRAIRIE WI 53590-4592
|
|
|
857.128
|
|
|
|
5.75
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2040 C
|
|
SSB&T CUST IRA FBO PAUL L LIPIARSKI 4419 ALDRICH AVE S MINNEAPOLIS MN 55419-4821
|
|
|
803.562
|
|
|
|
5.39
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2040 D
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI RETIREMENT 2040 D
|
|
CHARLES SCHWAB & CO INC SPECIAL CUSTODY ACCOUNTS FBO CUSTOMERS ATTN MUTUAL FUNDS 211
MAIN ST SAN FRANCISCO CA 94105-1905
|
|
|
4,417.568
|
|
|
|
44.15
|
%
|
|
b
|
|
ALLIANZGI RETIREMENT 2040 D
|
|
NATIONAL FINANCIAL SERVICES LLC FOR THE BENEFIT OF OUR CUSTOMERS ATTN MUTUAL FUNDS DEPT
5TH FL 200 LIBERTY ST ONE WORLD FINANCIAL CENTER NEW YORK NY 10281-1003
|
|
|
2,370.900
|
|
|
|
23.70
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2040 D
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
892.653
|
|
|
|
8.92
|
%
|
|
b
|
|
ALLIANZGI RETIREMENT 2040 D
|
|
FRONTIER TR CO FBO PECK SMILEY ETTLIN ARCHITECTS INC P O BOX 10758 FARGO ND 58106-0758
|
|
|
644.321
|
|
|
|
6.44
|
%
|
|
b
|
|
ALLIANZGI RETIREMENT 2040 D
|
|
PERSHING LLC PO BOX 2052 JERSEY CITY NJ 07303-2052
|
|
|
547.586
|
|
|
|
5.47
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2040 P
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI RETIREMENT 2040 P
|
|
NFS FOR EXCLUSIVE BENEFIT OF OUR CUSTOMER ATTN: MUTUAL FUNDS DEPT 4TH FL 499 WASHINGTON
BLVD JERSEY CITY NJ 07310-1995
|
|
|
306,217.144
|
|
|
|
76.26
|
%
|
|
b
|
|
ALLIANZGI RETIREMENT 2040 P
|
|
CHARLES SCHWAB & CO SPECIAL
CUSTODY ACCT FOR EXCLUSIVE BENEFIT OF OUR CUSTOMERS ATTN: CAROL WU/MUTUAL FUND OPS 211 MAIN ST SAN FRANCISCO CA 94105-1905
|
|
|
90,949.716
|
|
|
|
22.65
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2040 R
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANZGI RETIREMENT 2040 R
|
|
WILMINGTON TR RISC TTEE FBO 3 DIMENSIONAL SERVICES GROUP 401K PO BOX 52129 PHOENIX AZ
85072-2129
|
|
|
51,422.743
|
|
|
|
88.32
|
%
|
|
b
|
|
ALLIANZGI RETIREMENT 2040 R
|
|
MLPF & S FOR THE SOLE BENEFIT OF ITS CUSTOMERS ATTN FUND ADMN/#97M 4800 DEER LAKE DR E
FL 3 JACKSONVILLE FL 32246-6484
|
|
|
4,481.827
|
|
|
|
7.70
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2040 R6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANZGI RETIREMENT 2040 R6
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
266,151.185
|
|
|
|
51.83
|
%
|
|
b
|
|
ALLIANZGI RETIREMENT 2040 R6
|
|
CHARLES SCHWAB & CO INC SPECIAL CUSTODY ACCOUNT FOR THE EXCLUSIVE BENEFIT OF OUR
CUSTOMERS ATTN: MUTUAL FUNDS DEPT 211 MAIN ST SAN FRANCISCO CA 94105-1905
|
|
|
155,171.993
|
|
|
|
30.22
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2040 R6
|
|
RELIANCE TRUST COMPANY CUSTODIAN FBO TENNESSEE ORTHOPAEDIC A 401K PLAN PO BOX 48529
ATLANTA GA 30362-1529
|
|
|
42,966.732
|
|
|
|
8.37
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2040 R6
|
|
FRONTIER TRUST CO FBO POWERS & SONS LLC 401K PLAN #215707 PO BOX 10758 FARGO ND
58106-0758
|
|
|
35,284.728
|
|
|
|
6.87
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2045 A
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI RETIREMENT 2045 A
|
|
CHARLES SCHWAB & CO SPECIAL CUSTODY ACCOUNT OF THE EXCLUSIVE BENEFIT OF CUSTOMERS ATTN
MUTUAL FUNDS 211 MAIN ST SAN FRANCISCO CA 94105-1905
|
|
|
176,045.494
|
|
|
|
41.99
|
%
|
|
b
|
|
ALLIANZGI RETIREMENT 2045 A
|
|
WELLS FARGO BANK FBO VARIOUS RETIREMENT PLANS 1525 WEST WT HARRIS BLVD CHARLOTTE NC
28288-1076
|
|
|
147,342.392
|
|
|
|
35.14
|
%
|
|
b
|
|
ALLIANZGI RETIREMENT 2045 A
|
|
MG TR CO CUST FBO BRITT HUNT CO LLC RETIREM 717 17TH STREET SUITE 1300 DENVER CO
80202-3304
|
|
|
43,080.016
|
|
|
|
10.28
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2045 ADMIN
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANZGI RETIREMENT 2045 ADMIN
|
|
FIIOC FBO SMC CORPORATION RETIREMENT SAVINGS PLAN -19456 ATTN JAKE BEIL 100 MAGELLAN WAY
KW1C COVINGTON KY 41015-1987
|
|
|
76,717.682
|
|
|
|
87.48
|
%
|
|
b
|
|
ALLIANZGI RETIREMENT 2045 ADMIN
|
|
AMERICAN UNITED LIFE INSURANCE CO UNIT INVESTMENT TRUST SEPARATE ACCOUNTS ADMINISTRATION
PO BOX 368 INDIANAPOLIS IN 46206-0368
|
|
|
7,835.545
|
|
|
|
8.93
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2045 P
|
|
|
|
|
|
|
|
|
|
|
|
a, b
|
|
ALLIANZGI RETIREMENT 2045 P
|
|
NFS FOR EXCLUSIVE BENEFIT OF OUR CUSTOMER ATTN: MUTUAL FUNDS DEPT 4TH FL 499 WASHINGTON
BLVD JERSEY CITY NJ 07310-1995
|
|
|
335,005.490
|
|
|
|
99.79
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2045 R
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANZGI RETIREMENT 2045 R
|
|
WILMINGTON TR RISC TTEE FBO 3 DIMENSIONAL SERVICES GROUP 401K PO BOX 52129 PHOENIX AZ
85072-2129
|
|
|
19,048.376
|
|
|
|
92.36
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2045 R6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANZGI RETIREMENT 2045 R6
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
214,969.445
|
|
|
|
80.80
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2045 R6
|
|
RELIANCE TRUST COMPANY CUSTODIAN FBO TENNESSEE ORTHOPAEDIC A 401K PLAN PO BOX 48529
ATLANTA GA 30362-1529
|
|
|
20,537.253
|
|
|
|
7.72
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2045 R6
|
|
FRONTIER TRUST CO FBO POWERS & SONS LLC 401K PLAN #215707 PO BOX 10758 FARGO ND
58106-0758
|
|
|
14,895.521
|
|
|
|
5.60
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2050 A
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI RETIREMENT 2050 A
|
|
CHARLES SCHWAB & CO SPECIAL CUSTODY ACCOUNT OF THE EXCLUSIVE BENEFIT OF CUSTOMERS ATTN
MUTUAL FUNDS 211 MAIN ST SAN FRANCISCO CA 94105-1905
|
|
|
83,768.585
|
|
|
|
60.90
|
%
|
|
b
|
|
ALLIANZGI RETIREMENT 2050 A
|
|
WELLS FARGO FBO VARIOUS RETIREMENT PLANS 1525 WEST WT HARRIS BLVD CHARLOTTE NC
28288-1076
|
|
|
30,106.034
|
|
|
|
21.89
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2050 ADMIN
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANZGI RETIREMENT 2050 ADMIN
|
|
FIIOC FBO SMC CORPORATION RETIREMENT SAVINGS PLAN -19456 ATTN JAKE BEIL 100 MAGELLAN WAY
KW1C COVINGTON KY 41015-1987
|
|
|
36,768.955
|
|
|
|
64.98
|
%
|
|
b
|
|
ALLIANZGI RETIREMENT 2050 ADMIN
|
|
AMERICAN UNITED LIFE INSURANCE CO SEPARATE ACCOUNTS ADMINISTRATION PO BOX 368
INDIANAPOLIS IN 46206-0368
|
|
|
17,239.892
|
|
|
|
30.47
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2050 C
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI RETIREMENT 2050 C
|
|
CHARLES SCHWAB & CO INC SPECIAL CUSTODY ACCT FBO CUSTOMERS ATTN MUTUAL FUNDS 211 MAIN ST
SAN FRANCISCO CA 94105-1905
|
|
|
1,872.229
|
|
|
|
31.21
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2050 C
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
891.047
|
|
|
|
14.86
|
%
|
|
b
|
|
ALLIANZGI RETIREMENT 2050 C
|
|
SSB&T CUST SIMPLE IRA MAPLEVIEW ANIMAL CLINIC PC FBO STEPHANIE M JONES 17008 HAWTHORNE
PLZ #206 OMAHA NE 68118-2855
|
|
|
872.161
|
|
|
|
14.54
|
%
|
|
b
|
|
ALLIANZGI RETIREMENT 2050 C
|
|
ROBERT W BAIRD & CO INC A/C 2306-3081 777 EAST WISCONSIN AVENUE MILWAUKEE WI 53202-5391
|
|
|
761.797
|
|
|
|
12.70
|
%
|
|
b
|
|
ALLIANZGI RETIREMENT 2050 C
|
|
ROBERT W BAIRD & CO INC A/C 3177-6342 777 EAST WISCONSIN AVENUE MILWAUKEE WI 53202-5391
|
|
|
553.385
|
|
|
|
9.23
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2050 C
|
|
SSB&T CUST SEP IRA LOUISIANA BAR FOUNDATION FBO RENEE E BIENVENU 4322 HAMILTON ST NEW
ORLEANS LA 70118-2612
|
|
|
330.484
|
|
|
|
5.51
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2050 C
|
|
ROBERT W BAIRD & CO INC A/C 7073-9912 777 EAST WISCONSIN AVENUE MILWAUKEE WI 53202-5391
|
|
|
317.417
|
|
|
|
5.29
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2050 D
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANZGI RETIREMENT 2050 D
|
|
CHARLES SCHWAB & CO INC SPECIAL CUSTODY ACCOUNTS FBO CUSTOMERS ATTN MUTUAL FUNDS 211
MAIN ST SAN FRANCISCO CA 94105-1905
|
|
|
6,634.126
|
|
|
|
40.07
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2050 D
|
|
TD AMERITRADE PO BOX 2226 OMAHA NE 68103-2226
|
|
|
2,978.453
|
|
|
|
17.99
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2050 D
|
|
FRONTIER TR CO FBO TS GRAY CONSTRUCTION 401K PLAN 218 P O BOX 10758 FARGO ND
58106-0758
|
|
|
2,790.793
|
|
|
|
16.86
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2050 D
|
|
NATIONAL FINANCIAL SERVICES LLC FOR THE BENEFIT OF OUR CUSTOMERS ATTN MUTUAL FUNDS DEPT
5TH FL 200 LIBERTY ST ONE WORLD FINANCIAL CENTER NEW YORK NY 10281-1003
|
|
|
2,549.411
|
|
|
|
15.40
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2050 D
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
915.467
|
|
|
|
5.53
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2050 P
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANZGI RETIREMENT 2050 P
|
|
NFS FOR EXCLUSIVE BENEFIT OF OUR CUSTOMER ATTN: MUTUAL FUNDS DEPT 4TH FL 499 WASHINGTON
BLVD JERSEY CITY NJ 07310-1995
|
|
|
142,933.044
|
|
|
|
94.19
|
%
|
|
b
|
|
ALLIANZGI RETIREMENT 2050 P
|
|
CHARLES SCHWAB & CO SPECIAL
CUSTODY ACCT FOR EXCLUSIVE BENEFIT OF OUR CUSTOMERS ATTN: CAROL WU/MUTUAL FUND OPS 211 MAIN ST SAN FRANCISCO CA 94105-1905
|
|
|
7,749.237
|
|
|
|
5.11
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2050 R
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANZGI RETIREMENT 2050 R
|
|
WILMINGTON TR RISC TTEE FBO 3 DIMENSIONAL SERVICES GROUP 401K PO BOX 52129 PHOENIX AZ
85072-2129
|
|
|
23,414.953
|
|
|
|
94.79
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2050 R6
|
|
|
|
|
|
|
|
|
|
|
|
a
|
|
ALLIANZGI RETIREMENT 2050 R6
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
272,401.812
|
|
|
|
59.13
|
%
|
|
b
|
|
ALLIANZGI RETIREMENT 2050 R6
|
|
CHARLES SCHWAB & CO INC SPECIAL CUSTODY ACCOUNT FOR THE EXCLUSIVE BENEFIT OF OUR
CUSTOMERS ATTN: MUTUAL FUNDS DEPT 211 MAIN ST SAN FRANCISCO CA 94105-1905
|
|
|
163,978.575
|
|
|
|
35.60
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2055 A
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI RETIREMENT 2055 A
|
|
CHARLES SCHWAB & CO SPECIAL CUSTODY ACCOUNT OF THE EXCLUSIVE BENEFIT OF CUSTOMERS ATTN
MUTUAL FUNDS 211 MAIN ST SAN FRANCISCO CA 94105-1905
|
|
|
12,658.022
|
|
|
|
49.82
|
%
|
|
b
|
|
ALLIANZGI RETIREMENT 2055 A
|
|
WELLS FARGO BANK FBO VARIOUS RETIREMENT PLANS 1525 WEST WT HARRIS BLVD CHARLOTTE NC
28288-1076
|
|
|
3,153.972
|
|
|
|
12.41
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2055 A
|
|
FRONTIER TR CO FBO HORIZON MEDICAL GROUP PC 401K PS P O BOX 10758 FARGO ND 58106-0758
|
|
|
3,095.234
|
|
|
|
12.18
|
%
|
|
b
|
|
ALLIANZGI RETIREMENT 2055 A
|
|
SOUTHWEST SECURITIES INC FBO DUNCAN E HARVEY SOUTHWEST SECURITIES INC ROTH IRA CUST PO
BOX 509002 DALLAS TX 75250-9002
|
|
|
2,526.971
|
|
|
|
9.95
|
%
|
|
b
|
|
ALLIANZGI RETIREMENT 2055 A
|
|
AMERICAN UNITED INSURANCE CO TTEE GROUP RETIREMENT ANNUITY PO BOX 368 INDIANAPOLIS IN
46206-0368
|
|
|
1,634.704
|
|
|
|
6.43
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2055 ADMIN
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI RETIREMENT 2055 ADMIN
|
|
AMERICAN UNITED LIFE INSURANCE CO SEPARATE ACCOUNTS ADMINISTRATION PO BOX 368
INDIANAPOLIS IN 46206-0368
|
|
|
6,574.069
|
|
|
|
47.70
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2055 ADMIN
|
|
FIIOC FBO SMC CORPORATION RETIREMENT SAVINGS PLAN -19456 ATTN JAKE BEIL 100 MAGELLAN WAY
KW1C COVINGTON KY 41015-1987
|
|
|
6,237.086
|
|
|
|
45.25
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2055 ADMIN
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
734.043
|
|
|
|
5.33
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2055 P
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI RETIREMENT 2055 P
|
|
NFS FOR EXCLUSIVE BENEFIT OF OUR CUSTOMER ATTN: MUTUAL FUNDS DEPT 4TH FL 499 WASHINGTON
BLVD JERSEY CITY NJ 07310-1995
|
|
|
23,279.191
|
|
|
|
79.73
|
%
|
|
b
|
|
ALLIANZGI RETIREMENT 2055 P
|
|
CHARLES SCHWAB & CO SPECIAL
CUSTODY ACCT FOR EXCLUSIVE BENEFIT OF OUR CUSTOMERS ATTN: CAROL WU/MUTUAL FUND OPS 211 MAIN ST SAN FRANCISCO CA 94105-1905
|
|
|
5,183.583
|
|
|
|
17.75
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2055 R
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANZGI RETIREMENT 2055 R
|
|
WILMINGTON TR RISC TTEE FBO 3 DIMENSIONAL SERVICES GROUP 401K PO BOX 52129 PHOENIX AZ
85072-2129
|
|
|
3,549.727
|
|
|
|
77.34
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2055 R
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
730.921
|
|
|
|
15.93
|
%
|
|
|
|
ALLIANZGI RETIREMENT 2055 R6
|
|
|
|
|
|
|
|
|
|
|
|
a
|
|
ALLIANZGI RETIREMENT 2055 R6
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
220,906.600
|
|
|
|
90.47
|
%
|
B-4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount &
|
|
Percentage of
|
|
|
|
|
|
|
|
Beneficial Nature
|
|
Outstanding Share of
|
|
|
|
Fund Name
|
|
Registration
|
|
of Ownership
|
|
Ownership
|
|
|
|
ALLIANZGI RETIREMENT INCOME A
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI RETIREMENT INCOME A
|
|
CHARLES SCHWAB & CO SPECIAL CUSTODY ACCOUNT OF THE EXCLUSIVE BENEFIT OF CUSTOMERS ATTN
MUTUAL FUNDS 211 MAIN ST SAN FRANCISCO CA 94105-1905
|
|
|
92,668.020
|
|
|
|
30.05
|
%
|
|
b
|
|
ALLIANZGI RETIREMENT INCOME A
|
|
AMERICAN ENTERPRISE INVESTMENT SVC FBO #41999970 707 2ND AVE SOUTH MINNEAPOLIS MN
55402-2405
|
|
|
51,120.951
|
|
|
|
16.58
|
%
|
|
b
|
|
ALLIANZGI RETIREMENT INCOME A
|
|
WELLS FARGO FBO VARIOUS RETIREMENT PLANS 1525 WEST WT HARRIS BLVD CHARLOTTE NC
28288-1076
|
|
|
46,332.864
|
|
|
|
15.03
|
%
|
|
b
|
|
ALLIANZGI RETIREMENT INCOME A
|
|
PERSHING LLC PO BOX 2052 JERSEY CITY NJ 07303-2052
|
|
|
33,691.647
|
|
|
|
10.93
|
%
|
|
b
|
|
ALLIANZGI RETIREMENT INCOME A
|
|
LPL FINANCIAL A/C 1000-0005 9785 TOWNE CENTRE DRIVE SAN DIEGO CA 92121-1968
|
|
|
22,608.413
|
|
|
|
7.33
|
%
|
|
b
|
|
ALLIANZGI RETIREMENT INCOME A
|
|
NATIONAL FINANCIAL SERVICES LLC FOR THE BENEFIT OF OUR CUSTOMERS ATTN: MUTUAL FUNDS DEPT
4TH FL 499 WASHINGTON BLVD JERSEY CITY NJ 07310-2010
|
|
|
17,520.135
|
|
|
|
5.68
|
%
|
|
|
|
ALLIANZGI RETIREMENT INCOME ADMIN
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANZGI RETIREMENT INCOME ADMIN
|
|
FIIOC FBO SMC CORPORATION RETIREMENT SAVINGS PLAN -19456 ATTN JAKE BEIL 100 MAGELLAN WAY
KW1C COVINGTON KY 41015-1987
|
|
|
107,189.728
|
|
|
|
93.22
|
%
|
|
|
|
ALLIANZGI RETIREMENT INCOME C
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI RETIREMENT INCOME C
|
|
PERSHING LLC PO BOX 2052 JERSEY CITY NJ 07303-2052
|
|
|
62,256.353
|
|
|
|
28.54
|
%
|
|
b
|
|
ALLIANZGI RETIREMENT INCOME C
|
|
NATIONAL FINANCIAL SERVICES LLC FOR THE BENEFIT OF OUR CUSTOMERS ATTN: MUTUAL FUNDS DEPT
4TH FL 499 WASHINGTON BLVD JERSEY CITY NJ 07310-2010
|
|
|
22,438.311
|
|
|
|
10.29
|
%
|
|
b
|
|
ALLIANZGI RETIREMENT INCOME C
|
|
RAYMOND JAMES OMNIBUS FOR MUTUAL FUNDS HOUSE ACCT FIRM 92500015 ATTN COURTNEY WALLER 880
CARILLON PKWY ST PETERSBURG FL 33716-1100
|
|
|
15,854.612
|
|
|
|
7.27
|
%
|
|
|
|
ALLIANZGI RETIREMENT INCOME C
|
|
SSB&T CUST ROLLOVER IRA FBO STEVEN W STUHR W6393 SCHILLING RD ONALASKA WI 54650-9325
|
|
|
15,296.206
|
|
|
|
7.01
|
%
|
|
|
|
ALLIANZGI RETIREMENT INCOME D
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI RETIREMENT INCOME D
|
|
NATIONAL FINANCIAL SERVICES LLC FOR THE BENEFIT OF OUR CUSTOMERS ATTN MUTUAL FUNDS DEPT
5TH FL 200 LIBERTY ST ONE WORLD FINANCIAL CENTER NEW YORK NY 10281-1003
|
|
|
41,529.918
|
|
|
|
76.70
|
%
|
|
b
|
|
ALLIANZGI RETIREMENT INCOME D
|
|
CHARLES SCHWAB & CO INC SPECIAL CUSTODY ACCOUNTS FBO CUSTOMERS ATTN MUTUAL FUNDS 211
MAIN ST SAN FRANCISCO CA 94105-1905
|
|
|
6,793.276
|
|
|
|
12.55
|
%
|
|
b
|
|
ALLIANZGI RETIREMENT INCOME D
|
|
AMERITRADE INC FBO 9950065291 PO BOX 2226 OMAHA NE 68103-2226
|
|
|
3,002.926
|
|
|
|
5.55
|
%
|
|
|
|
ALLIANZGI RETIREMENT INCOME P
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI RETIREMENT INCOME P
|
|
NFS FOR EXCLUSIVE BENEFIT OF OUR CUSTOMER ATTN: MUTUAL FUNDS DEPT 4TH FL 499 WASHINGTON
BLVD JERSEY CITY NJ 07310-1995
|
|
|
386,625.966
|
|
|
|
85.84
|
%
|
|
b
|
|
ALLIANZGI RETIREMENT INCOME P
|
|
CHARLES SCHWAB & CO SPECIAL
CUSTODY ACCT FOR EXCLUSIVE BENEFIT OF OUR CUSTOMERS ATTN: CAROL WU/MUTUAL FUND OPS 211 MAIN ST SAN FRANCISCO CA 94105-1905
|
|
|
62,021.513
|
|
|
|
13.77
|
%
|
|
|
|
ALLIANZGI RETIREMENT INCOME R
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANZGI RETIREMENT INCOME R
|
|
WILMINGTON TR RISC TTEE FBO 3 DIMENSIONAL SERVICES GROUP 401K PO BOX 52129 PHOENIX AZ
85072-2129
|
|
|
5,984.360
|
|
|
|
83.26
|
%
|
|
|
|
ALLIANZGI RETIREMENT INCOME R
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
782.547
|
|
|
|
10.89
|
%
|
|
b
|
|
ALLIANZGI RETIREMENT INCOME R
|
|
AMERITRADE INC FEBO OUR CLIENT PO BOX 2226 OMAH ANE NE 68103-2226
|
|
|
420.820
|
|
|
|
5.85
|
%
|
|
|
|
ALLIANZGI RETIREMENT INCOME R6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANZGI RETIREMENT INCOME R6
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
219,276.006
|
|
|
|
43.66
|
%
|
|
|
|
ALLIANZGI RETIREMENT INCOME R6
|
|
RELIANCE TRUST COMPANY CUSTODIAN FBO TENNESSEE ORTHOPAEDIC A 401K PLAN PO BOX 48529
ATLANTA GA 30362-1529
|
|
|
160,710.312
|
|
|
|
32.00
|
%
|
|
b
|
|
ALLIANZGI RETIREMENT INCOME R6
|
|
CHARLES SCHWAB & CO INC SPECIAL CUSTODY ACCOUNT FOR THE EXCLUSIVE BENEFIT OF OUR
CUSTOMERS ATTN: MUTUAL FUNDS DEPT 211 MAIN ST SAN FRANCISCO CA 94105-1905
|
|
|
45,528.742
|
|
|
|
9.07
|
%
|
|
|
|
ALLIANZGI RETIREMENT INCOME R6
|
|
FRONTIER TRUST CO FBO POWERS & SONS LLC 401K PLAN #215707 PO BOX 10758 FARGO ND
58106-0758
|
|
|
30,776.404
|
|
|
|
6.13
|
%
|
|
|
|
ALLIANZGI SHORT DURATION HIGH INC INST
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI SHORT DURATION HIGH INC INST
|
|
PERSHING LLC PO BOX 2052 JERSEY CITY NJ 07303-2052
|
|
|
3,748,022.380
|
|
|
|
27.25
|
%
|
|
b
|
|
ALLIANZGI SHORT DURATION HIGH INC INST
|
|
NATIONAL FINANCIAL SERVICES FOR EXCLUSIVE BEN OF OUR CUSTOMERS 499 WASHINGTON BLVD MAIL
ZONE NJ4C JERSEY CITY NJ 07310-2010
|
|
|
2,375,365.647
|
|
|
|
17.27
|
%
|
|
b
|
|
ALLIANZGI SHORT DURATION HIGH INC INST
|
|
CHARLES SCHWAB & CO INC SPECIAL CUSTODY ACCOUNT FOR THE EXCLUSIVE BENEFIT OF OUR
CUSTOMERS ATTN: MUTUAL FUNDS DEPT 211 MAIN ST SAN FRANCISCO CA 94105-1905
|
|
|
1,654,013.530
|
|
|
|
12.03
|
%
|
|
|
|
ALLIANZGI SHORT DURATION HIGH INCOME A
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI SHORT DURATION HIGH INCOME A
|
|
UBS WM USA 0O0 11011 6100 OMNI A/C M/F ATTN DEPT MANAGER 499 WASHINGTON BLVD 9TH FL
JERSEY CITY NJ 07310-2055
|
|
|
4,642,841.338
|
|
|
|
42.98
|
%
|
|
b
|
|
ALLIANZGI SHORT DURATION HIGH INCOME A
|
|
AMERICAN ENTERPRISE INVESTMENT SVC FBO #41999970 707 2ND AVE SOUTH MINNEAPOLIS MN
55402-2405
|
|
|
1,672,718.717
|
|
|
|
15.49
|
%
|
|
b
|
|
ALLIANZGI SHORT DURATION HIGH INCOME A
|
|
MLPF & S FOR THE SOLE BENEFIT OF ITS CUSTOMERS ATTN FUND ADMN/#97M 4800 DEER LAKE DR E
FL 3 JACKSONVILLE FL 32246-6484
|
|
|
1,171,371.595
|
|
|
|
10.84
|
%
|
|
b
|
|
ALLIANZGI SHORT DURATION HIGH INCOME A
|
|
NATIONAL FINANCIAL SERVICES LLC FOR THE BENEFIT OF OUR CUSTOMERS ATTN: MUTUAL FUNDS DEPT
4TH FL 499 WASHINGTON BLVD JERSEY CITY NJ 07310-2010
|
|
|
761,156.146
|
|
|
|
7.05
|
%
|
|
|
|
ALLIANZGI SHORT DURATION HIGH INCOME C
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI SHORT DURATION HIGH INCOME C
|
|
MORGAN STANLEY SMITH BARNEY HARBORSIDE FINANCIAL CENTER PLAZA 2, 3RD FLOOR JERSEY CITY
NJ 07311
|
|
|
980,549.497
|
|
|
|
21.93
|
%
|
|
b
|
|
ALLIANZGI SHORT DURATION HIGH INCOME C
|
|
MLPF&S FOR THE SOLE BENEFIT OF ITS CUSTOMERS ATTN FUND ADMN/#97M 4800 DEER LAKE DR E FL
3 JACKSONVILLE FL 32246-6484
|
|
|
904,779.027
|
|
|
|
20.24
|
%
|
|
b
|
|
ALLIANZGI SHORT DURATION HIGH INCOME C
|
|
PERSHING LLC PO BOX 2052 JERSEY CITY NJ 07303-2052
|
|
|
499,711.575
|
|
|
|
11.18
|
%
|
|
b
|
|
ALLIANZGI SHORT DURATION HIGH INCOME C
|
|
UBS WM USA 0O0 11011 6100 OMNI A/C M/F ATTN DEPT MANAGER 499 WASHINGTON BLVD FL 9 JERSEY
CITY NJ 07310-2055
|
|
|
478,798.902
|
|
|
|
10.71
|
%
|
|
b
|
|
ALLIANZGI SHORT DURATION HIGH INCOME C
|
|
FIRST CLEARING, LLC SPECIAL CUSTODY ACCT FOR THE EXCLUSIVE BENEFIT OF CUSTOMER 2801
MARKET ST SAINT LOUIS MO 63103-2523
|
|
|
260,743.953
|
|
|
|
5.83
|
%
|
|
b
|
|
ALLIANZGI SHORT DURATION HIGH INCOME C
|
|
AMERICAN ENTERPRISE INVESTMENT SVC FBO #41999970 707 2ND AVE SOUTH MINNEAPOLIS MN
55402-2405
|
|
|
240,266.825
|
|
|
|
5.37
|
%
|
|
|
|
ALLIANZGI SHORT DURATION HIGH INCOME D
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI SHORT DURATION HIGH INCOME D
|
|
NATIONAL FINANCIAL SERVICES LLC FOR THE BENEFIT OF OUR CUSTOMERS ATTN MUTUAL FUNDS DEPT
5TH FL 200 LIBERTY ST ONE WORLD FINANCIAL CENTER NEW YORK NY 10281-1003
|
|
|
1,271,666.519
|
|
|
|
82.39
|
%
|
|
b
|
|
ALLIANZGI SHORT DURATION HIGH INCOME D
|
|
CHARLES SCHWAB & CO INC SPECIAL CUSTODY ACCOUNTS FBO CUSTOMERS ATTN MUTUAL FUNDS 211
MAIN ST SAN FRANCISCO CA 94105-1905
|
|
|
82,986.981
|
|
|
|
5.38
|
%
|
|
|
|
ALLIANZGI SHORT DURATION HIGH INCOME P
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI SHORT DURATION HIGH INCOME P
|
|
MERRILL LYNCH PIERCE FENNER & SMITH INC FOR THE SOLE BENEFIT OF ITS CUSTOMERS 4800 DEER
LAKE DR E JACKSONVILLE FL 32246-6484
|
|
|
4,551,423.767
|
|
|
|
50.51
|
%
|
|
b
|
|
ALLIANZGI SHORT DURATION HIGH INCOME P
|
|
MORGAN STANLEY SMITH BARNEY HARBORSIDE FINANCIAL CENTER PLAZA 2, 3RD FLOOR JERSEY CITY
NJ 07311
|
|
|
2,998,904.947
|
|
|
|
33.28
|
%
|
|
b
|
|
ALLIANZGI SHORT DURATION HIGH INCOME P
|
|
RBC CAPITAL MARKETS LLC MUTUAL FUND OMNIBUS PROCESSING OMNIBUS ATTN MUTUAL FUND OPS
MANAGER 60 S 6TH ST STE 700 # STREET-P08 MINNEAPOLIS MN 55402-4413
|
|
|
493,079.663
|
|
|
|
5.47
|
%
|
|
|
|
ALLIANZGI STRUCTURED ALPHA A
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI STRUCTURED ALPHA A
|
|
PERSHING LLC PO BOX 2052 JERSEY CITY NJ 07303-2052
|
|
|
92,629.694
|
|
|
|
74.24
|
%
|
|
b
|
|
ALLIANZGI STRUCTURED ALPHA A
|
|
JP MORGAN CLEARING CORP OMINIBUS ACCOUNT FOR THE EXCLUSIVE BENEFIT OF CUSTOMERS 3 CHASE
METROTECH CENTER 3RD FLOOR MUTUAL FUND DEPARTMENT BROOKLYN NY 11245-0001
|
|
|
17,904.890
|
|
|
|
14.35
|
%
|
|
|
|
ALLIANZGI STRUCTURED ALPHA C
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI STRUCTURED ALPHA C
|
|
PERSHING LLC PO BOX 2052 JERSEY CITY NJ 07303-2052
|
|
|
6,041.591
|
|
|
|
87.02
|
%
|
|
|
|
ALLIANZGI STRUCTURED ALPHA C
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
696.956
|
|
|
|
10.04
|
%
|
|
|
|
ALLIANZGI STRUCTURED ALPHA D
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI STRUCTURED ALPHA D
|
|
TD AMERITRADE INC FOR THE EXCLUSIVE BENEFIT OF OUR CLIENTS PO BOX 2226 OMAHA NE
68103-2226
|
|
|
67,648.189
|
|
|
|
74.74
|
%
|
|
b
|
|
ALLIANZGI STRUCTURED ALPHA D
|
|
NATIONAL FINANCIAL SERVICES LLC FOR THE BENEFIT OF OUR CUSTOMERS ATTN MUTUAL FUNDS DEPT
5TH FL 200 LIBERTY ST ONE WORLD FINANCIAL CENTER NEW YORK NY 10281-1003
|
|
|
11,115.602
|
|
|
|
12.28
|
%
|
|
b
|
|
ALLIANZGI STRUCTURED ALPHA D
|
|
CHARLES SCHWAB & CO INC ATTN MUTUAL FUNDS 211 MAIN ST SAN FRANCISCO CA 94105-1905
|
|
|
11,045.317
|
|
|
|
12.20
|
%
|
|
|
|
ALLIANZGI STRUCTURED ALPHA INST
|
|
|
|
|
|
|
|
|
|
|
|
a
|
|
ALLIANZGI STRUCTURED ALPHA INST
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
417,970.263
|
|
|
|
55.03
|
%
|
|
b
|
|
ALLIANZGI STRUCTURED ALPHA INST
|
|
NFS FOR EXCLUSIVE BENEFIT OF OUR CUSTOMER ATTN: MUTUAL FUNDS DEPT 4TH FL 499 WASHINGTON
BLVD JERSEY CITY NJ 07310-1995
|
|
|
192,610.110
|
|
|
|
25.36
|
%
|
|
b
|
|
ALLIANZGI STRUCTURED ALPHA INST
|
|
CHARLES SCHWAB & CO INC SPECIAL CUSTODY ACCOUNT FOR THE EXCLUSIVE BENEFIT OF OUR
CUSTOMERS ATTN MUTUAL FUND DEPT 211 MAIN ST SAN FRANCISCO CA 94105-1905
|
|
|
81,566.672
|
|
|
|
10.74
|
%
|
|
b
|
|
ALLIANZGI STRUCTURED ALPHA INST
|
|
PERSHING LLC PO BOX 2052 JERSEY CITY NJ 07303-2052
|
|
|
40,853.713
|
|
|
|
5.38
|
%
|
|
|
|
ALLIANZGI STRUCTURED ALPHA P
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI STRUCTURED ALPHA P
|
|
RBC CAPITAL MARKETS LLC MUTUAL FUND OMNIBUS PROCESSING OMNIBUS ATTN MUTUAL FUND OPS
MANAGER 60 S 6TH ST STE 700 # STREET-P08 MINNEAPOLIS MN 55402-4413
|
|
|
3,292.027
|
|
|
|
82.53
|
%
|
|
|
|
ALLIANZGI STRUCTURED ALPHA P
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
696.636
|
|
|
|
17.47
|
%
|
|
|
|
ALLIANZGI ULTRA MICRO CAP A
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI ULTRA MICRO CAP A
|
|
UBS WM USA 0O0 11011 6100 OMNI A/C M/F ATTN DEPT MANAGER 499 WASHINGTON BLVD 9TH FL
JERSEY CITY NJ 07310-2055
|
|
|
794,457.698
|
|
|
|
24.04
|
%
|
|
b
|
|
ALLIANZGI ULTRA MICRO CAP A
|
|
PERSHING LLC PO BOX 2052 JERSEY CITY NJ 07303-2052
|
|
|
614,085.501
|
|
|
|
18.58
|
%
|
|
b
|
|
ALLIANZGI ULTRA MICRO CAP A
|
|
LPL FINANCIAL FBO CUSTOMER ACCOUNTS ATTN MUTUAL FUND OPERATIONS PO BOX 509046 SAN DIEGO
CA 92150-9046
|
|
|
579,458.720
|
|
|
|
17.53
|
%
|
|
b
|
|
ALLIANZGI ULTRA MICRO CAP A
|
|
AMERICAN ENTERPRISE INVESTMENT SVC FBO #41999970 707 2ND AVE SOUTH MINNEAPOLIS MN
55402-2405
|
|
|
390,484.903
|
|
|
|
11.82
|
%
|
|
b
|
|
ALLIANZGI ULTRA MICRO CAP A
|
|
NATIONAL FINANCIAL SERVICES LLC FOR THE BENEFIT OF OUR CUSTOMERS ATTN: MUTUAL FUNDS DEPT
4TH FL 499 WASHINGTON BLVD JERSEY CITY NJ 07310-2010
|
|
|
229,266.473
|
|
|
|
6.94
|
%
|
|
b
|
|
ALLIANZGI ULTRA MICRO CAP A
|
|
CHARLES SCHWAB & CO INC SPECIAL CUSTODY ACCOUNTS FBO CUSTOMERS ATTN MUTUAL FUNDS 211
MAIN ST SAN FRANCISCO CA 94105-1905
|
|
|
205,933.227
|
|
|
|
6.23
|
%
|
|
|
|
ALLIANZGI ULTRA MICRO CAP INST
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI ULTRA MICRO CAP INST
|
|
CHARLES SCHWAB & CO INC SPECIAL CUSTODY ACCOUNT FOR THE EXCLUSIVE BENEFIT OF OUR
CUSTOMERS ATTN: MUTUAL FUNDS DEPT 211 MAIN ST SAN FRANCISCO CA 94105-1905
|
|
|
1,074,776.556
|
|
|
|
40.46
|
%
|
|
b
|
|
ALLIANZGI ULTRA MICRO CAP INST
|
|
NFS FOR EXCLUSIVE BENEFIT OF OUR CUSTOMER ATTN: MUTUAL FUNDS DEPT 4TH FL 499 WASHINGTON
BLVD JERSEY CITY NJ 07310-1995
|
|
|
672,571.518
|
|
|
|
25.32
|
%
|
|
b
|
|
ALLIANZGI ULTRA MICRO CAP INST
|
|
PERSHING LLC PO BOX 2052 JERSEY CITY NJ 07303-2052
|
|
|
325,755.815
|
|
|
|
12.26
|
%
|
|
b
|
|
ALLIANZGI ULTRA MICRO CAP INST
|
|
AMERITRADE INC FOR THE EXCLUSIVE BENEFIT OF OUR CLIENTS PO BOX 2226 OMAHA NE 68103-2226
|
|
|
298,713.908
|
|
|
|
11.24
|
%
|
|
|
|
ALLIANZGI ULTRA MICRO CAP P
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI ULTRA MICRO CAP P
|
|
STIFEL NICOLAUS & CO INC EXCLUSIVE BENEFIT OF CUSTOMERS 501 N BROADWAY SAINT LOUIS MO
63102-2188
|
|
|
36,654.559
|
|
|
|
59.28
|
%
|
|
b
|
|
ALLIANZGI ULTRA MICRO CAP P
|
|
LPL FBO LPL CUSTOMERS ATTN: MUTUAL FUND OPERATIONS 1 BEACON ST FL 22 BOSTON MA
02108-3106
|
|
|
3,648.107
|
|
|
|
5.90
|
%
|
|
b
|
|
ALLIANZGI ULTRA MICRO CAP P
|
|
HILLIARD LYONS CUST FOR LAWRENCE H LEE IRA PORTFOLIO ADVISOR 13818 ABOITE CENTER RD FORT
WAYNE IN 46814-9743
|
|
|
3,387.932
|
|
|
|
5.48
|
%
|
|
|
|
ALLIANZGI U.S. EQUITY HEDGED A
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI U.S. EQUITY HEDGED A
|
|
PERSHING LLC PO BOX 2052 JERSEY CITY NJ 07303-2052
|
|
|
85,343.405
|
|
|
|
98.56
|
%
|
|
|
|
ALLIANZGI U.S. EQUITY HEDGED C
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI U.S. EQUITY HEDGED C
|
|
PERSHING LLC PO BOX 2052 JERSEY CITY NJ 07303-2052
|
|
|
9,385.219
|
|
|
|
93.22
|
%
|
|
|
|
ALLIANZGI U.S. EQUITY HEDGED C
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
683.029
|
|
|
|
6.78
|
%
|
|
|
|
ALLIANZGI U.S. EQUITY HEDGED D
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI U.S. EQUITY HEDGED D
|
|
CHARLES SCHWAB & CO INC ATTN MUTUAL FUNDS 211 MAIN ST SAN FRANCISCO CA 94105-1905
|
|
|
14,281.760
|
|
|
|
84.14
|
%
|
|
b
|
|
ALLIANZGI U.S. EQUITY HEDGED D
|
|
NATIONAL FINANCIAL SERVICES LLC FOR THE BENEFIT OF OUR CUSTOMERS ATTN MUTUAL FUNDS DEPT
5TH FL 200 LIBERTY ST ONE WORLD FINANCIAL CENTER NEW YORK NY 10281-1003
|
|
|
1,771.272
|
|
|
|
10.44
|
%
|
|
|
|
ALLIANZGI U.S. EQUITY HEDGED INST
|
|
|
|
|
|
|
|
|
|
|
|
a
|
|
ALLIANZGI U.S. EQUITY HEDGED INST
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
204,051.306
|
|
|
|
62.96
|
%
|
|
b
|
|
ALLIANZGI U.S. EQUITY HEDGED INST
|
|
RELIANCE TRUST COMPANY CUSTODIAN FBO USW-DISTRICT LOCAL 286 PENSION FUND PO BOX 48529
ATLANTA GA 30362-1529
|
|
|
63,134.686
|
|
|
|
19.48
|
%
|
|
b
|
|
ALLIANZGI U.S. EQUITY HEDGED INST
|
|
CHARLES SCHWAB & CO INC SPECIAL CUSTODY ACCOUNT FOR THE EXCLUSIVE BENEFIT OF OUR
CUSTOMERS ATTN MUTUAL FUND DEPT 211 MAIN ST SAN FRANCISCO CA 94105-1905
|
|
|
25,727.748
|
|
|
|
7.94
|
%
|
|
|
|
ALLIANZGI U.S. EQUITY HEDGED P
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANZGI U.S. EQUITY HEDGED P
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
678.430
|
|
|
|
100.00
|
%
|
|
|
|
ALLIANZGI SMALL-CAP GROWTH A
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI SMALL-CAP GROWTH A
|
|
MLPF&S FOR THE SOLE BENEFIT OF ITS CUSTOMERS ATTN FUND ADMN/#97M 4800 DEER LAKE DR E FL
3 JACKSONVILLE FL 32246-6484
|
|
|
233,646.531
|
|
|
|
78.86
|
%
|
|
b
|
|
ALLIANZGI SMALL-CAP GROWTH A
|
|
PERSHING LLC PO BOX 2052 JERSEY CITY NJ 07303-2052
|
|
|
24,704.947
|
|
|
|
8.34
|
%
|
|
|
|
ALLIANZGI SMALL-CAP GROWTH C
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI SMALL-CAP GROWTH C
|
|
CHARLES SCHWAB & CO INC SPECIAL CUSTODY ACCT FBO CUSTOMERS ATTN MUTUAL FUNDS 211 MAIN ST
SAN FRANCISCO CA 94105-1905
|
|
|
9,310.809
|
|
|
|
25.58
|
%
|
|
b
|
|
ALLIANZGI SMALL-CAP GROWTH C
|
|
RAYMOND JAMES OMNIBUS FOR MUTUAL FUNDS HOUSE ACCT FIRM 92500015 ATTM COURTNEY WALLER 880
CARILLON PKWY ST PETERSBURG FL 33716-1100
|
|
|
6,585.658
|
|
|
|
18.09
|
%
|
|
b
|
|
ALLIANZGI SMALL-CAP GROWTH C
|
|
PERSHING LLC PO BOX 2052 JERSEY CITY NJ 07303-2052
|
|
|
2,779.477
|
|
|
|
7.64
|
%
|
|
|
|
ALLIANZGI SMALL-CAP GROWTH C
|
|
SSB&T CUST SIMPLE IRA PRECISE STAMPING INC FBO CHRIS P GOBLET 1480 SEQUOIA DR STE A
AURORA IL 60506-1098
|
|
|
2,577.413
|
|
|
|
7.08
|
%
|
|
|
|
ALLIANZGISMALL-CAP GROWTH C
|
|
SSB&T CUST ROTH CONV IRA FBO THOMAS W SOLEM 3709 S GEORGE MASON DR APT 1110E FALLS
CHURCH VA 22041-4726
|
|
|
2,100.499
|
|
|
|
5.77
|
%
|
|
|
|
ALLIANZGI SMALL-CAP GROWTH D
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI SMALL-CAP GROWTH D
|
|
CAPITAL ONE SHAREBUILDER INC —OMNIBUS ACCOUNT— 83 S KING ST STE 700 SEATTLE WA
98104-2851
|
|
|
2,148.932
|
|
|
|
40.83
|
%
|
|
|
|
ALLIANZGI SMALL-CAP GROWTH D
|
|
TD AMERITRADE FBO RICHARD CHENEY JR & SUSAN CHENEY COMMUNITY PROPERTY 426 BYNNER DR SAN
PEDRO CA 90732-3306
|
|
|
1,155.029
|
|
|
|
21.94
|
%
|
|
|
|
ALLIANZGI SMALL-CAP GROWTH D
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
861.168
|
|
|
|
16.36
|
%
|
|
|
|
ALLIANZGI SMALL-CAP GROWTH D
|
|
TD AMERITRADE FBO ILSE-ROSE WARG & JAMISON B WARG JT TEN 215 S FRONT ST PHILIPSBURG PA
16866-2211
|
|
|
392.381
|
|
|
|
7.45
|
%
|
|
|
|
ALLIANZGI SMALL-CAP GROWTH INST
|
|
|
|
|
|
|
|
|
|
|
|
a, b
|
|
ALLIANZGI SMALL-CAP GROWTH INST
|
|
CHARLES SCHWAB & CO INC SPECIAL CUSTODY ACCOUNT FOR THE EXCLUSIVE BENEFIT OF OUR
CUSTOMERS ATTN: MUTUAL FUNDS DEPT 211 MAIN ST SAN FRANCISCO CA 94105-1905
|
|
|
1,117,322.980
|
|
|
|
63.82
|
%
|
|
|
|
ALLIANZGI SMALL-CAP GROWTH INST
|
|
ALLIANZ FUNDS MULTI-STRATEGY TRUST ON BEHALF OF ALLIANZGI GLOBAL ALLOCATION FUND ATTN
STEPHEN SEXAUER 600 W BROADWAY FL 34 SAN DIEGO CA 92101-3398
|
|
|
113,945.859
|
|
|
|
6.51
|
%
|
|
b
|
|
ALLIANZGI SMALL-CAP GROWTH INST
|
|
STATE STREET BANK & TRUST CO CUST FOR MI 529 ADVISOR PLAN AGE-BASED PORTFOLIO 1 P75A 801
PENNSYLVANIA AVE KANSAS CITY MO 64105-1307
|
|
|
104,621.834
|
|
|
|
5.98
|
%
|
|
|
|
ALLIANZGI SMALL-CAP GROWTH P
|
|
|
|
|
|
|
|
|
|
|
|
b
|
|
ALLIANZGI SMALL-CAP GROWTH P
|
|
NATIONAL FINANCIAL SERVICES FOR EXCLUSIVE BEN OF OUR CUSTOMERS 499 WASHINGTON BLVD MAIL
ZONE NJ4C JERSEY CITY NJ 07310-2010
|
|
|
3,289.450
|
|
|
|
46.98
|
%
|
|
b
|
|
ALLIANZGI SMALL-CAP GROWTH P
|
|
AMERITRADE INC PO BOX 2226 OMAHA NE 68103-2226
|
|
|
2,239.639
|
|
|
|
31.99
|
%
|
|
|
|
ALLIANZGI SMALL-CAP GROWTH P
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
860.472
|
|
|
|
12.29
|
%
|
|
b
|
|
ALLIANZGI SMALL-CAP GROWTH P
|
|
LPL FBO LPL CUSTOMERS ATTN: MUTUAL FUND OPERATIONS 1 BEACON ST FL 22 BOSTON MA
02108-3106
|
|
|
595.554
|
|
|
|
8.51
|
%
|
|
|
|
ALLIANZGI SMALL-CAP GROWTH R
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANZGI SMALL-CAP GROWTH R
|
|
ALLIANZ FUND INVESTMENTS INC ATTN TODD M HEDTKE 5701 GOLDEN HILLS DR MINNEAPOLIS MN
55416-1297
|
|
|
861.858
|
|
|
|
57.52
|
%
|
|
|
|
ALLIANZGI SMALL-CAP GROWTH R
|
|
FRONTIER TR CO FBO GUSTIN T POTTER 401 K PLAN 51720 P O BOX 10758 FARGO ND 58106-0758
|
|
|
340.143
|
|
|
|
22.70
|
%
|
|
b
|
|
ALLIANZGI SMALL-CAP GROWTH R
|
|
UBS WM USA 0O0 11011 6100 OMNI A/C M/F ATTN DEPT MANAGER 499 WASHINGTON BLVD 9TH FL
JERSEY CITY NJ 07310-2055
|
|
|
296.244
|
|
|
|
19.77
|
%
|
B-5
APPENDIX C
ALLIANZ FUNDS MULTI-STRATEGY TRUST (THE “TRUST”)
PROXY VOTING POLICY
|
1.
|
|
It is the policy of the Trust that proxies should be voted in the interest of the
shareholders of the appropriate fund, as determined by those who are in the best position to
make this determination. The Trust believes that the firms and/or persons purchasing and
selling securities for the funds and analyzing the performance of the funds’ securities are in
the best position and have the information necessary to vote proxies in the best interests of
the funds and their shareholders, including in situations where conflicts of interest may
arise between the interests of shareholders, on one hand, and the interests of the investment
adviser, a sub-adviser and/or any other affiliated person of the fund, on the other.
Accordingly, the Trust’s policy shall be to delegate proxy voting responsibility to those
entities with portfolio management responsibility for the funds.
|
|
|
|
2.
|
|
The Trust, for each fund advised by Allianz Global Investors Fund Management LLC (“AGIFM”),
delegates the responsibility for voting proxies to AGIFM, which will in turn delegate such
responsibility to the sub-adviser of the particular fund. AGIFM’s Proxy Voting Policy Summary
is attached as
Appendix A
hereto. Summaries of the detailed proxy voting policies of
the Trust’s current sub-advisers are set forth in
Appendix B
attached hereto. Such
summaries may be revised from time to time to reflect changes to the sub-advisers’ detailed
proxy voting policies.
|
|
|
|
3.
|
|
The party voting the proxies (i.e., the sub-adviser) shall vote such proxies in accordance
with such party’s proxy voting policies and, to the extent consistent with such policies, may
rely on information and/or recommendations supplied by others.
|
|
|
|
4.
|
|
AGIFM and each sub-adviser of a fund of the Trust with proxy voting authority shall deliver a
copy of its respective proxy voting policies and any material amendments thereto to the Board
of the Trust promptly after the adoption or amendment of any such policies.
|
|
|
|
5.
|
|
The party voting the proxy shall: (i) maintain such records and provide such voting
information as is required for the Trust’s regulatory filings including, without limitation,
Form N-PX and the required disclosure of policy called for by Item 17 of Form N-1A; and (ii)
shall provide such additional information as may be requested, from time to time, by the Board
or the Trust’s Chief Compliance Officer.
|
|
|
|
6.
|
|
This Proxy Voting Policy Statement, the Proxy Voting Policy Summary of AGIFM and summaries of
the detailed proxy voting policies of each sub-adviser of a fund of the Trust with proxy
voting authority for a fund and how each fund voted proxies relating to portfolio securities
held during the most recent twelve month period ending June 30, shall be made available (i)
without charge, upon request, by calling 1-800-988-8380 (retail class) or 1-800-498-5413
(Class P, Institutional and Administrative classes); (ii) on the Trust’s website at
us.allianzgi.com; and (iii) on the Securities and Exchange Commission’s (“SEC’s”) website at
www.sec.gov. In addition, to the extent required by applicable law or determined by the
Trust’s Chief Compliance Officer or Board of Trustees, the Proxy Voting Policy Summary of
AGIFM and summaries of the detailed proxy voting policies of each sub-adviser with proxy
voting authority shall also be included in the Trust’s SAI.
|
C-1
Appendix A
ALLIANZ GLOBAL INVESTORS FUND MANAGEMENT LLC (“AGIFM”)
PROXY VOTING POLICY SUMMARY
|
1.
|
|
It is the policy of AGIFM that proxies should be voted in the interest of the shareholders of
the applicable fund, as determined by those who are in the best position to make this
determination. AGIFM believes that the firms and/or persons purchasing and selling securities
for the funds and analyzing the performance of the funds’ securities are in the best position
and have the information necessary to vote proxies in the best interests of the funds and
their shareholders, including in situations where conflicts of interest may arise between the
interests of shareholders, on one hand, and the interests of the investment adviser, a
sub-adviser and/or any other affiliated person of the fund, on the other. Accordingly,
AGIFM’s policy shall be to delegate proxy voting responsibility to those entities with
portfolio management responsibility for the funds.
|
|
|
|
2.
|
|
AGIFM, for each fund of Allianz Funds Multi-Strategy Trust for which it acts as investment
adviser, delegates the responsibility for voting proxies to the sub-adviser for the respective
fund.
|
|
|
|
3.
|
|
The party voting proxies (e.g., the sub-adviser) will vote the proxies in accordance with
their proxy voting policies and, to the extent consistent with their policies, may rely on
information and/or recommendations supplied by others.
|
|
|
|
4.
|
|
AGIFM and each sub-adviser of a fund will deliver a copy of their respective proxy voting
policies and any material amendments thereto to the board of the relevant fund promptly after
the adoption or amendment of any such policies.
|
|
|
|
5.
|
|
The party voting the proxy will: (i) maintain such records and provide such voting
information as is required for such funds’ regulatory filings including, without limitation,
Form N-PX and the required disclosure of policy called for by Item 17 of Form N-1A; and (ii)
will provide additional information as may be requested, from time to time, by the funds’
respective boards or chief compliance officers.
|
|
|
|
6.
|
|
Summaries of the proxy voting policies for AGIFM and each sub-adviser of a fund advised by
AGIFM and how each fund voted proxies relating to portfolio securities held during the most
recent twelve month period ended June 30 will be available (i) without charge, upon request,
by calling 1-800-988-8380 (retail class) or 1-800-498-5413 (Class P, Institutional and
Administrative classes); (ii) on the Allianz Global Investors Distributors Web site at
us.allianzgi.com; and (iii) on the Securities and Exchange Commission’s (“SEC’s”) website at
www.sec.gov. In addition, to the extent required by applicable law or determined by the
relevant fund’s board of directors/trustees or chief compliance officer, summaries of the
detailed proxy voting policies of AGIFM, each sub-adviser and each other entity with proxy
voting authority for a fund advised by AGIFM shall also be included in the SAI for the
relevant fund.
|
C-2
Appendix B
Allianz Global Investors U.S. LLC (“AllianzGI U.S.”)
Description of Proxy Voting Policy and Procedures
AllianzGI U.S. typically votes proxies as part of its discretionary authority to manage accounts,
unless the client has explicitly reserved the authority for itself. To ensure that the proxies are
voted in the best interests of its clients, AllianzGI U.S. has adopted proxy voting procedures and
guidelines for voting proxies on specific types of issues. When voting proxies, AllianzGI U.S.
seeks to make voting decisions solely in the best interests of its clients and to enhance the
economic value of the underlying portfolio securities held in its clients’ accounts. AllianzGI U.S.
will not be responsible for voting of proxies that AllianzGI U.S. has not been notified of on a
timely basis by the client’s custodian.
AllianzGI U.S. has adopted written Proxy Policy Guidelines and Procedures (the “Proxy Guidelines”)
that are reasonably designed to ensure that the firm is voting in the best interest of its clients.
The Proxy Guidelines reflect AllianzGI U.S.’s general voting positions on specific corporate
governance issues and corporate actions. AllianzGI U.S. has retained two independent third party
service providers (the “Proxy Providers”), to support two different groups of portfolio management
teams, to assist in the proxy voting process by implementing the votes in accordance with the Proxy
Guidelines as well as assisting in the administrative process. The services provided offer a
variety of proxy-related services to assist in AllianzGI U.S.’s handling of proxy voting
responsibilities. Although both Proxy Providers have been instructed to follow the Proxy
Guidelines, it is possible that in certain circumstances the Proxy Providers may interpret the
Proxy Guidelines in different ways, and as a result AllianzGI U.S. may cast votes on behalf of one
client account that are different than votes cast for the same shares held by another client
account.
In certain circumstances, a client may request in writing that AllianzGI U.S. vote proxies for its
account in accordance with a set of guidelines which differs from the Proxy Guidelines. For
example, a client may wish to have proxies voted for its account in accordance with the
Taft-Hartley proxy voting guidelines. In that case, AllianzGI U.S. will vote the shares held by
such client accounts in accordance with their direction, which may be different from the vote cast
for shares held on behalf of other client accounts that vote in accordance with the Proxy
Guidelines.
AllianzGI U.S. will generally refrain from voting proxies on non-U.S. securities that are subject
to share blocking restrictions. Certain countries require the freezing of shares for trading
purposes at the custodian/sub-custodian bank level in order to vote proxies to ensure that
shareholders voting at meetings continue to hold the shares through the actual shareholder meeting.
However, because AllianzGI U.S. cannot anticipate every proxy proposal that may arise (including a
proxy proposal that an analyst and/or portfolio manager believes has the potential to significantly
affect the economic value of the underlying security, such as proxies relating to mergers and
acquisitions), AllianzGI U.S. may, from time to time, instruct the Proxy Providers to cast a vote
for a proxy proposal in a share blocked country.
The Proxy Guidelines also provide for oversight of the proxy voting process by a Proxy Committee.
The Proxy Guidelines summarize AllianzGI U.S.’s position on various issues, including issues of
corporate governance and corporate actions, and give general indication as to how AllianzGI U.S.
will vote shares on such issues. Occasionally, there may be instances when AllianzGI U.S. may not
vote proxies in strict adherence to the Proxy Guidelines. To the extent that the Proxy Guidelines
do not cover potential voting issues or a case arises of a potential material conflict between
AllianzGI U.S.’s interest and those of a client with respect to proxy voting, the Proxy Committee
will convene to discuss the issues. In evaluating issues, the Proxy Committee may consider
information from many sources, including the portfolio management team, the analyst responsible for
monitoring the stock of the company at issue, management of a company presenting a proposal,
shareholder groups and independent proxy research services. In situations in which the Proxy
Guidelines do not give clear guidance on an issue, an analyst or portfolio manager and/or the Proxy
Committee will review the issue. In the event that either the analyst or portfolio manager wishes
to override the Proxy Guidelines, the proposal will be presented to the Proxy Committee for a final
decision. Any deviations from the Proxy Guidelines will be documented and maintained in accordance
with Rule 204-2 under the Advisers Act.
In accordance with the Proxy Guidelines, AllianzGI U.S. may review additional criteria associated
with voting proxies and evaluate the expected benefit to its clients when making an overall
determination on how or whether to vote a proxy. Upon receipt of a client’s written request,
AllianzGI U.S. may also vote proxies for that client’s account in a particular manner that may
differ from the Proxy Guidelines. In addition, AllianzGI U.S. may refrain from voting a proxy on
behalf of its clients’ accounts due to de-minimis holdings, immaterial impact on the portfolio,
items relating to non-U.S. issuers (such as those described below), non-discretionary holdings not
covered by AllianzGI U.S., timing issues related to the opening/closing of accounts, securities
lending issues (see below), contractual arrangements with clients and/or their authorized delegate,
the timing of receipt of information, or where circumstances beyond its control prevent it from
voting. For example, AllianzGI U.S. may refrain from voting a proxy of a non-U.S. issuer due to
logistical considerations that may impair AllianzGI U.S.’s ability to vote the proxy. These issues
may include, but are not limited to: (i) proxy statements and ballots being written in a language
other than English, (ii) untimely notice of a shareholder meeting, (iii) requirements
C-3
to vote
proxies in person, (iv) restrictions on non-U.S. person’s ability to exercise votes, (v)
restrictions on the sale of securities for a period of time in proximity to the shareholder
meeting, or (vi) requirements to provide local agents with power of attorney to facilitate the
voting instructions. Such proxies are voted on a best-efforts basis.
AllianzGI U.S. may vote in accordance with the proxy guidelines of its affiliate advisers when
voting in connection with Wrap Programs. The affiliated adviser’s guidelines may differ and in fact
be in conflict with AllianzGI U.S.’s voting guidelines.
If a client has decided to participate in a securities lending program, AllianzGI U.S. will defer
to the client’s determination and not attempt to recall securities on loan solely for the purpose
of voting routine proxies as this could impact the returns received from securities lending and
make the client a less desirable lender in the marketplace. If the participating client requests,
AllianzGI U.S. will use reasonable efforts to notify the client of proxy measures that AllianzGI
U.S. deems material.
The ability to timely identify material events and recommend recall of shares for proxy voting
purposes is not within the control of AllianzGI U.S. and requires the cooperation of the client and
its other service providers. Efforts to recall loaned securities are not always effective and there
can be no guarantee that any such securities can be retrieved in a timely manner for purposes of
voting the securities.
NFJ Investment Group LLC (“NFJ”)
Description of Proxy Voting Policy and Procedures
NFJ typically votes proxies as part of its discretionary authority to manage accounts, unless the
client has explicitly reserved the authority for itself. When voting proxies, NFJ’s primary
objective is to make voting decisions solely in the best economic interests of its clients. NFJ
will act in a manner that it deems prudent and diligent and which is intended to enhance the
economic value of the underlying portfolio securities held in its clients’ accounts.
NFJ has adopted written Proxy Voting Policies and Procedures (the “Proxy Guidelines”) that are
reasonably designed to ensure that it is voting in the best interest of its clients. The Proxy
Guidelines reflect NFJ’s general voting positions on specific corporate actions, including but not
limited to those relating to social and corporate responsibility issues, stock option plans and
other management compensation issues, changes to a portfolio company’s capital structure and
corporate governance. For example, NFJ generally votes for proposals to declassify boards and
generally opposes proposals to institute supermajority voting requirements relating to business
combinations. In addition, because Proxy Guidelines cannot anticipate all situations and the
surrounding facts of each proxy issue, some proxy issues may require a case-by-case analysis
(whether or not required by the Proxy Guidelines) and may result in a vote being cast that will
deviate from the Proxy Guidelines.
In accordance with the Proxy Guidelines, NFJ may review additional criteria associated with voting
proxies and evaluate the expected benefit to its clients when making an overall determination on
how or whether to vote the proxy. NFJ may vote proxies individually for an account or aggregate
and record votes across a group of accounts, strategy or product. In addition, NFJ may refrain
from voting a proxy on behalf of its clients’ accounts in certain circumstances, for example, due
to de-minimis holdings, impact on the portfolio, items relating to foreign issuers (including
ADRs), timing issues related to the opening/closing of accounts and contractual arrangements with
clients and/or their authorized delegate. For example, NFJ may refrain from voting a proxy of a
foreign issuer due to logistical considerations that may have a detrimental effect on NFJ’s ability
to vote the proxy. These issues may include, but are not limited to: (i) proxy statements and
ballots being written in a foreign language, (ii) untimely notice of a shareholder meeting, (iii)
requirements to vote proxies in person, (iv) restrictions on a foreigner’s ability to exercise
votes, (v) restrictions on the sale of securities for a period of time in proximity to the
shareholder meeting, or (vi) requirements to provide local agents with power of attorney to
facilitate the voting instructions. Such proxies are voted on a best-efforts basis.
To assist in the proxy voting process, NFJ may retain an independent third party service provider
to assist in providing research, analysis and voting recommendations on corporate governance issues
and corporate actions as well as assist in the administrative process. The services provided offer
a variety of proxy-related services to assist in NFJ’s handling of proxy voting responsibilities.
Conflicts of Interest.
NFJ may have conflicts of interest that can affect how it votes its
clients’ proxies. For example, NFJ or an affiliate may manage a pension plan whose management is
sponsoring a proxy proposal. The Proxy Guidelines are designed to prevent material conflicts of
interest from affecting the manner in which NFJ votes its clients’ proxies. In order to ensure
that all material conflicts of interest are handled appropriately while carrying out its obligation
to vote proxies, NFJ’s Proxy Committee has established procedures addressing how NFJ identifies and
resolves any material conflicts of interest with its clients.
C-4
Fuller & Thaler Asset Management, Inc. (“Fuller & Thaler”)
Description of Proxy Voting Policy and Procedures
As a fiduciary, Fuller & Thaler’s general policy is to exercise the voting authority delegated to
it by its clients in a manner that will maintain or enhance shareholder value of the companies in
which Fuller & Thaler has invested its client assets.
Fuller & Thaler votes the proxies for the securities held in its client portfolios in accordance
with Fuller & Thaler’s written proxy voting policy which has been constructed with the clients’
best interest in mind. Generally, Fuller & Thaler approves (or follows management recommendations)
in routine corporate matters such as the selection of directors or auditors, in issues involving an
increase in the authorized shares where needed for clearly defined business purposes, and in social
issues. Generally, Fuller & Thaler opposes (in some cases against management recommendations) the
indemnification of directors and/or officers where such indemnification includes “negligence and
gross negligence” in the performance of their fiduciary duties, super-majority voting requirements,
anti-takeover proposals which restrict shareholder authority, increases in authorized shares of
more than 25% without a stated business purpose, changes in corporate charter that do not have a
clearly stated business purpose, provisions for multi-tiered voting rights, authorizations of
“blank check” preferred stock or other capital stock without a stated business purpose,
“shareholder rights” provisions which tend to diminish rather than enhance shareholder power,
“anti-greenmail” provisions which also restrict shareholder authority, and staggered boards of
directors. Fuller & Thaler may evaluate other proposals, corporate combinations and divestments,
shareholder proposals, and profit sharing and stock options plans on a case-by-case basis.
Fuller & Thaler has contracted with Institutional Shareholder Services (“ISS”) to collect proxy
information from companies and to vote proxies according to Fuller & Thaler’s instructions. ISS
also provides proxy recommendations and corporate governance ratings to Fuller & Thaler that it may
or may not follow. For client accounts with a large number of holdings, Fuller & Thaler may
generally follow the proxy recommendations of ISS.
Where a proxy proposal raises a material conflict between Fuller & Thaler’s interests and a
client’s interests, Fuller & Thaler will rely on the recommendation of ISS to vote the proxy.
C-5
APPENDIX D
Procedures for Shareholders to Submit Nominee Candidates
(As of March 14, 2007)
A shareholder of a Fund must follow the following procedures in order to submit properly a nominee
recommendation for the Committee’s consideration.
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1.
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The shareholder must submit any such recommendation (a “Shareholder Recommendation”) in
writing to a Fund, to the attention of the Secretary, at the address of the principal
executive offices of the Fund. Once each quarter, if any Shareholder Recommendations have been
received by the Secretary during the quarter, the Secretary will inform the Committee of the
new Shareholder Recommendations. Because the Fund does not hold annual or other regular
meetings of shareholders for the purpose of electing Directors/Trustees, the Committee will
accept Shareholder Recommendations on a continuous basis.
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2.
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All Shareholder Recommendations properly submitted to a Fund will be held by the Secretary
until such time as (i) the Committee convenes to consider candidates to fill Board vacancies
or newly created Board positions (a “Director/Trustee Consideration Meeting”) or (ii) the
Committee instructs the Secretary to discard a Shareholder Recommendation following a
Director/Trustee Consideration Meeting or an Interim Evaluation (as defined below).
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3.
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At a Director/Trustee Consideration Meeting, the Committee will consider each Shareholder
Recommendation then held by the Secretary. Following a Director/Trustee Consideration Meeting,
the Committee may instruct the Secretary to discard any or all of the Shareholder
Recommendations currently held by the Secretary.
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4.
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A Committee may, in its discretion and at any time, convene to conduct an evaluation of
validly submitted Shareholder Recommendations (each such meeting, an “Interim Evaluation”) for
the purpose of determining which Shareholder Recommendations will be considered at the next
Director/Trustee Consideration Meeting. Following an Interim Evaluation, the Committee may
instruct the Secretary to discard any or all of the Shareholder Recommendations currently held
by the Secretary.
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5.
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The Shareholder Recommendation must include: (i) a statement in writing setting forth (A) the
name, date of birth, business address, residence address and nationality of the person
recommended by the shareholder (the “candidate”); (B) the number of shares of (and class) of
the Fund(s) owned of record or beneficially by the candidate, as reported to such shareholder
by the candidate; (C) any other information regarding the candidate called for with respect to
director nominees by paragraphs (a), (d), (e) and (f) of Item 401 of Regulation S-K or
paragraph (b) of Item 22 of Rule 14a-101 (Schedule 14A) under the Securities Exchange Act of
1934, as amended (the “Exchange Act”), adopted by the Securities and Exchange Commission (or
the corresponding provisions of any regulation or rule subsequently adopted by the Securities
and Exchange Commission or any successor agency applicable to the Trust); (D) any other
information regarding the candidate that would be required to be disclosed if the candidate
were a nominee in a proxy statement or other filing required to be made in connection with the
election of Directors/Trustees or Directors pursuant to Section 14 of the Exchange Act and the
rules and regulations promulgated thereunder; and (E) whether the recommending shareholder
believes that the candidate is or will be an “interested person” of the Fund (as defined in
the Investment Company Act of 1940, as amended) and, if not an “interested person,”
information regarding the candidate that will be sufficient for the Fund to make such
determination; (ii) the written and signed consent of the candidate to be named as a nominee
and to serve as a Director/Trustee if elected; (iii) the recommending shareholder’s name as it
appears on the Fund’s books; (iv) the number of shares of (and class) of the Fund(s) owned
beneficially and of record by the recommending shareholder; and (v) a description of all
arrangements or understandings between the recommending shareholder and the candidate and any
other person or persons (including their names) pursuant to which the recommendation is being
made by the recommending shareholder. In addition, the Committee may require the candidate to
furnish such other information as it may reasonably require or deem necessary to determine the
eligibility of such candidate to serve on the Board or to satisfy applicable law.
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D-1
APPENDIX E
The following is a brief summary of the principal investments and strategies and principal
risks of each of the Underlying Funds in which the
Target Funds
, the
Multi-Asset Funds
and the
Global Fundamental Strategy Fund
may invest. Some of the Underlying Funds invest primarily in
equity securities while other Underlying Funds invest primarily in fixed income securities
(including money market instruments). The summaries are based solely on information contained in
the prospectuses of each Underlying Fund, as filed with the Securities and Exchange Commission, as
of a recent date. These summaries are for convenient reference only and are qualified in their
entirety by reference to the current prospectuses and statements of additional information of each
Underlying Fund, and the Trust disclaims any obligation to update them in the event the information
in the applicable Underlying Fund prospectus changes. The principal investments and strategies and
principal risks of the Underlying Funds may change following the date of this Statement of
Additional Information, and investors should refer to the prospectuses of the Trust, Allianz Funds,
PIMCO Funds, PIMCO Equity Series and PIMCO ETF Trust and the Statements of Additional Information
of the Trust, Allianz Funds, PIMCO Funds, PIMCO Equity Series and PIMCO ETF Trust for the most
current information regarding the Underlying Funds.
The
Target Funds
, the
Multi-Asset Funds
and the
Global Fundamental Strategy Fund
may be subject to
each of the principal risks of the Underlying Funds. Descriptions of certain of these risks can be
found in the “Summary of Principal Risks” of their prospectuses. In addition, the
Target Funds
, the
Multi-Asset Funds
and the
Global Fundamental Strategy Fund
may be subject to the following risks:
China-Related Risk
For an Underlying Fund that focuses its investments in companies that have exposure to the Chinese
economy, events or factors affecting the Chinese economy will have a greater effect on, and may
more adversely affect, the Underlying Fund than they would with respect to a fund that is more
diversified among a number of regions.
The Chinese economy is generally considered an emerging and volatile market. A small number of
companies represent a large portion of the China market as a whole, and prices for securities of
these companies may be very sensitive to adverse political, economic, or regulatory developments in
China and other Asian countries, and may experience significant losses in such conditions. The
value of Chinese currencies may also vary significantly relative to the U.S. dollar, affecting the
Fund’s investments.
Historically, China’s central government has exercised substantial control over the Chinese
economy through administrative regulation, state ownership, the allocation, expropriation or
nationalization of resources, by controlling payment of foreign currency-denominated obligations,
by setting monetary policy and by providing preferential treatment to particular industries or
companies. The emergence of a domestic class is still at an early state, making China’s economic
health largely dependent upon exports. China’s growing trade surplus with the U.S. has increased
the risk of trade disputes, which could potentially have adverse effects on China’s management
strategy of its currency, as well as on some export-dependent sectors.
Despite economic reforms that have resulted in less direct central and local government
control over Chinese businesses, actions of the Chinese central and local government authorities
continue to have a substantial effect on economic conditions in China. These activities, which may
include central planning, partial state ownership of or government actions designed to
substantially influence certain Chinese industries, market sectors or particular Chinese companies,
may adversely affect the public and private sector companies in which the Fund invests. Government
actions may also affect the economic prospects for, and the market prices and liquidity of, the
securities of China companies and the payments of dividends and interest by China companies. In
addition, currency fluctuations, monetary policies, competition, social instability or political
unrest may adversely affect economic growth in China. The Chinese economy and Chinese companies may
also be adversely affected by regional security threats, as well as adverse developments in Chinese
trade policies, or in trade policies toward China by countries that are trading partners with
China.
The greater China region includes mainland China, Hong Kong, Macau and Taiwan, and the Fund’s
investments in the region are particularly susceptible to risks in that region. Events in any one
country within the region may impact the other countries in the region or the Asia region as a
whole. As a result, events in the region will generally have a greater effect on the Fund than if
the Fund were more geographically diversified, which could result in greater volatility and losses.
Markets in the greater China region can experience significant volatility due to social, regulatory
and political uncertainties.
Eco-Sectors Related Risk
For an Underlying Fund that focuses its investments in companies that have exposure, directly or
indirectly, to one or more of the EcoEnergy, Pollution Control and Clean Water sectors that
comprise the Eco-Sectors, events or factors affecting companies in the Eco-Sectors will have a
greater effect on, and may more adversely affect, the Underlying Fund than they would with respect
to a fund that is more diversified among a number of unrelated sectors and industries.
E-1
Companies in the Eco-Sectors may be particularly susceptible to such factors as environmental
protection regulatory actions, other international political and economic developments, changes in
government subsidy levels, environmental conservation practices, changes in taxation and other
government regulations, and increased costs associated with compliance with environmental or other
regulations. There are substantial differences between the environmental and other regulatory
practices and policies in various jurisdictions, and any given regulatory agency may make major
shifts in policy from time to time. Other economic and market developments that may significantly
affect companies in the Eco-Sectors include, without limitation, inflation, rising interest rates,
fluctuations in commodity prices, raw material costs and other operating costs, and competition
from new entrants into the Eco-Sectors.
The Eco-Sectors, on the whole, are newly developing and strongly influenced by technological
changes. The Eco-Sectors can be significantly affected by the level and volatility of technological
change in industries focusing on energy, pollution and environmental control. In particular,
technological advances can render an existing product, which may account for a substantial portion
of a company’s revenue, obsolete. Product development efforts in the Eco-Sectors may not result in
viable commercial products, and companies in the Eco-Sectors typically bear high research and
development costs, which can limit their ability to maintain operations during periods of
organizational growth or instability. Many companies in the Eco-Sectors are in the early stages of
operation and may have limited operating histories and smaller market capitalizations on average
than companies in other sectors. As a result of these and other factors, the value of investments
in companies in the Eco-Sectors tends to be considerably more volatile than that of companies in
more established sectors and industries.
Each of the sectors that comprise the Eco-Sectors is susceptible to particular risks,
including those described below. Companies in the EcoEnergy sector may be adversely affected by the
increased use of, or decreases in prices for, oil and other fossil fuels. This risk may be
particularly acute because oil prices are at historically high levels and may decline substantially
and/or abruptly. Changes in energy conservation practices and the demand for renewable energy may
also significantly impact the EcoEnergy sector. Companies in the Pollution Control sector are
particularly susceptible to changes in regulatory controls on, and international treaties with
respect to, the production or containment of pollutants. Changes in market practices and regulatory
conditions surrounding recycling and other waste management techniques may significantly affect the
demand for products and services of companies in the Pollution Control sector. Scientific
developments, such as breakthroughs in the remediation of global warming or changing sentiments
about the deleterious effects of pollution, may also affect practices with respect to pollution
control, which could in turn impact companies in the Pollution Control sector. Companies in the
Clean Water sector are susceptible to changes in investment in water purification technology
globally, and a slackening in the pace of new infrastructure projects in developing or developed
countries may constrain such companies’ abilities to grow in global markets. Other reductions in
demand for clean water, such as significant decreases in world population or increased availability
of potable water in arid regions, may reduce demand for products and services provided by companies
in the Clean Water sector.
To the extent an Underlying Fund focuses its assets in the Eco-Sectors, it invests in
companies that may share common characteristics, are often subject to similar business risks and
regulatory burdens, and whose securities may react similarly to various events and other factors.
To the extent an Underlying Fund focuses a significant portion of its assets in any particular
industry within the Eco-Sectors, it is further subject to focused investment risk and is more
susceptible to events or factors affecting companies in that particular industry.
An Underlying Fund may also have focused investment risk to the extent that it invests a
substantial portion of its assets in a particular country or geographic region. Prolonged drought,
floods, weather, disease and other natural disasters, as well as war and political instability, may
significantly reduce the ability of companies in the Eco-Sectors to maintain or expand their
operations or their marketing efforts in affected countries or geographic regions. See “Non-U.S.
Investment Risk” and “Emerging Markets Risk.” To the extent an Underlying Fund invests in companies
that derive substantial revenues from activities outside the Eco-Sectors, those investments may be
significantly affected by developments in other industries in which such companies are active. See
“Equity Securities Risk” and “Market Risk.”
European Concentration Risk
When a Fund holds or obtains exposure to European securities or indices of securities, it may be
affected significantly by economic, regulatory or political developments affecting European
issuers. All countries in Europe may be significantly affected by fiscal and monetary controls
implemented by the European Economic and Monetary Union. Eastern European markets are relatively
undeveloped and may be particularly sensitive to economic and political events affecting those
countries.
E-2
Far Eastern (excluding Japan) Concentration Risk
A Fund that holds or obtains exposure to Far Eastern (excluding Japanese) securities or indices of
securities may be affected significantly by economic, regulatory or political developments
affecting Far Eastern issuers. The economies and financial markets of some Far Eastern countries
have been erratic in recent years, and several countries’ currencies have fluctuated in value
relative to the U.S. dollar. The trading volume on some Far Eastern stock exchanges is much lower
than in the United States, making the securities of issuers traded thereon less liquid and more
volatile than similar U.S. securities. Politically, several Far Eastern countries are still
developing and could de-stabilize. In addition, it is possible that governments in the region could
take action adverse to Far Eastern issuers, such as nationalizing industries or restricting the
flow of money in and out of their countries.
Japanese Concentration Risk
An Underlying Fund that holds or obtains exposure to Japanese securities or indices of securities
may be affected significantly by economic, regulatory or political developments affecting Japanese
issuers. The Japanese economy, after achieving high growth in the 1980s, faltered dramatically in
the 1990s. While Japan’s recent economic performance has shown improvements with positive GDP
growth, the Japanese government continues to deal with high tax and unemployment rates, unstable
banking and financial service sectors, and low consumer spending. Should any or all of these
problems persist or worsen, an Underlying Fund invested in such securities could be adversely
affected. A small number of industries, including the electronic machinery industry, comprise a
large portion of the Japanese market, and therefore weakness in any of these industries could have
profound negative impact on the entire market. In addition, Japan has few natural resources; its
economy is heavily dependent on foreign trade and so it is vulnerable to trade sanctions or other
protectionist measures taken by its trading partners.
PIMCO CommodityRealReturn Strategy Fund Risk
The PIMCO CommodityRealReturn Strategy Fund
®
, an underlying bond fund in
which each Fund may invest, gains exposure to the commodities markets through investments in
commodity-linked derivative instruments, including commodity index-linked notes, swap agreements,
commodity options, futures and options on futures. The PIMCO CommodityRealReturn Strategy Fund will
also gain exposure indirectly to commodity markets by investing in the PIMCO Cayman Commodity Fund
I Ltd., a wholly-owned subsidiary of the PIMCO CommodityRealReturn Strategy Fund organized under
the laws of the Cayman Islands (“the Subsidiary”). The Subsidiary is advised by PIMCO, and has the
same investment objective as the PIMCO CommodityRealReturn Strategy Fund. The Subsidiary may invest
without limitation in commodity-linked swap agreements and other commodity-linked derivative
instruments. However, the Subsidiary is otherwise subject to the same fundamental, non-fundamental
and certain other investment restrictions of the PIMCO CommodityRealReturn Strategy Fund.
In order for the PIMCO CommodityRealReturn Strategy Fund to qualify as a regulated investment
company under Subchapter M of the Code, it must derive at least 90 percent of its gross income each
year from certain qualifying sources of income. The Internal Revenue Service (“IRS”) has issued
revenue rulings to the effect, first, that income derived from commodity-linked swaps is not
qualifying income under Subchapter M of the Code, and subsequently, that it is possible that
certain alternative investment instruments (including certain commodity index-linked notes)
creating commodity exposure produce qualifying income under the Code. The IRS has issued private
letter rulings in which the IRS specifically concluded that income from certain commodity
index-linked notes is qualifying income. In addition, the IRS has also issued another private
letter ruling in which the IRS specifically concluded that income derived from a fund’s investment
in a foreign subsidiary that invests in commodity-linked derivatives will also constitute
qualifying income.
Based on such rulings, the PIMCO CommodityRealReturn Strategy Fund seeks to gain exposure to
the commodity markets through investments in commodity index-linked notes and through investments
in the Subsidiary, in which the PIMCO CommodityRealReturn Strategy Fund may invest no more than 25%
of the value of its total assets. The PIMCO CommodityRealReturn Strategy Fund’s intention of
qualifying as a regulated investment company may limit the variety and/or terms of the commodity
index-linked notes in which that Fund may invest. The PIMCO CommodityRealReturn Strategy Fund’s
investment in commodity-linked swaps and other commodity-linked derivatives may also be limited by
that Fund’s intention of qualifying as a regulated investment company.
The use of commodity index-linked notes involves specific risks. The value of these notes will
rise or fall in response to changes in the underlying commodity or related index of investment.
These notes expose the PIMCO CommodityRealReturn Strategy Fund economically to movements in
commodity prices. These notes are also subject to risks, such as credit, market and interest rate
risks, that in general affect the values of debt securities. In addition, these notes are often
leveraged, increasing the volatility of each note’s market value relative to changes in the
underlying commodity, commodity futures contract or commodity index. Therefore, at the maturity of
the note, the PIMCO CommodityRealReturn Strategy Fund may receive more or less principal than it
originally invested. The PIMCO CommodityRealReturn Strategy Fund may receive interest payments on
the note that are more or less than the stated coupon interest payments. The PIMCO
CommodityRealReturn Strategy Fund will continue to seek ways to make use of other commodity-linked
derivative instruments, including swap agreements, commodity options, futures, options on futures
and alternative structures within the PIMCO CommodityRealReturn Strategy Fund to gain exposure to
commodity markets in a way consistent with maintaining that Fund’s status as a regulated investment
company under Subchapter M of the Code.
E-3
Water-Related Risk
An Underlying Fund, Global Water Fund, focuses its investments in companies that are substantially
engaged in water-related activities. Events or factors affecting the sector consisting of companies
engaged in such activities (the “water-related resource sector”) will have a greater effect on, and
may more adversely affect, the Underlying Fund than they would with respect to a fund that is more
diversified among a number of unrelated sectors and industries.
Companies in the water-related resource sector may be significantly affected by events
relating to international political and economic developments, water conservation, the success of
exploration projects, commodity prices and tax and other government regulations. There are
substantial differences between the water-related, environmental and other regulatory practices and
policies in various jurisdictions, and any given regulatory agency may make major shifts in policy
from time to time. Other economic and market developments that may significantly affect companies
in the water-related resource sector include, without limitation, inflation, rising interest rates,
fluctuations in commodity prices, raw material costs and other operating costs, and competition
from new entrants into the sector.
Companies in the water-related resource sector are susceptible to changes in investment in
water purification technology globally, and a slackening in the pace of new infrastructure projects
in developing or developed countries may constrain such companies’ ability to grow in global
markets. Other reductions in demand for clean water, such as significant decreases in world
population or increased availability of potable water in arid regions, may reduce demand for
certain products and services provided by companies in the water-related resource sector.
While the water-related resource sector includes established and mature companies, portions of
the sector are newly developing and strongly influenced by technological changes. The sector can be
significantly affected by the level and volatility of technological change in industries focusing
on the quality or availability of or demand for potable and non-potable water. In particular,
technological advances can render an existing product, which may account for a substantial portion
of a company’s revenue, obsolete. Product development efforts by companies in the sector that are
focused on developing newer technologies may not result in viable commercial products, and such
companies in the sector typically bear high research and development costs, which can limit their
ability to maintain operations during periods of organizational growth or instability. Many
companies in the sector are in the early stages of operation and may have limited operating
histories and smaller market capitalizations on average than companies in other sectors. As a
result of these and other factors, the value of investments in companies in the water-related
resource sector tends to be considerably more volatile than that of companies in more established
sectors and industries.
Underlying Funds that focus on the water-related resource sector invest in companies that may
share common characteristics, are often subject to similar business risks and regulatory burdens,
and whose securities may react similarly to various events and other factors. To the extent it
focuses a significant portion of its assets in any particular industry within the water-related
resource sector, the Underlying Fund is further subject to focused investment risk and is more
susceptible to events or factors affecting companies in that particular industry. See “Focused
Investment Risk.”
The Underlying Fund may also have focused investment risk to the extent that it invests a
substantial portion of its assets in a particular country or geographic region. Prolonged drought,
floods, weather, disease and other natural disasters, as well as war and political instability, may
significantly reduce the ability of companies in the water-related resource sector to maintain or
expand their operations or their marketing efforts in affected countries or geographic regions. See
“Non-U.S. Investment Risk” and “Emerging Markets Risk.”
To the extent the Underlying Fund invests in companies that derive substantial revenues from
activities outside the water-related resource sector, those investments may be significantly
affected by developments in other industries in which such companies are active. See “Equity
Securities Risk” and “Market Risk.”
E-4
|
|
|
|
|
|
|
|
|
AllianzGI Behavioral Advantage Large Cap Fund
|
|
Ticker Symbol:
|
|
|
|
AZFIX (Inst. Class)
|
|
|
|
|
|
|
|
|
|
Principal
Investments and
Strategies
|
|
Investment Objective
|
|
Fund Focus
|
|
Approximate Primary
|
|
|
|
Seeks long-term
capital
appreciation
|
|
Large capitalization U.S.
common stocks
|
|
Capitalization Range
Large-Capitalization
(in the top 1,000
U.S. stocks based
on market
capitalization)
|
|
|
|
|
|
|
|
|
|
|
|
Fund Category
|
|
|
|
Dividend Frequency
|
|
|
|
Blend Stocks
|
|
|
|
At least annually
|
The Fund seeks to achieve its investment objective by
investing at least 80% of its net assets (plus borrowings for
investment purposes) in common stocks of large capitalization
companies based in the U.S. For purposes of this policy, the Fund
currently considers a company to be a large capitalization
U.S.-based company if it is in the top 1,000 largest U.S.-based
companies ranked by market capitalization (
i.e
., market
capitalization of between $2.8 billion and $500.7 billion as of
December 31, 2013). As of December 31, 2013, the top 1,000 largest
U.S.-based companies had a weighted average market capitalization
of $101.3 billion and a median market capitalization of $7.5
billion. As the portfolio managers’ initial investment universe
generally consists of stocks of the top 1,500 companies ranked by
market capitalization based in the U.S., a portion (though
typically less than 20%) of the Fund’s assets will be invested in
companies ranked between the 1,001st and the 1,500th largest by
market capitalization (
i.e
., between $2.8 billion and $1.3 billion
as of December 31, 2013). The Fund considers a company to be based
in the U.S. if it is publicly traded in the U.S. and it satisfies
one or more of the following additional criteria: it is
incorporated in the U.S., it is headquartered in the U.S., its
reported assets are primarily located in the U.S., or it derives
the majority of its revenue from the U.S.
The Fund seeks to achieve its investment objective by
building a diversified portfolio of large capitalization U.S.
stocks in a disciplined process that applies Fuller & Thaler’s
proprietary research on the behavioral biases of other investors.
The portfolio managers begin with a universe of the largest 1,500
U.S. stocks and ultimately select approximately 400-500 stocks
through a two-step process.
First, the Fund starts with Fuller & Thaler’s proprietary
alternative U.S. equity index which represents the U.S. large
capitalization universe but does not weight stocks by market
capitalization. Fuller & Thaler believes that market
capitalizations are a combination of size and investor errors; so
traditional market cap-weighted indexes by definition buy more of
large capitalization stocks and more of over-priced stocks. Fuller
& Thaler’s proprietary alternative U.S. equity index is based on
accounting measures of size and past investor over-reaction. The
starting index is expected to have the broad diversification of
the S&P 500 Index with respect to position count, and similar
sector and style exposures to the Index.
Second, the portfolio managers apply a behavioral overlay
that capitalizes on the biases of other investors. This is based
on Fuller & Thaler’s more than 20 years of proprietary research
applying behavioral finance insights to the stock market. Fuller
& Thaler’s research finds that stocks are good investments when
other investors under-react to good news or over-react to bad
news. The Fund buys more of stocks where the portfolio managers
believe investors are likely
under
-reacting to dull, unexpected
good
news and more of stocks where the portfolio managers believe
investors are likely
over
-reacting to
bad
news and biased against
the stock.
Before trading, the portfolio managers review the portfolio’s
characteristics relative to its benchmark, the S&P 500 Index.
The portfolio managers expect to rebalance the Fund’s
portfolio periodically, up to several times each year. The Fund
may sell individual holdings, outside of periodic rebalancing of
the portfolio, if cash is required to meet shareholder redemptions
or if
E-5
significant news is announced that causes the portfolio
managers to change materially their view of the relative
attractiveness of a holding. The portfolio managers may buy
additional shares of existing positions or may add a new position
in response to increases in the percentage cash position of the
portfolio. The Fund may also invest a portion of its assets in
real estate investment trusts (REITs).
The Fund may utilize stock index futures contracts, warrants
and other derivative instruments. Although the Fund did not invest
significantly in derivative instruments as of the most recent
fiscal year end, it may do so at any time. The Fund may also
invest in exchange traded funds (ETFs). In response to adverse
market, economic, political or other conditions, the Fund may
deviate from its principal strategies by making temporary
investments of some or all of its assets in high-quality fixed
income securities, cash and cash equivalents. The Fund may be less
likely to achieve its investment objective when it does so.
|
|
|
|
|
Principal Risks
|
|
Among the principal risks of investing in the
Fund, which could adversely affect its net asset
value, yield and total return, are (in
alphabetical order after the first three risks):
|
|
|
•
|
|
Market Risk
|
|
|
|
|
•
|
|
Issuer Risk
|
|
|
|
|
•
|
|
Equity Securities Risk
|
|
|
|
|
•
|
|
Credit and Counterparty Risk
|
|
|
|
|
•
|
|
Derivatives Risk
|
|
|
|
|
•
|
|
Focused Investment Risk
|
|
|
|
|
•
|
|
Leveraging Risk
|
|
|
|
|
•
|
|
Liquidity Risk
|
|
|
|
|
•
|
|
Management Risk
|
|
|
|
|
•
|
|
REIT and Real Estate-Related Investment Risk
|
|
|
|
|
•
|
|
Turnover Risk
|
E-6
|
|
|
|
|
|
|
|
|
AllianzGI Best Styles Global Equity Fund
|
|
Ticker Symbol:
|
|
|
|
AGERX (Class R6)
|
|
|
|
|
|
|
|
|
|
Principal
Investments and
Strategies
|
|
Investment Objective
|
|
Fund Focus
|
|
Approximate Primary
|
|
|
|
Long-term capital
appreciation
|
|
Global Equity Securities
|
|
Capitalization Range
All capitalizations
|
|
|
|
|
|
|
|
|
|
|
|
Fund Category
|
|
|
|
Dividend Frequency
|
|
|
|
Blend Stocks
|
|
|
|
Annually
|
The Fund seeks to achieve its investment objective by
creating a diversified portfolio of global equities. The Fund will
normally invest at least 80% of its net assets (plus borrowings
made for investment purposes) in equity securities and
equity-related instruments. Equity-related instruments are
securities and other instruments, including derivatives such as
equity-linked securities, whose investment results are intended to
correspond generally to the performance of one or more specified
equity securities or of a specified equity index or analagous
“basket” of equity securities. The Fund normally invests at least
40% of its assets in non-U.S. securities, including emerging
market securities. The portfolio managers intend to diversify the
Fund’s investments across geographic regions and economic sectors,
and under normal circumstances, geographic and sector weightings
will be set with reference to (though with such deviations as the
portfolio managers feel appropriate from) those included in the
MSCI All Country World Index. The Fund may invest in issuers of
any size market capitalization, including smaller capitalization
companies.
The portfolio managers begin with an investment universe of
approximately 8,000 equity securities and then assess individual
securities using a disciplined investment process that integrates
top-down investment style research (see discussion of investment
style orientations below) and proprietary fundamental bottom-up
company-specific research with a quantitative risk-management
process. The portfolio managers manage the portfolio with
reference to the MSCI All Country World Index by selecting
approximately 400 to 600 securities for the Fund. The Fund may and
intends to hold stocks that are not included in the benchmark
index. The portfolio managers combine a range of investment style
orientations, such as Value, Earnings Change, Price Momentum,
Growth, and Quality (each described below), in seeking positive
relative returns versus the benchmark index and in managing the
overall portfolio’s sensitivity to broader market movements (or
“beta”). The final portfolio is constructed through a portfolio
optimization process that seeks to maximize exposure to equity
securities with attractive investment style characteristics,
subject to region, sector, capitalization, security and other
constraints.
The portfolio managers combine the following investment style
orientations in managing the Fund’s portfolio:
•
The Value investment style orientation selects equity
securities that the portfolio managers believe have attractive
valuations based on metrics including dividend yield and
price-to-earnings, price-to-cashflow and price-to-book ratios, as
compared to other equity securities in the investable universe.
•
The Earnings Change investment style orientation is
designed to capture shorter-term, trend-following investment
opportunities and generally selects equity securities with
positive earnings revisions, announcements or surprises.
•
The Price Momentum investment orientation is also
trend-following and generally selects equity securities with
positive price momentum and relative strength within the
investable universe.
•
The Growth investment style orientation generally selects
equity securities with expected and historical earnings and
dividend growth.
•
The Quality investment style orientation generally
emphasizes equity securities with strong profitability and
historical earnings stability, and considers additional factors,
such as whether a company has improving margins, positive net
income, positive operating capital, decreasing long-term debt and
high-quality earnings, among others.
E-7
The Fund seeks to consistently outperform the MSCI All
Country World Index, regardless of changes in the economic or
market environment, by implementing a well-diversified mix of the
long-term investment style orientations described above. The
portfolio managers believe that diversifying across different
investment style orientations can be an effective way to mitigate
the cyclical nature of the individual investment style
orientations. The Fund’s resulting diversified mix of the
investment style orientations is expected to remain fairly stable
over time.
The portfolio managers regularly monitor the risk and return
profile of the portfolio and each investment style within the
portfolio and consider whether to sell a particular security when
any of the above factors materially changes, or when a more
attractive investment candidate is available.
The Fund may invest in issuers of any capitalization and may
participate in initial public offerings (IPOs). The Fund may also
utilize foreign currency exchange contracts, stock index futures
contracts, warrants and other derivative instruments. In response
to adverse market, economic, political or other conditions, the
Fund may deviate from its principal strategies by making temporary
investments of some or all of its assets in high-quality fixed
income securities, cash and cash equivalents. The Fund may be less
likely to achieve its investment objective when it does so.
|
|
|
|
|
Principal Risks
|
|
Among the principal risks of investing in the
Fund, which could adversely affect its net asset
value, yield and total return, are (in
alphabetical order after the first six risks):
|
|
|
•
|
|
Equity Securities Risk
|
|
|
|
|
•
|
|
Market Risk
|
|
|
|
|
•
|
|
Issuer Risk
|
|
|
|
|
•
|
|
Non-U.S. Investment Risk
|
|
|
|
|
•
|
|
Emerging Markets Risk
|
|
|
|
|
•
|
|
Smaller Company Risk
|
|
|
|
|
•
|
|
Credit and Counterparty
Risk
|
|
|
|
|
•
|
|
Currency Risk
|
|
|
|
|
•
|
|
Derivatives Risk
|
|
|
|
|
•
|
|
Focused Investment Risk
|
|
|
|
|
•
|
|
IPO Risk
|
|
|
|
|
•
|
|
Leveraging Risk
|
|
|
|
|
•
|
|
Liquidity Risk
|
|
|
|
|
•
|
|
Management Risk
|
|
|
|
|
•
|
|
Turnover Risk
|
E-8
|
|
|
|
|
|
|
|
|
AllianzGI China Equity Fund
|
|
Ticker Symbol:
|
|
|
|
ALQIX (Inst. Class)
|
|
|
|
|
|
|
|
|
|
Principal
Investments and
Strategies
|
|
Investment Objective
|
|
Fund Focus
|
|
Approximate Primary
|
|
|
|
Seeks long-term
capital
appreciation
|
|
Equity securities of
Chinese companies
|
|
Capitalization Range
All capitalizations
|
|
|
|
|
|
|
|
|
|
|
|
Fund Category
International Stocks
|
|
|
|
Dividend Frequency
At least annually
|
The Fund seeks to achieve its investment objective by
normally investing at least 80% of its net assets (plus borrowings
made for investment purposes) in equity securities of Chinese
companies. The portfolio managers consider “Chinese companies” as
those companies that (i) are incorporated in Mainland China, (ii)
derive at least 50% of their revenue or profits from business
activities in Mainland China, or (iii) maintain at least 50% of
their assets in Mainland China. Under normal circumstances, the
Fund will invest primarily in Chinese companies that are
incorporated in Mainland China and listed on the Hong Kong Stock
Exchange (commonly referred to as “H-shares”) or those that are
incorporated internationally and listed on the Hong Kong Stock
Exchange (commonly referred to as “Red-chips”). Under normal
circumstances, no more than 20% of the Fund’s assets will
ordinarily be invested in Chinese companies listed on the Shanghai
and Shenzhen Stock Exchanges as A-shares (which are denominated in
Renminbi, Mainland China’s currency) or B-shares (which are
denominated in the United States dollar and Hong Kong dollar). The
Fund may invest in securities of companies with any size market
capitalization, including small- and medium-capitalization
companies. The Fund may also invest its assets in securities
issued in initial public offerings (IPOs).
In selecting investments for the Fund, the portfolio manager
uses a disciplined, bottom-up security selection methodology in an
attempt to enhance returns for the portfolio. The objective is to
identify investment opportunities among large, medium and small
capitalization companies that have attractive risk-return profiles
based on fundamental analysis and, when necessary, supported by
Grassroots
sm
Research, as described
below. The portfolio manager focuses on growth securities that she
believes are trading at reasonable valuations, securities with
positive transformations (
e.g.
, re-ratings, or earning surprises)
and securities that she believes have turn-around potential. Other
characteristics that may be considered during the security
selection process include an issuer’s: growing consumer affluence
and brand-building; growing cross-straits ties between the
People’s Republic of China and Taiwan; potential as beneficiary of
Government fiscal stimuli; and rising potential as an industry
leader with international competitiveness. The portfolio manager
sells securities as she deems appropriate in accordance with sound
investment practices and the Fund’s investment objectives and as
necessary for redemption purposes.
In selecting investments, the portfolio manager may seek the
input of a global research platform, regional portfolio managers
and single country managers. In addition to traditional research
activities, the portfolio manager uses
Grassroots
sm
Research, which
prepares research reports based on field interviews with
customers, distributors and competitors of the companies in which
the Fund invests or contemplates investing, and provides a “second
look” at potential investments and checks marketplace assumptions
about market demand for particular products and services.
The Fund is “non-diversified,” which means that it may invest
a significant portion of its assets in a relatively small number
of issuers, which may increase risk. Under normal circumstances,
the portfolio manager typically selects approximately 30 to 50
securities for the Fund.
The Fund may utilize foreign currency exchange contracts,
options, stock index futures contracts and other derivative
instruments. Although the Fund did not invest significantly in
derivative instruments as of the most recent fiscal year end, it
may do so at any time. In response to adverse market, economic,
political or other conditions, the Fund may deviate from its
principal strategies by making temporary investments of some or
all of its assets in high-quality fixed income securities, cash
and cash equivalents. The Fund may not achieve its investment
objective when it does so.
E-9
|
|
|
|
|
Principal Risks
|
|
Among the principal risks of investing in the Fund,
which could adversely affect its net asset value,
yield and total return, are (in alphabetical order
after the first seven risks):
|
|
|
•
|
|
Market Risk
|
|
|
|
|
•
|
|
Issuer Risk
|
|
|
|
|
•
|
|
Equity Securities Risk
|
|
|
|
|
•
|
|
China-Related Risk
|
|
|
|
|
•
|
|
Non-U.S. Investment Risk
|
|
|
|
|
•
|
|
Focused Investment Risk
|
|
|
|
|
•
|
|
Emerging Markets Risk
|
|
|
|
|
•
|
|
Credit and Counterparty
Risk
|
|
|
|
|
•
|
|
Currency Risk
|
|
|
|
|
•
|
|
Derivatives Risk
|
|
|
|
|
•
|
|
IPO Risk
|
|
|
|
|
•
|
|
Leveraging Risk
|
|
|
|
|
•
|
|
Liquidity Risk
|
|
|
|
|
•
|
|
Management Risk
|
|
|
|
|
•
|
|
Smaller Company Risk
|
|
|
|
|
•
|
|
Turnover Risk
|
E-10
|
|
|
|
|
|
|
|
|
AllianzGI Convertible Fund
|
|
Ticker Symbol:
|
|
|
|
ANNPX (Inst. Class)
|
|
|
|
|
|
|
|
|
|
Principal
Investments and
Strategies
|
|
Investment Objective
Seeks maximum total
return, consisting of
capital appreciation
and current income
|
|
Fund Focus
Convertible securities
|
|
Approximate Primary
Capitalization
Range
All capitalizations
|
|
|
|
|
|
|
|
|
|
|
|
Fund Category
|
|
|
|
Dividend Frequency
|
|
|
|
Convertible Securities
|
|
|
|
Quarterly
|
The Fund seeks to achieve its investment objective by
normally investing at least 80% of its net assets (plus borrowings
made for investment purposes) in convertible securities, which
include, but are not limited to, corporate bonds, debentures,
notes or preferred stocks and their hybrids that can be converted
into (exchanged for) equity securities or other securities, such
as warrants or options, which provide an opportunity for equity
participation. For purposes of this policy, the Fund may also gain
exposure to convertible securities through derivatives or other
“synthetic” means. The Fund may invest in securities of any market
capitalization or credit quality, and may from time to time invest
a significant amount of its assets in securities of smaller
companies. The Fund may also invest up to 20% of its net assets in
nonconvertible debt securities rated below investment grade (rated
Ba or below by Moody’s, or BB or below by S&P or Fitch, or if
unrated, determined by the Sub-Adviser to be of comparable
quality). The Fund may also invest in securities issued by the
U.S. government and its agencies and instrumentalities.
The portfolio managers follow a disciplined, fundamental
bottom-up research process, which facilitates the early
identification of convertible securities issuers demonstrating the
ability to improve their fundamental characteristics. The
portfolio managers select issuers that exceed minimum fundamental
metrics and exhibit the highest visibility of future expected
operating performance. The fundamental research process generally
includes: a breakdown of a company and its growth by division and
region, including revenue model analysis; profit margin analysis;
analysis of experience and quality of its management; industry
dynamics and competitive analysis; distribution channel and supply
chain analysis; and macroeconomic climate analysis. The portfolio
managers may consider selling a particular security when the
portfolio managers perceive a change in company fundamentals, a
decline in relative attractiveness to other issues, and/or a
decline in industry fundamentals, or if any of the original
reasons for purchase materially changes.
The portfolio managers evaluate each security’s investment
characteristics as a fixed income instrument as well as its
potential for capital appreciation. Under normal market
conditions, the portfolio managers seek to capture approximately
60-80% of the upside performance of the underlying equities with
50% or less of the downside exposure.
The Fund may utilize foreign currency exchange contracts,
options, stock index futures contracts, warrants and other
derivative instruments. Although the Fund did not invest
significantly in derivative instruments as of the most recent
fiscal year end, it may do so at any time. In response to adverse
market, economic, political or other conditions, the Fund may
deviate from its principal strategies by making temporary
investments of some or all of its assets in high-quality fixed
income securities, cash and cash equivalents. The Fund may not
achieve its investment objective when it does so.
E-11
|
|
|
|
|
Principal Risks
|
|
Among the principal risks of investing in the Fund,
which could adversely affect its net asset value,
yield and total return, are (in alphabetical order
after the first nine risks):
|
|
|
•
|
|
Market Risk
|
|
|
|
|
•
|
|
Issuer Risk
|
|
|
|
|
•
|
|
Convertible Securities Risk
|
|
|
|
|
•
|
|
Interest Rate Risk
|
|
|
|
|
•
|
|
Credit and Counterparty
Risk
|
|
|
|
|
•
|
|
Call Risk
|
|
|
|
|
•
|
|
Equity Securities Risk
|
|
|
|
|
•
|
|
High Yield Risk
|
|
|
|
|
•
|
|
Liquidity Risk
|
|
|
|
|
•
|
|
Derivatives Risk
|
|
|
|
|
•
|
|
Focused Investment Risk
|
|
|
|
|
•
|
|
Leveraging Risk
|
|
|
|
|
•
|
|
Management Risk
|
|
|
|
|
•
|
|
Smaller Company Risk
|
|
|
|
|
•
|
|
Turnover Risk
|
E-12
|
|
|
|
|
|
|
|
|
AllianzGI Disciplined Equity Fund
|
|
Ticker Symbol:
|
|
|
|
ARDIX (Inst. Class)
|
|
|
|
|
|
|
|
|
|
Principal
Investments and
Strategies
|
|
Investment Objective
Seeks long-term
capital
appreciation
|
|
Fund Focus
Equity securities of U.S.
companies
|
|
Approximate Primary
Capitalization Range
Greater than $1.5 billion
|
|
|
|
|
|
|
|
|
|
|
|
Fund Category
|
|
|
|
Dividend Frequency
|
|
|
|
Blend Stocks
|
|
|
|
At least annually
|
The Fund seeks to achieve its investment objective by
normally investing at least 80% of its net assets (plus borrowings
made for investment purposes) in equity securities and
equity-related instruments. Equity-related instruments are
securities and other instruments, including derivatives such as
equity-linked securities, whose investment results are intended to
correspond generally to the performance of one or more specified
equity securities or of a specified equity index or analogous
“basket” of equity securities. The Fund will invest primarily in
U.S. companies with market capitalizations of at least $1.5
billion. The Fund may also invest up to 20% of its assets in
non-U.S. securities (but no more than 10% in companies located in
any one non-U.S. country or 10% in emerging market securities).
The Fund may invest in initial public offerings (IPOs).
In analyzing specific companies for possible investment, the
portfolio manager ordinarily looks for several of the following
characteristics: strong potential for capital appreciation;
substantial capacity for growth in revenue, cash flow and/or
earnings through either an expanding market or expanding market
share; a strong balance sheet; superior management; strong
commitment to research and product development; and differentiated
or superior products and services and/or a steady stream of new
products and services. Investments are not restricted to companies
with a record of dividend payments. Although the Fund is
diversified, it may hold a relatively small number of securities
at any given time. The portfolio manager sells securities as he
deems appropriate in accordance with sound investment practices
and the Fund’s investment objective and as necessary for
redemption purposes.
In addition to traditional research activities, the portfolio
manager uses GrassrootsSM Research, which prepares research
reports based on field interviews with customers, distributors and
competitors of the companies in which the Fund invests or
contemplates investing, and provides a “second look” at potential
investments and checks marketplace assumptions about market demand
for particular products and services.
The Fund may utilize foreign currency exchange contracts,
options, stock index futures contracts and other derivative
instruments. Although the Fund did not invest significantly in
derivative instruments as of the most recent fiscal year end, it
may do so at any time. In response to adverse market, economic,
political or other conditions, the Fund may deviate from its
principal strategies by making temporary investments of some or
all of its assets in high-quality fixed income securities, cash
and cash equivalents. The Fund may not achieve its investment
objective when it does so.
Liquidation
. The Board of Trustees has approved the
liquidation and dissolution of the Fund, which will occur on or
about May 16, 2014 (the “Liquidation Date”). Any shares of the
Fund outstanding on the Liquidation Date will be automatically
redeemed on the Liquidation Date. The proceeds of any such
redemption will be equal to the net asset value of such shares
after dividend distributions required to eliminate any Fund-level
taxes are made and the expenses and liabilities of the Fund have
been paid or otherwise provided for. The Distributor will waive
contingent deferred sales charges applicable to redemptions
beginning five (5) business days prior to the Liquidation Date,
including such Liquidation Date.
At any time prior to the Liquidation Date, shareholders may
redeem their shares of the Fund and receive the net asset value
thereof, pursuant to the procedures set forth under “How to Buy
and Sell Shares” in the Prospectuses. Shareholders may also
exchange their shares of the Fund for shares of the same class of
any other series of the Trust or Allianz Funds that offers that
class, as described under “How to Buy and Sell Shares – Exchanging
Shares” in the Prospectuses. Such exchanges will be taxable
transactions for shareholders who hold shares in taxable accounts.
E-13
Redemptions on the Liquidation Date will generally be treated
like any other redemption of shares and may result in a gain or
loss for U.S. federal income tax purposes. Shareholders should
consult their own tax advisors regarding their particular
situation and the possible application of state, local or non-U.S.
tax laws.
The Board of Trustees of the Trust has imposed the following
restrictions on new purchases of, and exchanges for, shares of the
Fund: Effective May 9, 2014, shares of the Fund will no longer be
available for purchase by current or new investors in the Funds,
other than through the automatic reinvestment of distributions by
current shareholders, and shareholders of other series of the
Trust and Allianz Funds will no longer be permitted to exchange
any of their shares for shares of the Fund, as described in the
Prospectuses under “How to Buy and Sell Shares – Exchanging
Shares.”
The Board of Trustees of the Trust and the Distributor, each
reserve the right at any time to modify or eliminate the terms
described above, including on a case-by-case basis.
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Principal Risks
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|
Among the principal risks of investing in the Fund, which
could adversely affect its net asset value, yield and
total return, are (in alphabetical order after the first
three risks):
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•
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Market Risk
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•
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Issuer Risk
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•
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Equity Securities Risk
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•
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Credit and Counterparty
Risk
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•
|
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Currency Risk
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•
|
|
Derivatives Risk
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•
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Emerging Markets Risk
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•
|
|
Focused Investment Risk
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•
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IPO Risk
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•
|
|
Leveraging Risk
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•
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Liquidity Risk
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•
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Management Risk
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•
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Non-U.S. Investment Risk
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•
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Smaller Company Risk
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•
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Turnover Risk
|
E-14
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AllianzGI Emerging Markets Debt Fund
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Ticker Symbol:
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[ ]
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Principal Investments and
Strategies
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Investment Objective
Seeks long-term
capital
appreciation
and current income
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Fund Focus
Diversified portfolio of debt and
debt-related instruments issued by
Sovereign, Quasi-Sovereign or
Corporate issuers of emerging
market countries
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Credit Quality
No limitation
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Fund Category
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Dividend Frequency
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Fixed Income Securities
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Quarterly
|
The
Fund seeks to achieve its
investment objective by normally
investing at least 80% of its net
assets (plus borrowings made for
investment purposes) in a
diversified portfolio of debt
instruments issued by Sovereign,
Quasi-Sovereign or Corporate
issuers of emerging market
countries. The Fund’s investments
in derivatives and other synthetic
instruments that have economic
characteristics similar to these
investments will be counted toward
satisfaction of the Fund’s 80%
investment policy. The instruments
in which the Fund may invest may be
denominated in non-U.S. currencies
and the U.S. dollar. The average
portfolio duration for this Fund
varies based on the Sub-Adviser’s
forecast for interest rates and,
under normal market conditions,
varies from (negative) 4 years to
(positive) 8 years. Duration is a
measure used to determine the
sensitivity of a security’s price
to changes in interest rates. The
longer a security’s duration, the
more sensitive it will be to
changes in interest rates. The Fund
may invest in securities of any
credit quality, and the Fund’s
average credit quality can vary as
the portfolio managers deem
appropriate.
Sovereigns are governments of
emerging market countries.
Quasi-Sovereigns are governmental
entities, agencies and other
issuers that are more than 50%
owned, directly or indirectly, by a
Sovereign, or whose obligations are
guaranteed by a Sovereign. A
Corporate issuer is any issuer
other than a Sovereign or a
Quasi-Sovereign that is located in
an emerging market country or, an
issuer deriving at least 50% of its
revenues or profits from goods
produced or sold, investments made,
or services performed in one or
more emerging market countries or
that has at least 50% of its assets
in one or more emerging market
countries. Emerging market
countries are generally located in
Asia, Africa, the Middle East,
Latin America and Eastern Europe.
Countries with emerging market
economies are those with securities
markets that are, in the opinion of
the Sub-Adviser, less sophisticated
than more developed markets in
terms of participation by
investors, analyst coverage,
liquidity and regulation.
The
Fund seeks to achieve its
investment objective by normally
investing primarily in
interest-bearing securities issued
by Sovereign, Quasi-Sovereign or
Corporate issuers of emerging
market countries. The portfolio
managers believe they can maximize
emerging market returns from
inefficient and often mispriced
investments in Sovereigns,
Corporates, local rates, and
foreign exchange rates. The
portfolio managers use a multi-step
process in selecting securities to
buy and sell that combines top-down
and bottom-up analysis. The
portfolio managers seek
opportunities in selected emerging
markets that they believe may
benefit from significant positive
changes, such as political and
economic trends and reforms,
Central Bank productivity, policy
consistency, legislative
initiatives, foreign currency
reserves, interest-rate cycles,
industrial production, commodities
and manufacturing dependence,
public-sector borrowing, expected
bond issues, foreign exchange
vulnerability and foreign
ownership. As part of its
investment process, the portfolio
managers employ a risk management
strategy. The risk management
strategy considers markets,
Sovereigns, duration, credit risk
and liquidity risk. The portfolios
managers seek to build a final
portfolio of securities that
considers relative value.
The
Fund may invest in debt instruments
of all types and denominated in any
currency (including, without
limitation, U.S. Dollars, Euros,
Swiss Francs, Japanese Yen, British
Pound Sterling and other major
currencies, as well as local
currencies of emerging market
countries) whether subordinated or
unsubordinated, secured or
unsecured, quoted or unquoted,
rated or unrated, or floating or
fixed rate. These may include,
without limitation, bonds,
debentures, notes, convertible
securities, commercial paper,
loans, participations, certificates
of deposit, asset-backed securities
and mortgage-backed securities. The
Fund may also invest a portion of
E-15
its assets in money market
instruments, including money market
funds denominated in U.S. dollars
or other currencies, as well as
other investment companies, if the
investment companies invest
principally in the types of
investments in which the Fund may
invest directly. Equities and
comparable rights may be acquired
in the exercise of subscription,
conversion and option rights on
convertible bonds and bonds with
warrants, but they must be sold
within six months. Shorting of
individual bonds may also be part
of the investment strategy.
Up
to 10% of the Fund’s total assets
may be invested in securities
issued by or guaranteed by any
single country with a credit rating
below investment grade. A “single
country” shall include a country,
its government, a public or local
authority or nationalized industry
of that country. Up to 10% of the
Fund’s total assets may also be
invested in preferred shares issued
by Corporate issuers of an emerging
market country. Additionally, up to
15% of the Fund’s total assets may
be invested in interest-bearing
securities which, at the time of
acquisition, are rated CCC+ by
Standard & Poor’s Ratings Service
(“S&P”). These assets must be sold
within six months if their rating
is downgraded below CCC+.
The
Fund may utilize various derivative
instruments and related strategies,
including to gain exposure to one
or more of the issuers referred to
above or other assets. The Fund may
utilize derivatives of all types
and may invest in, without
limitation, call and put options,
forward contracts and swap
agreements, credit-linked notes and
other related instruments with
respect to individual currencies,
bonds, and securities of any kind,
indices and baskets of securities,
interest rates and currencies as
part of its principal investment
strategies. The Fund may use
derivatives for hedging or
efficient portfolio management
purposes, but also may use them to
increase the Fund’s investment
exposure beyond that which it could
achieve by investing directly in
more conventional securities. The
Fund may invest in currency-related
transactions, such as forward
transactions (including deliverable
and non-deliverable forwards),
currency futures transactions and
currency options transactions, and
may also invest directly in foreign
currencies, in each case for
hedging or other investment
purposes.
In
response to adverse market,
economic, political or other
conditions, the Fund may deviate
from its principal strategies by
making temporary investments of
some or all of its assets in cash
or cash equivalents. The Fund may
be less likely to achieve its
investment objective when it does
so.
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|
Principal Risks
|
|
Among the principal
risks of investing in the Fund,
which could adversely affect its
net asset value, yield and total
return, are (in alphabetical order
after the first three risks):
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•
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Credit and Counterparty Risk
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•
|
|
Currency Risk
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•
|
|
Derivatives Risk
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•
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|
Emerging Markets Risk
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•
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|
Fixed Income Risk
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•
|
|
Focused Investment Risk
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•
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|
High Yield Risk
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•
|
|
Interest rate Risk
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•
|
|
Issuer Risk
|
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•
|
|
Leveraging Risk
|
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•
|
|
Liquidity Risk
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•
|
|
Management Risk
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•
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Market Risk
|
E-16
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•
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|
Mortgage-Related and Other Asset-Backed Risk
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•
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|
Non-U.S. Investment Risk
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•
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|
Short Selling Risk
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•
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|
Turnover Risk
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•
|
|
Variable Distribution Risk
|
E-17
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|
AllianzGI Global Managed Volatility
Fund
|
|
AVYIX (Inst. Class)
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Principal Investments and
Strategies
|
|
Investment Objective
Seeks long-term
capital
appreciation
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|
Fund Focus
Global All Cap Equity
Securities
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|
Approximate Primary
Capitalization Range
All Capitalizations
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Fund Category
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|
Dividend Frequency
|
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|
Blend Stocks
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|
|
At least annually
|
The Fund seeks to achieve its investment objective by
creating a portfolio of global equities that manages overall
portfolio volatility. The Fund normally invests primarily in
equity securities of companies located both in the U.S. and
outside of the U.S., and will not invest the greater of: (i) 50%
of its net assets, or (ii) a portion of its net assets equal to 5%
more than the applicable country’s weight in the MSCI World Index,
in companies within any single country (including the U.S.). As of
February 28, 2014, the capitalization weighting of the U.S. in the
MSCI World Index was approximately 54.6%. The Fund may invest in
issuers of any size market capitalization, including smaller
capitalization companies. The Fund may also invest in initial
public offerings (IPOs). The Fund will normally focus its
investments in developed countries, but reserves the flexibility
to invest in emerging market securities as well.
The portfolio managers use a dynamic quantitative process
combined with a fundamentals-based, actively managed security
selection process to make individual security and sector selection
decisions. Under the Sub-Adviser’s managed volatility strategy,
the portfolio managers seek to emphasize stocks that exhibit a
lower sensitivity to broader market movements (or “beta”), as they
believe that stocks with higher betas are not rewarded with
commensurately higher returns by the market. The portfolio
construction process is iterative in nature. Initially, the
portfolio managers build a fully invested and diversified
portfolio subject to country, sector, capitalization and security
constraints with a goal of minimizing total volatility as measured
by the standard deviation of returns (a measure of risk) with a
preference for investments with risk profiles that are generally
lower than in the market. The team then overlays a proprietary
stock selection model and seeks to build a final portfolio of
stocks that considers the trade off between volatility and sources
of relative outperformance (or “alpha”). The portfolio managers
consider whether to sell a particular security when any of the
above factors materially changes, or when a more attractive
investment candidate is available.
The Fund may have a high portfolio turnover rate, which may
be in excess of 100%.
In addition to equity securities (such as preferred stocks,
convertible securities and warrants) and equity-related
instruments, the Fund may invest in securities issued in initial
public offerings (IPOs) and real estate investments trusts
(REITs), and utilize foreign currency exchange contracts, options,
stock index futures contracts, warrants and other derivative
instruments. Although the Fund did not invest significantly in
derivative instruments as of the most recent fiscal year end, it
may do so at any time. In response to adverse market, economic,
political or other conditions, the Fund may deviate from its
principal strategies by making temporary investments of some or
all of its assets in high-quality fixed income securities, cash
and cash equivalents. The Fund may not achieve its investment
objective when it does so.
|
|
|
|
|
Principal Risks
|
|
Among the principal risks of investing in the Fund, which
could adversely affect its net asset value, yield and
total return, are (in alphabetical order after the first
three risks):
|
|
|
•
|
|
Market Risk
|
|
|
|
|
•
|
|
Issuer Risk
|
|
|
|
|
•
|
|
Equity Securities Risk
|
|
|
|
|
•
|
|
Credit and Counterparty
Risk
|
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|
|
|
•
|
|
Currency Risk
|
E-18
|
|
•
|
|
Derivatives Risk
|
|
|
|
|
•
|
|
Emerging Markets Risk
|
|
|
|
|
•
|
|
Focused Investment Risk
|
|
|
|
|
•
|
|
IPO Risk
|
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|
|
•
|
|
Leveraging Risk
|
|
|
|
|
•
|
|
Liquidity Risk
|
|
|
|
|
•
|
|
Management Risk
|
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•
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|
Non-U.S. Investment Risk
|
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|
•
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|
REIT and Real
Estate-Related Investment Risk
|
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|
•
|
|
Smaller Company Risk
|
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•
|
|
Turnover Risk
|
E-19
|
|
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|
AllianzGI Global Water Fund
|
|
Ticker Symbol:
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|
AWTIX (Inst. Class)
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|
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|
Principal
Investments and
Strategies
|
|
Investment Objective
Seeks long-term
capital appreciation
|
|
Fund Focus
Equity securities of
water-related companies
worldwide
|
|
Approximate Primary
Capitalization
Range
All capitalizations
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|
Fund Category
|
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|
Dividend Frequency
|
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|
Sector-Related Stocks
|
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|
|
At least annually
|
The Fund seeks to achieve its investment objective by
investing, under normal circumstances, at least 80% of its net
assets (plus borrowings made for investment purposes) in common
stocks and other equity securities of companies that are
represented in one or more of the S&P Global Water Index, the
Palisades Water or Global Water Indices or the S-Network Global
Water Index (Composite), or that are substantially engaged in
water-related activities. For purposes of the 80% test, the
portfolio manager considers a company to be “substantially
engaged” in water-related activities if it derives at least 50% of
its revenues or profits from, or devotes at least 50% of its
assets to, such activities. The portfolio manager considers
“water-related activities” as those commercial activities that
relate to the quality or availability of or demand for potable and
non-potable water and include but are not necessarily limited to
the following: water production, storage, transport and
distribution; water supply-enhancing or water demand-reducing
technologies and materials; water planning, control and research;
water conditioning, such as filtering, desalination, disinfection
and purification; sewage and liquid waste treatment; and water
delivery-related equipment and technology, consulting or
engineering services relating to any of the above-mentioned
activities. See “Summary of Principal Risks—Water-Related Risk” in
the applicable Prospectus. The Fund’s portfolio manager is not
constrained by capitalization limitations. The Fund invests, under
normal circumstances, at least 40% of its total assets in non-U.S.
securities, and allocates its investments among securities of
issuers located in at least eight different countries (which may
include the United States). The Fund may invest in emerging market
securities. The Fund may also purchase securities in initial
public offerings (IPOs).
In making investment decisions for the Fund, the portfolio
manager selects investments on a bottom-up basis irrespective of
market capitalization, geography, industry/sector or growth- or
value-orientation. In selecting investments for the Fund, the
portfolio manager ordinarily looks for several of the following
characteristics: higher than average growth and strong potential
for capital appreciation; substantial capacity for growth in
revenue through either an expanding market or expanding market
share; a strong balance sheet; superior management; strong
commitment to research and product development; and differentiated
or superior products and services and/or a steady stream of new
products and services. Investments are not restricted to companies
with a record of dividend payments. In analyzing specific
companies for possible investment, the portfolio manager may also
consider the anticipated economic growth rate, political outlook,
inflation rate, currency outlook and interest rate environment for
the country and the region in which the company is located. The
portfolio manager sells securities as he deems appropriate in
accordance with sound investment practices and the Fund’s
investment objective and as necessary for redemption purposes.
In selecting investments, the portfolio manager may seek the
input of a global research platform, regional portfolio managers
and single country managers. In addition to traditional research
activities, the portfolio manager uses
Grassroots
sm
Research, which
prepares research reports based on field interviews with
customers, distributors and competitors of the companies in which
the Fund invests or contemplates investing, and provides a “second
look” at potential investments and checks marketplace assumptions
about market demand for particular products and services.
The Fund is “non-diversified,” which means that it may invest
a significant portion of its assets in a relatively small number
of issuers, which may increase risk. Under normal
circumstances, the portfolio manager typically selects
approximately 25 to 50 securities for the Fund.
E-20
The Fund may utilize foreign currency exchange contracts,
options, stock index futures contracts and other derivative
instruments. Although the Fund did not invest significantly in
derivative instruments as of the most recent fiscal year end, it
may do so at any time. In response to adverse market, economic,
political or other conditions, the Fund may deviate from its
principal strategies by making temporary investments of some or
all of its assets in high-quality fixed income securities, cash
and cash equivalents. The Fund may not achieve its investment
objective when it does so.
|
|
|
|
|
Principal Risks
|
|
Among the principal risks of investing in the Fund, which
could adversely affect its net asset value, yield and
total return, are (in alphabetical order after the first
six risks):
|
|
|
•
|
|
Market Risk
|
|
|
|
|
•
|
|
Issuer Risk
|
|
|
|
|
•
|
|
Equity Securities Risk
|
|
|
|
|
•
|
|
Water-Related Risk
|
|
|
|
|
•
|
|
Focused Investment Risk
|
|
|
|
|
•
|
|
Non-U.S. Investment Risk
|
|
|
|
|
•
|
|
Credit and Counterparty
Risk
|
|
|
|
|
•
|
|
Currency Risk
|
|
|
|
|
•
|
|
Derivatives Risk
|
|
|
|
|
•
|
|
Emerging Markets Risk
|
|
|
|
|
•
|
|
IPO Risk
|
|
|
|
|
•
|
|
Leveraging Risk
|
|
|
|
|
•
|
|
Liquidity Risk
|
|
|
|
|
•
|
|
Management Risk
|
|
|
|
|
•
|
|
Smaller Company Risk
|
|
|
|
|
•
|
|
Turnover Risk
|
E-21
|
|
|
|
|
|
|
|
|
AllianzGI High Yield Bond Fund
|
|
Ticker Symbol:
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|
|
AYBIX (Inst. Class)
|
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|
|
|
|
|
|
|
|
Principal
Investments and
Strategies
|
|
Investment Objective
Seeks a high level of
current income and
capital growth
|
|
Fund Focus
Higher yielding fixed
income securities
|
|
Credit Quality
Minimum 80% of
assets below rated
Ba/BB or below
|
|
|
|
|
|
|
|
|
|
|
|
Fund Category
|
|
|
|
Dividend Frequency
|
|
|
|
Fixed Income Securities
|
|
|
|
Monthly
|
The Fund seeks to achieve its investment objective by
normally investing at least 80% of its net assets (plus borrowings
made for investment purposes) in high yield securities (“junk
bonds”), which are fixed income securities rated below investment
grade (rated Ba or below by Moody’s, or BB or below by S&P or
Fitch, or if unrated, determined by the Sub-Adviser to be of
comparable quality). The Fund’s fixed income securities may be
fixed-, variable- or floating-rate. The Fund invests across the
entire range of maturities of high yield securities.
The portfolio managers follow a disciplined, fundamental
bottom-up research process, which facilitates the early
identification of high yield issuers demonstrating their ability
to improve their fundamental characteristics. The portfolio
managers select issuers that exceed minimum credit statistics and
exhibit the highest visibility of future expected operating
performance. The portfolio managers look for the following in high
yield investment candidates: ability to exceed market expectations
of operating earnings; the potential for bond rating upgrades;
debt reduction capabilities; the ability to secure other sources
of capital; and the potential to be recognized as an acquisition
candidate. The fundamental research process generally includes:
breakdown of a company and its growth by division and region,
including revenue model analysis; profit margin analysis;
experience and quality of its management; industry dynamics and
competitive analysis; distribution channel and supply chain
analysis; and macroeconomic climate. The portfolio managers may
consider selling a particular security when the portfolio managers
perceive a change in credit fundamentals, a decline in relative
attractiveness to other issues, and/or a decline in industry
fundamentals, or if any of the original reasons for purchase
materially changes.
The Fund may invest in the securities of issuers of any
market capitalization, including smaller capitalization companies.
The Fund may utilize foreign currency exchange contracts, options,
stock index futures contracts, warrants and other derivative
instruments. Although the Fund did not invest significantly in
derivative instruments as of the most recent fiscal year end, it
may do so at any time. In response to adverse market, economic,
political or other conditions, the Fund may deviate from its
principal strategies by making temporary investments of some or
all of its assets in high-quality fixed income securities, cash
and cash equivalents. The Fund may not achieve its investment
objective when it does so.
E-22
|
|
|
|
|
Principal Risks
|
|
Among the principal risks of investing in the Fund,
which could adversely affect its net asset value,
yield and total return, are (in alphabetical order
after the first six risks):
|
|
|
•
|
|
Market Risk
|
|
|
|
|
•
|
|
Issuer Risk
|
|
|
|
|
•
|
|
Interest Rate Risk
|
|
|
|
|
•
|
|
High Yield Risk
|
|
|
|
|
•
|
|
Credit and Counterparty
Risk
|
|
|
|
|
•
|
|
Liquidity Risk
|
|
|
|
|
•
|
|
Derivatives Risk
|
|
|
|
|
•
|
|
Focused Investment Risk
|
|
|
|
|
•
|
|
Leveraging Risk
|
|
|
|
|
•
|
|
Management Risk
|
|
|
|
|
•
|
|
Smaller Company Risk
|
|
|
|
|
•
|
|
Turnover Risk
|
E-23
|
|
|
|
|
|
|
|
|
AllianzGI International Small-Cap Fund
|
|
Ticker Symbol:
|
|
|
|
ALOIX (Inst. Class)
|
|
|
|
|
|
|
|
|
|
Principal
Investments and
Strategies
|
|
Investment Objective
Seeks maximum
long-term capital
appreciation
|
|
Fund Focus
Equity securities of smaller
non-U.S. companies
|
|
Approximate Primary
Capitalization Range
Less than $5 billion
|
|
|
|
|
|
|
|
|
|
|
|
Fund Category
|
|
|
|
Dividend Frequency
|
|
|
|
International
Growth Stocks
|
|
|
|
At least annually
|
The Fund seeks to achieve its objective by normally investing
at least 80% of its net assets (plus borrowings made for
investment purposes) in companies with smaller market
capitalizations. The Fund currently considers smaller market
capitalization companies to be companies with market
capitalizations of below $5 billion. The Fund normally allocates
its investments among securities of issuers located in at least
eight different countries (one of which may be the United States).
The Fund may invest up to 30% of its assets in emerging market
securities (but no more than 10% in any one emerging market
country). The Fund may invest in initial public offerings (IPOs).
Regional portfolio managers in Europe and Asia collaborate to
produce a portfolio that is believed likely to have the best
investment opportunities from each of those regions. The
allocation of Fund assets among these regions is set from time to
time and periodically adjusted through a collaborative effort
among the most senior portfolio manager in the regions. Regional
weights in the Fund’s portfolio are expected to be comparable to
those in the MSCI World ex-USA Small Cap Index. The lead portfolio
manager oversees weighting determinations and has discretion to
deviate from the regional weights of the MSCI World ex-USA Small
Cap Index. In making investment decisions for the Fund, the
portfolio managers develop forecasts of economic growth, inflation
and interest rates that are used to help identify regions and
countries that are likely to offer the best investment
opportunities. The portfolio managers may consider the anticipated
economic growth rate, political outlook, inflation rate, currency
outlook and interest rate environment for the country and the
region in which a company is located. In addition, the portfolio
managers ordinarily look for the following characteristics: higher
than average growth and strong potential for capital appreciation;
substantial capacity for growth in revenue through either an
expanding market or market share; a strong balance sheet; superior
management; strong commitment to research and product development;
and differentiated or superior products and services or a steady
stream of new products and services. Investments are not
restricted to companies with a record of dividend payments. The
portfolio managers sell securities as they deem appropriate in
accordance with sound investment practices and the fund’s
investment objectives and as necessary for redemption purposes.
In addition to traditional research activities, the portfolio
managers use Grassroots
sm
Research,
which prepares research reports based on field interviews with
customers, distributors and competitors of the companies in which
the Fund invests or contemplates investing, and provides a “second
look” at potential investments and checks marketplace assumptions
about market demand for particular products and services.
The Fund may utilize foreign currency exchange contracts,
options, stock index futures contracts, warrants and other
derivative instruments. Although the Fund did not invest
significantly in derivative instruments as of the most recent
fiscal year end, it may do so at any time. In response to adverse
market, economic, political or other conditions, the Fund may
deviate from its principal strategies by making temporary
investments of some or all of its assets in high-quality fixed
income securities, cash and cash equivalents. The Fund may not
achieve its investment objective when it does so.
E-24
|
|
|
|
|
Principal Risks
|
|
Among the principal risks of investing in the Fund,
which could adversely affect its net asset value,
yield and total return, are (in alphabetical order
after the first six risks):
|
|
|
•
|
|
Market Risk
|
|
|
|
|
•
|
|
Issuer Risk
|
|
|
|
|
•
|
|
Equity Securities Risk
|
|
|
|
|
•
|
|
Non-U.S. Investment Risk
|
|
|
|
|
•
|
|
Emerging Markets Risk
|
|
|
|
|
•
|
|
Smaller Company Risk
|
|
|
|
|
•
|
|
Credit and Counterparty
Risk
|
|
|
|
|
•
|
|
Currency Risk
|
|
|
|
|
•
|
|
Derivatives Risk
|
|
|
|
|
•
|
|
Focused Investment Risk
|
|
|
|
|
•
|
|
IPO Risk
|
|
|
|
|
•
|
|
Leveraging Risk
|
|
|
|
|
•
|
|
Liquidity Risk
|
|
|
|
|
•
|
|
Management Risk
|
|
|
|
|
•
|
|
Turnover Risk
|
E-25
|
|
|
|
|
|
|
|
|
AllianzGI Micro Cap Fund
|
|
Ticker Symbol:
|
|
|
|
AMCIX (Inst. Class)
|
|
|
|
|
|
|
|
|
|
Principal
Investments and
Strategies
|
|
Investment Objective
Seeks maximum
long-term capital
appreciation
|
|
Fund Focus
Micro-capitalization
common stocks
|
|
Approximate Primary
Capitalization Range
Similar to Russell
Microcap Growth
Index
|
|
|
|
|
|
|
|
|
|
|
|
Fund Category
|
|
|
|
Dividend Frequency
|
|
|
|
Growth Stocks
|
|
|
|
At least annually
|
The Fund seeks to achieve its investment objective by
normally investing at least 80% of its net assets (plus borrowings
made for investment purposes) in equity securities of micro-cap
companies. The Fund currently defines micro-cap companies as those
with market capitalizations comparable to companies included in
the Russell Microcap Growth Index (between $9 million and $7.87
billion as of February 28, 2014). The Fund may invest in initial
public offerings (IPOs).
The portfolio managers follow a disciplined, fundamental
bottom-up research process focusing on companies undergoing
positive fundamental change, with sustainable growth
characteristics. The portfolio managers look for what they believe
to be the best risk-reward candidates within the investment
universe, defined as equities that are expected to appreciate
based on accelerating fundamental performance and related multiple
expansion. Company specific research includes industry and
competitive analysis, revenue model analysis, profit analysis and
balance sheet assessment. Once the portfolio managers believe that
positive fundamental change is occurring and will likely lead to
accelerating fundamental performance, they seek evidence that
performance will not be short-lived but rather a longer-term
sustainable trend. Lastly, the portfolio managers determine if the
investment is timely with regard to relative valuation and price
strength, exploiting stocks that are under-priced relative to
their potential. The portfolio managers may consider selling a
particular security if any of the original reasons for purchase
materially changes or a more attractive total return candidate is
identified. The Fund may have a high portfolio turnover rate,
which may be up to 200% or more.
The Fund may utilize foreign currency exchange contracts,
options, stock index futures contracts, warrants and other
derivative instruments. Although the Fund did not invest
significantly in derivative instruments as of the most recent
fiscal year end, it may do so at any time. In response to adverse
market, economic, political or other conditions, the Fund may
deviate from its principal strategies by making temporary
investments of some or all of its assets in high-quality fixed
income securities, cash and cash equivalents. The Fund may not
achieve its investment objective when it does so.
E-26
|
|
|
|
|
Principal Risks
|
|
Among the principal risks of investing in the Fund,
which could adversely affect its net asset value,
yield and total return, are (in alphabetical order
after the first four risks):
|
|
|
•
|
|
Market Risk
|
|
|
|
|
•
|
|
Issuer Risk
|
|
|
|
|
•
|
|
Equity Securities Risk
|
|
|
|
|
•
|
|
Smaller Company Risk
|
|
|
|
|
•
|
|
Credit and Counterparty
Risk
|
|
|
|
|
•
|
|
Derivatives Risk
|
|
|
|
|
•
|
|
Focused Investment Risk
|
|
|
|
|
•
|
|
IPO Risk
|
|
|
|
|
•
|
|
Leveraging Risk
|
|
|
|
|
•
|
|
Liquidity Risk
|
|
|
|
|
•
|
|
Management Risk
|
|
|
|
|
•
|
|
Turnover Risk
|
E-27
|
|
|
|
|
|
|
|
|
AllianzGI NFJ Emerging Markets Value Fund
|
|
Ticker Symbol:
|
|
|
|
AZMIX (Inst. Class)
|
|
|
|
|
|
|
|
|
|
Principal
Investments and
Strategies
|
|
Investment Objective
Seeks long-term
capital
appreciation
|
|
Fund Focus
Equity securities of
companies domiciled in
emerging market countries
|
|
Approximate Primary
Capitalization Range
Greater than $500 million
|
|
|
|
|
|
|
|
|
|
|
|
Fund Category
|
|
|
|
Dividend Frequency
|
|
|
|
International Stocks
|
|
|
|
Quarterly
|
The Fund seeks to achieve its investment objective by
normally investing at least 80% of its net assets (plus borrowings
made for investment purposes) in equity securities of companies
that are domiciled in or tied economically to countries with
emerging securities markets—that is, countries with securities
markets which are, in the opinion of the portfolio managers, less
sophisticated than more developed markets in terms of
participation by investors, analyst coverage, liquidity and
regulation. Most countries with emerging securities markets are
located in Asia, Africa, the Middle East, Latin America and
Eastern Europe. The Fund may achieve its exposure to non-U.S.
equity securities in several ways, including through investing in
American Depositary Receipts (ADRs) and other depositary receipts,
in addition to direct investments in the securities of non-U.S.
issuers. The Fund may also utilize foreign currency exchange
contracts, options, stock index futures contracts and other
derivative instruments, as well as access products such as
participatory notes. Although the Fund does not expect to invest
significantly in foreign currency exchange contracts, options,
stock index futures contracts and other derivative instruments, it
may do so at any time.
In selecting investments for the Fund, the portfolio managers
use a value investing style focusing on equity securities of
companies whose securities the portfolio managers believe have low
valuations, including smaller capitalization securities and real
estate investment trusts (REITs). The portfolio managers partition
the Fund’s initial selection universe of non-U.S. and U.S.
companies for dividend-paying value opportunities across the
emerging markets to determine potential holdings for the Fund
representing broad diversification by sector, industry, country
and issue. The portfolio managers use quantitative factors to
screen the Fund’s selection universe, analyzing factors such as
price-to-earnings ratios (
i.e.
, share price relative to a
company’s earnings), dividend yield, price-to-book ratios (
i.e.
,
share price relative to a company’s balance sheet value),
price-to-cash-flow ratios (
i.e.
, share price relative to a
company’s cash flow). After still further narrowing the universe
through a combination of qualitative analysis and fundamental
research, the portfolio managers select approximately 125 to 175
securities for the Fund. The portfolio managers may consider
selling a security when any of the factors leading to its purchase
materially changes or when a more attractive candidate is
identified, including when an alternative security demonstrates a
lower price-to-earnings ratio, a higher dividend yield or other,
favorable qualitative metrics.
In response to adverse market, economic, political or other
conditions, the Fund may deviate from its principal strategies by
making temporary investments of some or all of its assets in
high-quality fixed income securities, cash and cash equivalents.
The Fund may be less likely to achieve its investment objective
when it does so.
E-28
|
|
|
|
|
Principal Risks
|
|
Among the principal risks of investing in the Fund,
which could adversely affect its net asset value,
yield and total return, are (in alphabetical order
after the first six risks):
|
|
|
•
|
|
Market Risk
|
|
|
|
|
•
|
|
Issuer Risk
|
|
|
|
|
•
|
|
Equity Securities Risk
|
|
|
|
|
•
|
|
Non-U.S. Investment Risk
|
|
|
|
|
•
|
|
Emerging Markets Risk
|
|
|
|
|
•
|
|
Smaller Company Risk
|
|
|
|
|
•
|
|
Credit and Counterparty
Risk
|
|
|
|
|
•
|
|
Currency Risk
|
|
|
|
|
•
|
|
Derivatives Risk
|
|
|
|
|
•
|
|
Liquidity Risk
|
|
|
|
|
•
|
|
Management Risk
|
|
|
|
|
•
|
|
REIT and Real
Estate-Related Investment Risk
|
|
|
|
|
•
|
|
Turnover Risk
|
E-29
|
|
|
|
|
|
|
|
|
AllianzGI NFJ Global Dividend Value Fund
|
|
Ticker Symbol:
|
|
|
|
ANUIX (Inst. Class)
|
|
|
|
|
|
|
|
|
|
Principal
Investments and
Strategies
|
|
Investment Objective
Seeks long-term
growth of capital
and income
|
|
Fund Focus
Income-producing common
stocks of U.S. and non-U.S.
companies with potential for
capital appreciation
|
|
Approximate Primary
Capitalization Range
In excess of $1 billion
|
|
|
|
|
|
|
|
|
|
|
|
Fund Category
|
|
|
|
Dividend Frequency
|
|
|
|
Global Stocks
|
|
|
|
Quarterly
|
The Fund seeks to achieve its investment objective by
normally investing primarily in common stocks of U.S. and non-U.S.
companies with market capitalizations in excess of $1 billion.
Under normal circumstances, the Fund will invest at least 80% of
its net assets (plus borrowings made for investment purposes) in
common stocks and other equity securities of companies that pay or
are expected to pay dividends. The Fund will, under normal
circumstances, invest at least 40% of its total assets in non-U.S.
securities and at least 25% of its total assets in U.S.
securities, and will allocate its investments among securities of
issuers located in at least three different countries (which may
include the United States). The Fund will normally invest no more
than 30% of its total assets in emerging market securities. The
Fund may achieve its exposure to non-U.S. equity securities in
several ways, including through investing in American Depositary
Receipts (ADRs) and other depositary receipts, in addition to
direct investments in the securities of non-U.S. issuers. The Fund
may also invest a portion of its assets in real estate investment
trusts (REITs).
In selecting investments for the Fund, the portfolio managers
use a value investing style focusing on equity securities of
companies whose securities the portfolio managers believe have low
valuations. The portfolio managers use quantitative factors to
screen the Fund’s initial selection universe of U.S. and non-U.S.
companies. The portfolio managers classify the Fund’s selection
universe by industry (without regard to geographic concentration)
in order to determine potential holdings for the Fund representing
a broad range of industry groups. Within each industry group, the
portfolio managers further narrow the universe by analyzing
factors such as price-to-earnings ratios (
i.e.
, share price
relative to a company’s earnings), dividend yield, price-to-book
ratios (
i.e.
, share price relative to a company’s balance sheet
value), price-to-cash-flow ratios (
i.e.
, share price relative to a
company’s cash flow) and price momentum (
i.e.
, changes in stock
price relative to changes in overall market prices). After still
further narrowing the universe through a combination of
qualitative analysis and fundamental research, the portfolio
managers select approximately 40 to 60 securities for the Fund.
The portfolio managers may consider selling a security when any of
the factors leading to its purchase materially changes or when a
more attractive candidate is identified, including when an
alternative security with strong fundamentals demonstrates a lower
price-to-earnings ratio, a higher dividend yield or other,
favorable qualitative metrics.
The Fund may utilize foreign currency exchange contracts,
options, stock index futures contracts and other derivative
instruments. Although the Fund did not invest significantly in
derivative instruments as of the most recent fiscal year end, it
may do so at any time. In response to adverse market, economic,
political or other conditions, the Fund may deviate from its
principal strategies by making temporary investments of some or
all of its assets in high-quality fixed income securities, cash
and cash equivalents. The Fund may not achieve its investment
objective when it does so.
E-30
|
|
|
|
|
Principal Risks
|
|
Among the principal risks of investing in the Fund,
which could adversely affect its net asset value,
yield and total return, are (in alphabetical order
after the first six risks):
|
|
|
•
|
|
Market Risk
|
|
|
|
|
•
|
|
Issuer Risk
|
|
|
|
|
•
|
|
Equity Securities Risk
|
|
|
|
|
•
|
|
Non-U.S. Investment Risk
|
|
|
|
|
•
|
|
Emerging Markets Risk
|
|
|
|
|
•
|
|
Smaller Company Risk
|
|
|
|
|
•
|
|
Credit and Counterparty
Risk
|
|
|
|
|
•
|
|
Currency Risk
|
|
|
|
|
•
|
|
Focused Investment Risk
|
|
|
|
|
•
|
|
Leveraging Risk
|
|
|
|
|
•
|
|
Liquidity Risk
|
|
|
|
|
•
|
|
Management Risk
|
|
|
|
|
•
|
|
REIT and Real
Estate-Related Investment Risk
|
|
|
|
|
•
|
|
Turnover Risk
|
E-31
|
|
|
|
|
|
|
|
|
AllianzGI NFJ International Small-Cap Value Fund
|
|
Ticker Symbol:
|
|
|
|
AJVIX (Inst. Class)
|
|
|
|
|
|
|
|
|
|
Principal
Investments and
Strategies
|
|
Investment Objective
Seeks long-term
capital
appreciation
|
|
Fund Focus
Undervalued equity securities
of non-U.S. companies with
small capitalizations
|
|
Approximate Primary
Capitalization Range
Between $500
million and $5
billion
|
|
|
|
|
|
|
|
|
|
|
|
Fund Category
|
|
|
|
Dividend Frequency
|
|
|
|
Value Stocks
|
|
|
|
Annually
|
The Fund seeks to achieve its objective by normally investing
at least 80% of its net assets (plus borrowings made for
investment purposes) in common stocks and other equity securities
(such as preferred stocks, convertible securities and warrants)
with smaller market capitalizations. The Fund currently considers
smaller market capitalization companies to be companies with
market capitalization of between $500 million and $5 billion.
Under normal circumstances, the Fund expects to invest at least
65% of its net assets in non-U.S. equity securities. The Fund may
invest up to 20% of its assets in emerging market securities. The
Fund may also achieve its exposure to non-U.S. equity securities
through investing in American Depositary Receipts (ADRs).
The portfolio managers seek stocks that are attractively
priced, based on their industry relative P/E multiples and
dividend yields. The portfolio managers use a value investing
style focusing on companies whose securities the portfolio
managers believe are undervalued. The portfolio managers partition
the Fund’s selection universe by industry and then identify what
they believe to be undervalued securities in each industry to
determine potential holdings for the Fund representing a broad
range of industry groups. The portfolio managers use quantitative
factors to screen the Fund’s initial selection universe, analyzing
factors such as price momentum (
i.e.
, changes in security price
relative to changes in overall market prices), earnings estimate
revisions (
i.e.
, changes in analysts’ earnings-per-share
estimates) and fundamental changes. After narrowing the universe
through a combination of qualitative analysis and fundamental
research, the portfolio managers select securities for the Fund.
In addition to common stocks and other equity securities, the Fund
may invest in securities issued in initial public offerings
(IPOs), and may utilize foreign currency exchange contracts,
options, stock index futures contracts and other derivative
instruments. Although the Fund does not expect to invest
significantly in derivative instruments, it may do so at any
time. In response to adverse market, economic, political
or other conditions, the Fund may deviate from its principal
strategies by making temporary investments of some or all of its
assets in high-quality fixed income securities, cash and cash
equivalents. The Fund may be less likely to achieve its investment
objective when it does so.
|
|
|
|
|
Principal Risks
|
|
Among the principal risks of investing in the Fund,
which could adversely affect its net asset value,
yield and total return, are (in alphabetical order
after the first nine risks):
|
|
|
•
|
|
Market Risk
|
|
|
|
|
•
|
|
Issuer Risk
|
|
|
|
|
•
|
|
Equity Securities Risk
|
|
|
|
|
•
|
|
Non-U.S. Investment Risk
|
|
|
|
|
•
|
|
Credit and Counterparty
Risk
|
|
|
|
|
•
|
|
Currency Risk
|
|
|
|
|
•
|
|
Emerging Markets Risk
|
E-32
|
|
•
|
|
Smaller Company Risk
|
|
|
|
|
•
|
|
Liquidity Risk
|
|
|
|
|
•
|
|
Derivatives Risk
|
|
|
|
|
•
|
|
Focused Investment Risk
|
|
|
|
|
•
|
|
IPO Risk
|
|
|
|
|
•
|
|
Management Risk
|
|
|
|
|
•
|
|
Turnover Risk
|
E-33
|
|
|
|
|
|
|
|
|
AllianzGI NFJ International Value II Fund
|
|
Ticker Symbol:
|
|
|
|
NFJIX (Inst. Class)
|
|
|
|
|
|
|
|
|
|
Principal
Investments and
Strategies
|
|
Investment Objective
Seeks long-term
capital
appreciation
|
|
Fund Focus
Undervalued equity securities
of non-U.S. companies with
capitalizations greater than
$1 billion
|
|
Approximate Primary
Capitalization Range
Greater than $1 billion
|
|
|
|
|
|
|
|
|
|
|
|
Fund Category
|
|
|
|
Dividend Frequency
|
|
|
|
International Stocks
|
|
|
|
Quarterly
|
The Fund seeks to achieve its investment objective by
normally investing at least 80% of its net assets (plus borrowings
made for investment purposes) in non U.S. equity securities with
market capitalizations greater than $1 billion. The Fund normally
invests a significant portion of its assets in securities that the
portfolio managers expect will generate income (for example, by
paying dividends). The Fund may invest up to 20% of its assets in
emerging market securities. The Fund may also achieve its exposure
to non-U.S. equity securities through investing in American
Depositary Receipts (ADRs). The Fund normally will allocate its
investments among securities of issuers located in at least three
different countries (which may include the United States).
The portfolio managers use a value investing style focusing
on companies whose securities the portfolio managers believe are
undervalued. The portfolio managers partition the Fund’s selection
universe by industry to identify what they believe to be
undervalued securities in each industry to determine potential
holdings for the Fund representing a broad range of industry
groups. The portfolio managers use quantitative factors to screen
the Fund’s selection universe analyzing factors such as price
momentum (
i.e.
, changes in security price relative to changes in
overall market prices), earnings estimate revisions (
i.e.
, changes
in analysts’ earnings-per-share estimates) and fundamental
changes. After still further narrowing the universe through a
combination of qualitative analysis and fundamental research, the
portfolio managers select approximately 75 to 125 securities for
the Fund. The portfolio managers consider selling a security when
any of the factors leading to its purchase materially changes or
when a more attractive candidate is identified, including when an
alternative security with strong fundamentals demonstrates a lower
price-to-earnings ratio, a higher dividend yield or favorable
qualitative metrics.
In addition to common stocks and other equity securities
(such as preferred stocks, convertible securities and warrants),
the Fund may invest in securities issued in initial public
offerings (IPOs), and may utilize foreign currency exchange
contracts, options, stock index futures contracts and other
derivative instruments. Although the Fund did not invest
significantly in derivative instruments as of the most recent
fiscal year end, it may do so at any time.
In response to adverse market, economic, political or other
conditions, the Fund may deviate from its principal strategies by
making temporary investments of some or all of its assets in
high-quality fixed income securities, cash and cash equivalents.
The Fund may be less likely to achieve its investment objective
when it does so.
|
|
|
|
|
Principal Risks
|
|
Among the principal risks of investing in the Fund,
which could adversely affect its net asset value,
yield and total return, are (in alphabetical order
after the first six risks):
|
|
|
•
|
|
Market Risk
|
|
|
|
|
•
|
|
Issuer Risk
|
|
|
|
|
•
|
|
Equity Securities Risk
|
E-34
|
|
•
|
|
Non-U.S. Investment Risk
|
|
|
|
|
•
|
|
Emerging Markets Risk
|
|
|
|
|
•
|
|
Smaller Company Risk
|
|
|
|
|
•
|
|
Credit and Counterparty
Risk
|
|
|
|
|
•
|
|
Currency Risk
|
|
|
|
|
•
|
|
Focused Investment Risk
|
|
|
|
|
•
|
|
Liquidity Risk
|
|
|
|
|
•
|
|
Management Risk
|
|
|
|
|
•
|
|
Turnover Risk
|
E-35
|
|
|
|
|
|
|
|
|
AllianzGI Redwood Fund
|
|
Ticker Symbol:
|
|
|
|
ARRIX (Inst. Class)
|
|
|
|
|
|
|
|
|
|
Principal
Investments and
Strategies
|
|
Investment Objective
Seeks long-term
capital
appreciation with a
high degree of
downside protection
and reduced
volatility relative
to the broad U.S.
equity market
|
|
Fund Focus
U.S. equity and equity
related instruments and
derivatives
|
|
Approximate Primary
Capitalization Range
Mid- and large-capitalization
(generally in excess of $2
billion)
|
|
|
|
|
|
|
|
|
|
|
|
Fund Category
|
|
|
|
Dividend Frequency
|
|
|
|
Equity Long-Short
(Alternative)
|
|
|
|
At least annually
|
The Fund seeks to achieve its objective under normal
circumstances by primarily investing in in-the-money (ITM)
buy-writes on U.S. equities and writing out-of-the-money put options
on U.S. equities. Buy-writes represent the combination of a long
equity position and the sale of a call option against that equity
position. By investing in buy-writes that are significantly
in-the-money, the Fund receives cash (the premium) from the
purchaser of the option, which generally provides the Fund with a
positive return unless the market price of the equity position
underlying the option falls below the initial purchase price less
the option premium collected.
In selecting buy-write investments for the Fund, the portfolio
manager uses a combination of fundamental and quantitative methods.
In analyzing specific buy-writes for possible investment, the
portfolio manager ordinarily looks for the following
characteristics: protection down to a fundamentally derived estimate
of “intrinsic value” as described below; attractive potential return
relative to risk; and an appropriate correlation between the time to
expiration and the estimate of intrinsic value. In addition to
traditional research activities, the portfolio manager uses
Grassroots
sm
Research, which prepares
research reports based on field interviews with customers,
distributors and competitors of the companies in which the Fund
invests or contemplates investing, and provides a “second look” at
potential investments and checks marketplace assumptions about
market demand for particular products and services.
Based on fundamental research, the portfolio manager estimates
the potential downside volatility (the “intrinsic value” level) of
each equity security under consideration for the Fund’s buy-write
portfolio. The strike price of the call option(s) sold against that
stock is usually set at or below the estimated intrinsic value
level. Typically this means that the strike price may be
significantly in-the-money at the time it is written, though the
Fund will typically sell options with a variety of strike prices
relative to current market prices of the underlying stocks. The time
to expiration of the options that the Fund sells varies, depending
on the characteristics of each particular buy-write. The ITM
buy-write strategy seeks to generate gains from option premiums,
while providing downside protection relative to its equity positions
and generating overall portfolio volatility that is lower than the
equity portfolio alone. However, there is no assurance that the ITM
buy-write strategy will achieve its objectives. Because the Fund
writes options on a substantial portion of its equity portfolio at
prices that are often significantly in-the-money, the upside
potential appreciation from the stock is limited.
In addition to writing (selling) in-the-money call options on
securities held in its equity portfolio, the Fund may, to a lesser
extent, write (sell) in-the-money call options on equity indexes
and/or exchange traded funds. With respect to any long equity
position held by the Fund, the Fund may write call options on a
greater or lesser number of shares than it holds. To the extent that
call options are written on greater than 100% of the position, this
would represent naked call option exposure, which would be subject
to the requirements for segregating liquid assets or else entering
into offsetting positions as described below. The Fund may also sell
naked out-of-the-money puts to achieve the same goals as a
buy-write. When writing out-of-the-money put options, the Fund
typically sets the strike price at or below the estimated intrinsic
value level of the securities on which the options are written. The
Fund’s written put options will be “naked” because the Fund will not
hold a covering short position in the underlying security during the
term of the option.
E-36
The issuers of equity securities purchased by the Fund may be
of any market capitalization, though they will primarily have market
capitalizations in excess of $2 billion. The Fund may invest in
companies located within or outside the United States (including
companies located in emerging market countries). The Fund is not
limited in the percentage of assets it may invest in any one
country, region or geographic area. The Fund may maintain a portion
of its assets in short-term fixed income securities, cash and cash
equivalents. The Fund may invest in initial public offerings (IPOs).
The Fund may also invest in exchange-traded funds and may write
(sell) out-of-the-money puts. Although the Fund is diversified, it
may hold a relatively small number of securities at any given time.
Call options are contracts representing the right, but not the
obligation, to purchase the underlying equity security or ETF or the
cash value of the index at a specified price (the “strike price”) at
or before a specified future date (the “expiration date”). The price
of the option is determined by trading activity in the broad options
market and generally reflects the relationship between factors
including the current value of the underlying equity security, ETF
or index and the strike price, the prevailing interest rate, the
estimated dividend stream, the volatility of the underlying equity
security, ETF or index and the time remaining until the expiration
date. As the writer (seller) of a call option, the Fund would
receive cash (the premium) from the purchaser of the option, and the
purchaser would have the right to purchase the underlying security
from the Fund at the strike price or, in the case of a cash-settled
option, any amount by which the underlying security or ETF or the
cash value of the applicable index exceeds the strike price upon
exercise. In effect, the Fund would forgo the potential appreciation
in the underlying security, ETF or index above the strike price in
exchange for the premium. The Fund would only retain the risk of
loss should the price of the underlying security, ETF or index
decline to below its purchase price less the premium paid.
The Fund will primarily write call options on individual
securities where those options are “covered.” The Fund’s written
call options on individual portfolio securities will be covered
because the Fund will hold the underlying security in its portfolio
throughout the term of the option. The Fund also expects, from time
to time, to write call options on individual securities that it does
not hold in its portfolio
(i.e.,
“naked” call options). With respect
to naked call options and naked put options and options on indexes
or ETFs, the Fund will cover the options either by segregating
liquid assets in an amount equal to the collateral required by the
Chicago Board Options Exchange and in compliance with the collateral
requirements of the 1940 Act under the contract or by entering into
offsetting positions. The Fund primarily will write “listed” call
options that are originated and standardized by the Options Clearing
Corporation and trade on a major exchange, although it also may
write unlisted (or “over-the-counter”) call options and so-called
“flex” options (options that are traded on an exchange, but with
customized strike prices and expiration dates). The Fund’s strategy
of writing call options could cause the Fund to recognize larger
amounts of net short-term capital gains, which are taxable at the
higher ordinary income tax rates when distributed to shareholders,
than it otherwise would in the absence of such strategy. The ITM
buy-write strategy also could terminate or suspend the Fund’s
holding period in the underlying securities, and, as a result, any
dividends received by the Fund on those securities may not qualify
for treatment as “qualified dividend income” (which is taxable to
individual shareholders at the lower long-term capital gain rates).
The portfolio manager may consider exiting or reducing a buy-write
position when any of the factors leading to the investment
materially change or when a more attractive candidate is identified
and as necessary for redemption purposes.
In addition to the use of written option contracts under its
ITM buy-write strategy, the Fund may utilize foreign currency
exchange contracts, other options, stock index futures contracts,
other futures and forward contracts, swap agreements, variance
swaps, convertibles and reverse convertibles and other derivative
instruments. In response to adverse market, economic, political or
other conditions, the Fund may deviate from its principal strategies
by making temporary investments of some or all of its assets in high
quality fixed income securities, cash and cash equivalents. The Fund
may not achieve its investment objective when it does so.
E-37
|
|
|
|
|
Principal Risks
|
|
Among the principal risks of investing in the Fund,
which could adversely affect its net asset value,
yield and total return, are (in alphabetical order
after the first four risks):
|
|
|
•
|
|
Market Risk
|
|
|
|
|
•
|
|
Issuer Risk
|
|
|
|
|
•
|
|
Equity Securities Risk
|
|
|
|
|
•
|
|
Derivatives Risk
|
|
|
|
|
•
|
|
Credit and Counterparty Risk
|
|
|
|
|
•
|
|
Currency Risk
|
|
|
|
|
•
|
|
Emerging Markets Risk
|
|
|
|
|
•
|
|
Focused Investment Risk
|
|
|
|
|
•
|
|
Interest Rate Risk
|
|
|
|
|
•
|
|
IPO Risk
|
|
|
|
|
•
|
|
Leveraging Risk
|
|
|
|
|
•
|
|
Liquidity Risk
|
|
|
|
|
•
|
|
Management Risk
|
|
|
|
|
•
|
|
Non-U.S. Investment Risk
|
|
|
|
|
•
|
|
Smaller Company Risk
|
|
|
|
|
•
|
|
Turnover Risk
|
E-38
|
|
|
|
|
|
|
|
|
AllianzGI Short Duration High Income Fund
|
|
Ticker Symbol:
|
|
|
|
ASHIX (Inst. Class)
|
|
|
|
|
|
|
|
|
|
Principal
Investments and
Strategies
|
|
Investment Objective
Seeks a high level of
current income
|
|
Fund Focus
High Yield Bonds and Bank
Loans
|
|
Credit Quality
Minimum 80% of
assets rated Ba/BB
or below
|
|
|
|
|
|
|
|
|
|
|
|
Fund Category
|
|
|
|
Dividend Frequency
|
|
|
|
Fixed Income Securities
|
|
|
|
Monthly
|
The Fund seeks to achieve its investment objective by
normally investing at least 80% of its net assets (plus borrowings
made for investment purposes) in debt securities (“junk bonds”)
issued by public and private companies, which are rated below
investment grade (rated Ba or below by Moody’s or BB or below by
S&P or Fitch, or if unrated, determined by the Sub-Adviser to be
of comparable quality), while maintaining an average duration of
less than three years and in derivatives and other synthetic
instruments that have economic characteristics similar to such
debt securities. Derivatives transactions may have the effect of
either magnifying or limiting the Fund’s gains and losses.
Duration is a measure of the weighted average maturity of cash
flows on the bonds held by the Fund and can be used by the
portfolio managers as a measure of the sensitivity of the market
value of the Fund’s portfolio to changes in interest rates.
Generally, the longer the duration of the Fund, the more sensitive
its market value will be to changes in interest rates. To
illustrate the effects of changes in interest rates on a portfolio
with a similar average duration, generally, a portfolio with an
average duration of three years would be expected to fall
approximately 3% if interest rates rose by one percentage point.
The Fund may invest up to 20% of its assets in bank loans.
The Fund may invest up to 20% of its assets in non-U.S.
securities, which will typically be U.S. dollar-denominated but
may also include securities denominated in non-U.S. currencies.
The Fund invests in high yield securities (“junk bonds”) and
bank loans, collecting coupons, and protecting from adverse market
conditions, with incremental benefit from capital preservation.
The Fund will invest less than 10% of its net assets in securities
rated CCC or below by Standard and Poor’s.
The portfolio managers utilize a top-down approach that seeks
to identify industries and companies that appear favorable for
investment. Industries going through a perceived decline generally
are not candidates for selection. After the industries are
selected, the portfolio managers identify bonds of issuers within
those industries based on their creditworthiness, their yields in
relation to their credit quality and the relative value in
relation to the high yield market. The portfolio managers may sell
a security for a variety of reasons, such as to invest in a
company offering superior investment opportunities.
Although the Fund did not invest significantly in derivative
instruments as of the most recent fiscal year end, it may do so at
any time. In response to adverse market, economic, political or
other conditions, the Fund may deviate from its principal
strategies by making temporary investments of some or all of its
assets in high-quality fixed income securities, cash and cash
equivalents. The Fund may be less likely to achieve its investment
objective when it does so.
E-39
|
|
|
|
|
Principal Risks
|
|
Among the principal risks of investing in the Fund,
which could adversely affect its net asset value,
yield and total return, are (in alphabetical order
after the first six risks):
|
|
|
•
|
|
Fixed Income Risk
|
|
|
|
|
•
|
|
High Yield Risk
|
|
|
|
|
•
|
|
Market Risk
|
|
|
|
|
•
|
|
Issuer Risk
|
|
|
|
|
•
|
|
Interest Rate Risk
|
|
|
|
|
•
|
|
Credit and Counterparty
Risk
|
|
|
|
|
•
|
|
Confidential Information
Access Risk
|
|
|
|
|
•
|
|
Derivatives Risk
|
|
|
|
|
•
|
|
Liquidity Risk
|
|
|
|
|
•
|
|
Management Risk
|
|
|
|
|
•
|
|
Non-U.S. Investment Risk
|
|
|
|
|
•
|
|
Smaller Company Risk
|
E-40
|
|
|
|
|
|
|
|
|
AllianzGI Structured Alpha Fund
|
|
Ticker Symbol:
|
|
|
|
AZIIX (Inst. Class)
|
|
|
|
|
|
|
|
|
|
Principal
Investments and
Strategies
|
|
Investment Objective
Seeks to generate
attractive
risk-adjusted
absolute returns
through a complete
market cycle
|
|
Fund Category
Options
|
|
Approximate Primary
Capitalization
Range
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fund Focus
|
|
Dividend Frequency
|
|
|
|
|
|
Equity index options
|
|
At least annually
|
The Fund seeks to achieve its investment objective by
investing significantly in exchange-traded listed and FLEX U.S.
equity and volatility index options, while holding cash and cash
equivalents as collateral for option investments.
Under normal market conditions, the Fund will hold the
majority of its assets in cash and cash equivalents such as U.S.
Treasury bills. The portfolio managers will select these in an
effort to maintain a stable portfolio base as collateral for the
index option spread strategy described below.
Using a portion of its cash and cash equivalents as
collateral, the portfolio managers utilize a combination of
proprietary models to construct paired option positions, or
so-called “option spreads,” typically by buying and selling put
options and call options on equity and volatility indexes such as
the S&P 500 Index, SPX Volatility Index, Russell 2000 Index and
NASDAQ 100. Call options are contracts representing the right to
purchase the underlying instrument at a specified price (the
“strike price”) at or before a specified future date (the
“expiration date”), while put options represent the right to sell
the underlying instrument at the strike price on or before the
expiration date. Index options, which are not based on a single
underlying security, are typically cash-settled without requiring
delivery. The Fund may buy and sell exchange-traded options and
FLEX options (i.e., listed options that are traded on an exchange
but with customized strike prices and expiration dates). Option
spreads are typically created by buying and selling options of the
same class on the same underlying instrument but with different
strike prices or expiration dates. The number of contracts bought
and sold can be different in a spread (normally called a “ratio
spread”) or they can be the same. The portfolio managers seek to
create option-based “profit zones” that upon expiration of the
combination of individual option positions that make up the option
spread will capture positive payoffs if the level of the
underlying index (or other instrument) ends up within the chosen
“profit zone.” The Fund seeks to optimize spread positions and
profit zones based on (a) targeted positive return potential, (b)
structural risk protections, (c) collateral management, and (d)
flexibility to restructure profit zones if necessary. The Fund
intends to invest primarily in option spreads, consisting of 50 to
400 individual option positions, and may buy or sell put or call
index options that are not paired as part of an option spread. The
duration of individual option positions will normally range from
20 to 75 days at inception. The gross notional value of options
held by the Fund may significantly exceed the current net asset
value of the Fund at any time. To the extent the Fund enters into
option positions that are only partially or not at all paired as
part of an option spread, the Fund may have greater exposure to
rapid deterioration of the portfolio and should be deemed
speculative.
The Fund may invest in exchange traded funds (“ETFs”) and
exchange traded notes (“ETNs”), including ETFs and ETNs that
provide exposure to market volatility, either as an offset, an
option or an addition to option-based trades. The Fund may utilize
foreign currency exchange contracts, options, stock index futures
contracts and other derivative instruments. In response to adverse
market, economic, political or other conditions, the Fund may
deviate from its principal strategies by making temporary
investments of some or all of its assets in high-quality fixed
income securities, cash and cash equivalents. The Fund may not
achieve its investment objective when it does so.
E-41
|
|
|
|
|
Principal Risks
|
|
Among the principal risks of investing in the Fund,
which could adversely affect its net asset value,
yield and total return, are (in alphabetical order
after the first two risks):
|
|
|
•
|
|
Market Risk
|
|
|
|
|
•
|
|
Fixed Income Risk
|
|
|
|
|
•
|
|
Credit and Counterparty
Risk
|
|
|
|
|
•
|
|
Derivatives Risk
|
|
|
|
|
•
|
|
Leveraging Risk
|
|
|
|
|
•
|
|
Liquidity Risk
|
|
|
|
|
•
|
|
Management Risk
|
|
|
|
|
•
|
|
Turnover Risk
|
E-42
|
|
|
|
|
|
|
|
|
AllianzGI Ultra Micro Cap Fund
|
|
Ticker Symbol:
|
|
|
|
AUMIX (Inst. Class)
|
|
|
|
|
|
|
|
|
|
Principal
Investments and
Strategies
|
|
Investment Objective
Seeks maximum
long-term capital
appreciation
|
|
Fund Focus
Ultra
micro-capitalization
common stocks
|
|
Approximate Primary
Capitalization Range
Less than two times
the weighted
average of Russell
Microcap Growth
Index
|
|
|
|
|
|
|
|
|
|
|
|
Fund Category
|
|
|
|
Dividend Frequency
|
|
|
|
Growth Stocks
|
|
|
|
At least annually
|
The Fund seeks to achieve its objective by normally investing
at least 80% of its net assets (plus borrowings made for
investment purposes) in equity securities of ultra micro-cap
companies. The Fund currently defines ultra micro-cap companies as
those with market capitalizations less than two times the weighted
average of the Russell Microcap Growth Index,
i.e.
,
capitalizations less than $1.47 billion as of February 28, 2014.
Under normal market conditions, the Fund expects to maintain a
weighted average market capitalization below that of the Russell
Microcap Growth Index ($734 million as of February 28, 2014).
The portfolio managers follow a disciplined, fundamental
bottom-up research process focusing on companies undergoing
positive fundamental change, with sustainable growth
characteristics. The portfolio managers look for what they believe
to be the best risk-reward candidates within the investment
universe, defined as equities that are expected to appreciate
based on accelerating fundamental performance and related multiple
expansion. Company specific research includes industry and
competitive analysis, revenue model analysis, profit analysis and
balance sheet assessment. Once the portfolio managers believe that
positive fundamental change is occurring and will likely lead to
accelerating fundamental performance, they seek evidence that
performance will not be short-lived but rather a longer-term
sustainable trend. Lastly, the portfolio managers determine if the
investment is timely with regard to relative valuation and price
strength, exploiting stocks that are under-priced relative to
their potential. The portfolio managers may consider selling a
particular security if any of the original reasons for purchase
materially changes or a more attractive total return candidate is
identified. The Fund may have a high portfolio turnover rate,
which may be up to 200% or more.
The Fund may utilize foreign currency exchange contracts,
options, stock index futures contracts, warrants and other
derivative instruments. Although the Fund did not invest
significantly in derivative instruments as of the most recent
fiscal year end, it may do so at any time. In response to adverse
market, economic, political or other conditions, the Fund may
deviate from its principal strategies by making temporary
investments of some or all of its assets in high-quality fixed
income securities, cash and cash equivalents. The Fund may not
achieve its investment objective when it does so.
E-43
|
|
|
|
|
Principal Risks
|
|
Among the principal risks of investing in the Fund,
which could adversely affect its net asset value,
yield and total return, are (in alphabetical order
after the first four risks):
|
|
|
•
|
|
Market Risk
|
|
|
|
|
•
|
|
Issuer Risk
|
|
|
|
|
•
|
|
Equity Securities Risk
|
|
|
|
|
•
|
|
Smaller Company Risk
|
|
|
|
|
•
|
|
Credit and Counterparty
Risk
|
|
|
|
|
•
|
|
Derivatives Risk
|
|
|
|
|
•
|
|
Focused Investment Risk
|
|
|
|
|
•
|
|
IPO Risk
|
|
|
|
|
•
|
|
Leveraging Risk
|
|
|
|
|
•
|
|
Liquidity Risk
|
|
|
|
|
•
|
|
Management Risk
|
|
|
|
|
•
|
|
Turnover Risk
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E-44
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AllianzGI U.S. Small-Cap Growth Fund
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Ticker Symbol:
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(formerly known as, AllianzGI U.S. Emerging Growth Fund)
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AEMIX (Inst. Class)
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Principal
Investments and
Strategies
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Investment Objective
Seeks maximum
long-term capital
appreciation
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Fund Focus
Smaller capitalization common
stocks
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Approximate Primary
Capitalization Range
Below the highest
market
capitalization of
companies
represented in the
Russell 2000 Growth
Index
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Fund Category
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Dividend Frequency
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Growth Stocks
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At least annually
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The Fund seeks to achieve its investment objective by
normally investing at least 80% of its net assets (plus borrowings
made for investment purposes) in equity securities of U.S.
companies with smaller market capitalizations. The Fund currently
defines “U.S. companies” as those companies that (i) are
incorporated in the U.S., (ii) derive at least 50% of their
revenue or profits from business activities in the U.S. or (iii)
maintain at least 50% of their assets in the U.S. The Fund
currently considers smaller market capitalization companies to be
companies with market capitalizations that are below the highest
market capitalization of companies represented in the Russell 2000
Growth Index (approximately $7.87 billion as of February 28,
2014). The Fund may continue to hold securities of a portfolio
company that subsequently appreciates above the smaller market
capitalization threshold. Because of this, the Fund may have less
than 80% of its net assets in smaller market capitalization stocks
at any given time. Effective April 1, 2014, the Fund changed its
name from “AllianzGI U.S. Emerging Growth Fund” to “AllianzGI U.S.
Small-Cap Growth Fund” and, consistent with the type of
investments suggested by the Fund’s name, adopted the revised 80%
test referenced above.
The portfolio managers follow a disciplined, fundamental
bottom-up research process focusing on companies undergoing
positive fundamental change, with sustainable growth
characteristics. The portfolio managers look for what they believe
to be the best risk-reward candidates within the investment
universe, defined as equities that are expected to appreciate
based on accelerating fundamental performance and related multiple
expansion. Company specific research includes industry and
competitive analysis, revenue model analysis, profit analysis and
balance sheet assessment. Once the portfolio managers believe that
positive fundamental change is occurring and will likely lead to
accelerating fundamental performance, they seek evidence that
performance will not be short-lived but rather a longer-term
sustainable trend. Lastly, the portfolio managers determine if the
investment is timely with regard to relative valuation and price
strength, exploiting stocks that are under-priced relative to
their potential. The portfolio managers may consider selling a
particular security if any of the original reasons for purchase
materially changes or a more attractive total return candidate is
identified. The Fund may have a high portfolio turnover rate,
which may be up to 200% or more.
The Fund may utilize foreign currency exchange contracts,
options, stock index futures contracts, warrants and other
derivative instruments. Although the Fund did not invest
significantly in derivative instruments as of the most recent
fiscal year end, it may do so at any time. In response to adverse
market, economic, political or other conditions, the Fund may
deviate from its principal strategies by making temporary
investments of some or all of its assets in high-quality fixed
income securities, cash and cash equivalents. The Fund may not
achieve its investment objective when it does so.
E-45
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Principal Risks
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Among the principal risks of investing in the Fund, which could adversely affect its net asset
value, yield and total return, are (in alphabetical order after the first three risks):
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Market Risk
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Issuer Risk
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Equity Securities Risk
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Credit and Counterparty Risk
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Derivatives Risk
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Focused Investment Risk
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IPO Risk
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Leveraging Risk
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Liquidity Risk
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Management Risk
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Smaller Company Risk
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Turnover Risk
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E-46
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AllianzGI U.S. Equity Hedged Fund
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Ticker Symbol:
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AZUIX (Inst. Class)
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Principal
Investments and
Strategies
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Investment Objective
Seeks capital
appreciation, with added
emphasis on the
protection of capital
during unfavorable market
conditions
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Fund Category
Common Stocks
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Approximate Primary
Capitalization Range
Same as S&P 500 Index
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Fund Focus
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Dividend Frequency
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U.S. equity securities
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At least annually
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The Fund seeks to achieve its investment objective by
normally investing at least 80% of its net assets (plus borrowings
made for investment purposes) in common stocks of U.S. companies.
The Fund currently defines “U.S. companies” as those companies
that are deemed to be United States companies for purposes of
their geographical eligibility for inclusion in the S&P 500 Index,
a broad-based index of U.S. stocks.
The Fund expects to invest typically in substantially all 500
stocks included in the S&P 500 Index, which may include real
estate investment trusts (REITs), and seeks to replicate
approximately the relative weighting of those stocks on the S&P
500 Index. From time to time, the portfolio managers may deviate
from these allocations, for example, during periods immediately
following adjustments to the composition of the S&P 500 Index or
for purposes of efficient portfolio management. To the extent the
portfolio managers identify efficiencies in achieving exposure to
desired stocks through other instruments, the Fund may complement
its direct stock positions with temporary or medium-term
investments in stock index futures, exchange traded funds (ETFs)
and other derivative instruments. The portfolio managers may
consider selling a particular position if the security ceases to
be included on the S&P 500 Index (either through quarterly
rebalancing of the index or otherwise) or if a more attractive
means of achieving the same exposure is identified. Because the
S&P 500 Index does not incur the types of transaction costs that
the Fund bears in connection with rebalancing and responding to
cash flows, the Fund’s stock portfolio (regardless of whether
through direct or indirect holdings) may consistently underperform
the S&P 500 Index.
Under normal market and other conditions, in addition to the
stock portfolio described above, the Fund seeks to employ a
strategy of investing in exchange-traded options or FLEX options
(
i.e.
listed options that are traded on an exchange, but with
customized strike prices and expiration dates) that, when paired
with the equity portfolio, promote the protection of capital
during unfavorable market conditions (the “Index Option
Strategy”). The Fund will utilize (buy) equity index put options
(long puts) on U.S. equity indexes with the purpose of protecting
the Fund from a significant market decline while limiting the cost
and interference of this “protection,” and will write (sell)
equity index call options (short calls) on U.S. equity indexes to
offset some or all of the cost of the put options. Under normal
market conditions, the option positions will consist of long puts
with notional value roughly equal to the full value of the Fund’s
stock portfolio, expiring in roughly equal proportions over longer
periods (e.g., the next 12 months), and short call positions
expiring over a shorter period (e.g. less than 45 days) with
notional value roughly equal to the full value of the Fund’s stock
portfolio. Additionally, under certain circumstances, the
portfolio managers may seek to pair a long put position with a
short put position at a strike price below the coinciding long
put. All options are expected to be held to expiration (unless
redemptions require earlier close-out), and strike prices are
systematically selected. In pursuing the Index Option Strategy,
the Fund generally will not be able to offset the full cost of the
“protection” it is seeking and must keep significant cash and cash
equivalents available, and therefore the Fund will typically
underperform the S&P 500 Index during periods of market increases
and slight market decreases.
In response to adverse market, economic, political or other
conditions, the Fund may deviate from its principal strategies by
making temporary investments of some or all of its assets in long
call options or call option spreads, high-quality fixed income
securities, cash and cash equivalents. The Fund may not achieve
its investment objective when it does so.
E-47
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Principal Risks
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Among the principal risks of investing in the Fund,
which could adversely affect its net asset value,
yield and total return, are (in alphabetical order
after the first four risks):
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Market Risk
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Issuer Risk
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Equity Securities Risk
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Derivatives Risk
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Credit and Counterparty
Risk
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Leveraging Risk
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Liquidity Risk
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Management Risk
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REIT and Real
Estate-Related Investment Risk
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Turnover Risk
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E-48
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AllianzGI Emerging Markets Opportunities Fund
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Ticker Symbol:
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AOTIX (Inst. Class)
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Principal Investments and Strategies
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Investment Objective
Seeks maximum
long-term capital
appreciation
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Fund Focus
Emerging market stocks
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Approximate Primary
Capitalization
Range
All capitalizations
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Fund Category
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Dividend Frequency
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International Stocks
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At least annually
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The Fund seeks to achieve its investment objective by normally investing at least
80% of its net assets (plus borrowings made for investment purposes) in securities
of companies that are tied economically to countries with emerging securities
markets—that is, countries with securities markets that are, in the opinion of the
portfolio managers, less sophisticated than more developed markets in terms of
participation by investors, analyst coverage, liquidity and regulation. The Fund’s
portfolio managers consider a security to be tied economically to a country with an
emerging securities market if it is classified as an emerging market security by
MSCI Inc. (“MSCI”), incorporated in an Emerging Market Country (as defined below),
traded on an exchange in an Emerging Market Country or if it has exposure to an
Emerging Market Country. The Fund will normally invest primarily in companies
located in the countries represented in the Fund’s benchmark, the MSCI Emerging
Markets Index (“Emerging Market Countries”), and have exposure to at least 5
Emerging Market Countries. The Fund normally invests primarily in common stocks,
either directly or indirectly through depositary receipts. The Fund may invest up
to 20% of its net assets in securities of U.S. companies.
The portfolio managers use a growth-oriented, dynamic quantitative process combined
with a fundamentals-based, actively-managed security selection process to make
individual security, industry sector and country selection decisions. The
investment philosophy is focused on investing in companies undergoing positive
change with sustainable growth characteristics and timely market recognition will
result in outperformance. The process is built upon a proprietary multi-factor
model that analyzes securities in the investment universe. This multi-factor model
employs an array of criteria to make these stock selection recommendations. The
team qualitatively reviews each of the model’s investment recommendations to
determine suitability. The integrated relationship between research and portfolio
management combines the latest research from the academic and investment management
community with real-world portfolio management experience to maximize excess return
opportunities within a risk-controlled framework. The approach is quantitative in
nature, therefore the majority of research conducted is model research to improve
current or develop new factors to enhance the quantitative model’s stock-selection
capabilities. The portfolio managers consider whether to sell a particular security
when any of the model’s multi-factors materially change or when a more attractive
total return candidate is identified.
The Fund may utilize foreign currency exchange contracts, options, stock index
futures contracts and other derivative instruments. Although the Fund did not
invest significantly in derivative instruments as of the most recent fiscal year
end, it may do so at any time. In response to adverse market, economic, political
or other conditions, the Fund may deviate from its principal strategies by making
temporary investments of some or all of its assets in high-quality fixed income
securities, cash and cash equivalents. The Fund may be less likely to achieve its
investment objective when it does so.
Effective January 28, 2013, the Fund changed its name from “Allianz AGIC Emerging
Markets Opportunities Fund” to “AllianzGI Emerging Markets Opportunities Fund.”
E-49
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Principal Risks
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Among the principal risks of investing in the Fund, which could adversely affect
its net asset value, yield and total return, are (in alphabetical order after the
first six risks):
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Market Risk
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Issuer Risk
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Equity Securities Risk
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Non-U.S. Investment
Risk
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Emerging Markets Risk
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Smaller Company Risk
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Credit and Counterparty
Risk
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Currency Risk
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Derivatives Risk
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Focused Investment Risk
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Leveraging Risk
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Liquidity Risk
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Management Risk
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Turnover Risk
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E-50
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AllianzGI Focused Growth Fund
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Ticker Symbol:
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PGFIX (Inst. Class)
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Principal Investments and Strategies
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Investment Objective
Seeks capital
appreciation
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Fund Focus
Larger capitalization common stocks
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Approximate Primary
Capitalization Range
$1 billion or more
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Fund Category
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Dividend Frequency
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Growth Stocks
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At least annually
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The Fund seeks to achieve its investment objective by normally investing primarily in equity securities of U.S. companies with market
capitalizations of at least $1 billion. The Fund may also invest up to 20% of its assets in non-U.S. securities (but no more than 10% in any one
non-U.S. country or 10% in emerging market securities). At times, depending on market and other conditions, the Fund may also invest a
significant percentage of its assets in a small number of business sectors or industries. The portfolio managers normally select 25 to 45 large
cap growth stocks for the Fund’s portfolio. The portfolio managers attempt to include in the Fund’s portfolio securities that exhibit the
greatest combination of earnings growth potential, quality (as reflected in consistent business fundamentals) and attractive valuation.
In analyzing specific companies for possible investment, the portfolio managers ordinarily look for several of the following characteristics:
higher than average growth and strong potential for capital appreciation; substantial capacity for growth in revenue, cash flow or earnings
through either an expanding market or expanding market share; a strong balance sheet; superior management; strong commitment to research and
product development; and differentiated or superior products and services or a steady stream of new products and services. Investments are not
restricted to companies with a record of dividend payments. The portfolio managers sell securities as they deem appropriate in accordance with
sound investment practices and the Fund’s investment objective and as necessary for redemption purposes.
In addition to traditional research activities, the portfolio managers use Grassroots
SM
Research, which prepares research reports
based on field interviews with customers, distributors and competitors of the companies in which the Fund invests or contemplates investing,
provides a “second look” at potential investments, and checks marketplace assumptions about market demand for particular products and services.
The Fund may utilize foreign currency exchange contracts, options, stock index futures contracts and other derivative instruments. Although the
Fund did not invest significantly in derivative instruments as of the most recent fiscal year end, it may do so at any time. In response to
adverse market, economic, political or other conditions, the Fund may deviate from its principal strategies by making temporary investments of
some or all of its assets in high-quality fixed income securities, cash and cash equivalents. The Fund may be less likely to achieve its
investment objective when it does so.
Effective September 24, 2012, the Fund changed its name from “Allianz AGIC Growth Fund” to “Allianz RCM Focused Growth Fund” in connection with a
change in the Fund’s investment strategy. Effective January 28, 2013, the Fund changed its name from “Allianz RCM Focused Growth Fund” to
“AllianzGI Focused Growth Fund.”
E-51
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Principal Risks
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Among the principal risks of investing in the Fund, which could adversely affect its net asset value, yield and total return, are (in
alphabetical order after the first three risks):
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Market Risk
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Issuer Risk
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Equity Securities Risk
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Credit and Counterparty Risk
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Currency Risk
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Derivatives Risk
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Emerging Markets Risk
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Focused Investment Risk
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Leveraging Risk
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Liquidity Risk
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Management Risk
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Non-U.S. Investment Risk
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Turnover Risk
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E-52
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AllianzGI Global Commodity Equity Fund
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Ticker Symbol:
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RGLIX (Inst. Class)
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Principal Investments and Strategies
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Investment Objective
Seeks long-term
capital appreciation
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Fund Focus
Equity securities of U.S. and non-U.S. natural
resources companies
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Approximate Primary
Capitalization Range
All capitalizations
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Fund Category
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Dividend Frequency
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Sector-Related Stocks
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At least annually
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The Fund seeks to achieve its investment objective by normally investing at least 80% of its net assets (plus borrowings made for investment
purposes) in equity securities of companies principally engaged in the research, development, manufacturing, extraction, distribution or sale of
materials, energy or goods related to the Agriculture, Energy, Materials or Commodity-Related Industrials sectors. The Fund considers (i) the
Agriculture sector to include products such as grain, vegetable oils, livestock and agricultural-type products such as coffee; (ii) the Energy
sector to include products such as coal, natural gas, oil, alternative energy and electricity; (iii) the Materials sector to include products
such as chemicals & fertilizers, constructions materials, industrial metal, precious metal, steel, minerals and paper products; and (iv) the
Commodity-Related Industrials sector to include industrial firms that manufacture tools, equipment and goods used in the development and
production of commodities or that maintain infrastructure used in their transportation. The Fund also has a fundamental investment policy to
invest at least 25% of its total assets in the “natural resources” sector, as described in the SAI.
Under normal conditions, the portfolio managers seek to allocate investments such that the Fund has exposure to a diverse range of commodities
within each of the three primary commodity sectors of Agriculture, Energy and Materials. Investments in commodity sectors can be significantly
affected by events relating to international political and economic developments, energy conservation, the success of exploration projects,
global commodity prices, tax and other government regulations, or natural phenomena around the world.
The Fund expects to invest most of its assets in U.S. and non-U.S. common stocks. Under normal circumstances, the Fund will invest a minimum of
1/3 of its assets in non-U.S. securities and will allocate its investments among securities of issuers located in at least eight different
countries (which may include the United States).
The Fund’s portfolio managers will evaluate the relative attractiveness of individual commodity cycles, including supply-demand fundamentals,
pricing outlook and impact on U.S. and non-U.S. macroeconomic indicators like inflation. In addition, the portfolio managers may make use of
internally and externally developed forecasts of economic growth, inflation and interest rates to help identify industry sectors, regions and
individual countries (including emerging market countries) that the portfolio managers believe are likely to offer the best investment
opportunities.
The portfolio managers seek to evaluate the degree to which companies’ earnings are linked to the price changes of the commodities to which those
companies are exposed, as well as companies’ fundamental value and prospects for growth. The portfolio managers focus on those companies that
they expect will appreciate in value as relevant commodity prices increase and have higher than average rates of growth and/or strong potential
for capital appreciation independent of underlying commodity price inflation. During periods of low expected inflation for an individual
commodity, the portfolio managers will give more weight to non-inflation criteria for companies linked to that commodity. The portfolio managers
sell securities as the portfolio managers deem appropriate in accordance with sound investment practices and the Fund’s investment objectives and
as necessary for redemption purposes.
E-53
In addition to traditional research activities, the portfolio managers use Grassroots
SM
Research, which prepares research reports
based on field interviews with customers, distributors and competitors of the companies in which the Fund invests or contemplates investing, and
provides a “second look” at potential investments and checks marketplace assumptions about market demand for particular products and services.
The Fund may utilize foreign currency exchange contracts, options, stock index futures contracts and other derivative instruments. Although the
Fund did not invest significantly in derivative instruments as of the most recent fiscal year end, it may do so at any time. The Fund may also
invest up to 10% of its net assets in securities issued by other investment companies, included exchange-traded funds (“ETFs”). In response to
adverse market, economic, political or other conditions, the Fund may deviate from its principal strategies by making temporary investments of
some or all of its assets in high-quality fixed income securities, cash and cash equivalents. The Fund may be less likely to achieve its
investment objective when it does so.
Effective September 1, 2011, the Fund changed its name from “Allianz RCM Global Resources Fund” in connection with an expansion in investment
focus to additional commodity-related sectors. Effective January 28, 2013, the Fund changed its name from “Allianz RCM Global Commodity Equity
Fund” to “AllianzGI Global Commodity Equity Fund.”
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Principal Risks
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Among the principal risks of investing in the Fund, which could adversely affect its net asset value, yield and total return, are (in
alphabetical order after the first seven risks):
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Market Risk
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Issuer Risk
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Equity Securities Risk
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Focused Investment Risk (Commodity-Related Companies Risk)
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Non-U.S. Investment Risk
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Emerging Markets Risk
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Smaller Company Risk
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Credit and Counterparty Risk
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Currency Risk
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Derivatives Risk
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Leveraging Risk
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Liquidity Risk
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•
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Management Risk
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•
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Turnover Risk
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E-54
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AllianzGI Global Small-Cap Fund
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Ticker Symbol:
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DGSCX (Inst. Class)
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Principal Investments and Strategies
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Investment Objective
Seeks long-term
capital appreciation
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Fund Focus
Equity securities of smaller capitalization U.S.
and non-U.S. issuers
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Approximate Primary
Capitalization Range
Weighted-average market
capitalization between
50% and 200% of the
weighted-average market
capitalization of the
MSCI World Small-Cap
Index
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Fund Category
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Dividend Frequency
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Global Stocks
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At least annually
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The Fund seeks to achieve its objective by normally investing at least 80% of its net assets (plus borrowings made for investment purposes) in
companies with market capitalizations comparable to those of companies included in the MSCI World Small-Cap Index (between $61 million and $12.8
billion as of June 30, 2013). Under normal market and other conditions, the Fund expects to maintain a weighted-average market capitalization
between 50% and 200% of the weighted-average market capitalization of the securities in the MSCI World Small-Cap Index, which as of June 30, 2013
would permit the Fund to maintain a weighted-average market capitalization ranging from $1.2 billion to $4.6 billion. The Fund normally will
allocate its investments among securities of issuers located in at least eight different countries (which may include the United States) and
expects that the majority of its non-U.S. investments will normally be in Japan and Western Europe. The Fund will normally invest no more than
25% of its assets in issuers located in any one country outside the U.S., other than France, Germany, Japan and the United Kingdom. The Fund may
invest up to 30% of its assets in emerging market securities (but no more than 10% in any one emerging market country). Regional portfolio
managers in the United States, Europe and Asia collaborate to produce a portfolio that is believed likely to have the best investment
opportunities from each of those regions. The allocation of Fund assets among these three regions is set from time to time and periodically
adjusted through a collaborative effort among the most senior portfolio manager in the regions. Regional weights in the Fund’s portfolio are
expected to be comparable to those in the MSCI World Small-Cap Index. The lead portfolio manager oversees weighting determinations and has
discretion to deviate from the regional weights of the MSCI World Small-Cap Index.
The portfolio managers in Europe and Asia develop forecasts of economic growth, inflation and interest rates that are used to help identify
countries and other geographies within the applicable region that are likely to offer the best investment opportunities. The portfolio managers
may consider the anticipated economic growth rate, political outlook, inflation rate, currency outlook and interest rate environment for the
country and the region in which a company is located. The portfolio managers in Europe and Asia ordinarily look for the following
characteristics: higher than average growth and strong potential for capital appreciation; substantial capacity for growth in revenue through
either an expanding market or market share; a strong balance sheet; superior management; strong commitment to research and product development;
and differentiated or superior products and services or a steady stream of new products and services.
The portfolio managers in the United States follow a disciplined, fundamental bottom-up research process focusing on North American companies
with sustainable growth characteristics that are undergoing positive fundamental change. The portfolio managers look for what they believe to be
the best risk-reward candidates within the investment universe, defined as equities that are expected to appreciate based on accelerating
fundamental performance, rising expectations and related multiple expansion. Company-specific research includes industry and competitive
analysis, revenue model analysis, profit analysis and balance sheet assessment. Once the
E-55
portfolio managers in the United States believe that
positive fundamental change is occurring and will likely lead to accelerating fundamental performance, they seek evidence that performance will
be a longer-term sustainable trend. Lastly, these portfolio managers determine if the investment is timely with regard to relative valuation and
price strength, exploiting stocks that are under-priced relative to their potential.
In addition to common stocks and other equity securities (such as preferred stocks, convertible securities and warrants), the Fund may invest in
securities issued in initial public offerings (IPOs), and may utilize foreign currency exchange contracts, options, stock index futures contracts
and other derivative instruments. Although the Fund did not invest significantly in derivative instruments as of the most recent fiscal year end,
it may do so at any time.
Effective January 28, 2013, the Fund changed its name from “Allianz RCM Global Small-Cap Fund” to “AllianzGI Global Small-Cap Fund.”
|
|
|
|
|
Principal Risks
|
|
Among the principal risks of investing in the Fund, which could adversely affect its net asset value, yield and total return, are (in
alphabetical order after the first six risks):
|
|
|
•
|
|
Market Risk
|
|
|
|
|
•
|
|
Issuer Risk
|
|
|
|
|
•
|
|
Equity Securities Risk
|
|
|
|
|
•
|
|
Non-U.S. Investment Risk
|
|
|
|
|
•
|
|
Emerging Markets Risk
|
|
|
|
|
•
|
|
Smaller Company Risk
|
|
|
|
|
•
|
|
Credit and Counterparty Risk
|
|
|
|
|
•
|
|
Currency Risk
|
|
|
|
|
•
|
|
Derivatives Risk
|
|
|
|
|
•
|
|
Focused Investment Risk
|
|
|
|
|
•
|
|
IPO Risk
|
|
|
|
|
•
|
|
Leveraging Risk
|
|
|
|
|
•
|
|
Liquidity Risk
|
|
|
|
|
•
|
|
Management Risk
|
|
|
|
|
•
|
|
Turnover Risk
|
E-56
|
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|
AllianzGI Income & Growth Fund
|
|
Ticker Symbol:
|
|
|
|
AZNIX (Inst. Class)
|
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|
Principal Investments and Strategies
|
|
Investment Objective
Seeks total return
comprised of current
income, current
gains and capital
appreciation
|
|
Fund Focus
Combination of common stocks and other equity
securities, debt securities and convertible
securities
|
|
Approximate Primary
Capitalization Range
All capitalizations
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|
Fund Category
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|
Dividend Frequency
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Income & Equity
|
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|
Monthly
|
The Fund seeks to achieve its investment objective by normally investing in a combination of common stocks and other equity securities, debt
securities and convertible securities. It is expected that substantially all of the Fund’s debt securities and a substantial portion of its
convertible securities will consist of securities rated below investment grade (sometimes referred to as “high yield securities” or “junk
bonds”). The allocation of the Fund’s investments across these asset classes will vary from time to time, based upon the portfolio managers’
consideration of factors such as changes in equity prices, changes in interest rates and other economic and market factors, such that an asset
class may be more heavily weighted in the Fund’s portfolio than the other classes at any time and from time to time, and sometimes to a
substantial extent. The Fund may invest a portion of its assets in non-U.S. securities, including emerging market securities. The Fund may invest
in securities of companies with any size market capitalization, but ordinarily expects to focus its common stock investments in companies with
market capitalizations of $3 billion or more.
The portfolio managers utilize a disciplined, fundamental, bottom-up research process intended to identify issuers whose fundamentals are
expected to improve. In analyzing specific companies for possible investment, the portfolio managers ordinarily look for one or more of the
following characteristics: above-average earnings growth; high return on invested capital; a healthy or improving balance sheet and overall
financial strength; historic levels of dividend payments; sound financial and accounting policies; strong competitive advantages, which may
include effective research and product development and marketing, development of new technologies, efficient service and pricing flexibility;
strong management; and general operating characteristics that will enable the companies to compete successfully in their respective markets. In
addition, when analyzing a convertible or debt security for possible investment, the portfolio managers will also consider such security’s
characteristics as an income-producing security using credit analysis. The convertible securities in which the Fund may invest include bonds,
debentures, notes, preferred stocks, “synthetic” convertibles and other securities or investments that may be converted or exchanged (by the
holder or by the issuer) into equity securities of the issuer (or cash or securities of equivalent value). The weighted average maturity of the
portion of the Fund’s assets invested in convertible and debt securities will typically be ten years or less, although the weighted average
maturity may vary depending on market and other conditions. The Fund may hold a relatively large number of securities at any given time (e.g., in
excess of 150). The portfolio managers may consider selling a particular security if any of the original reasons for purchase materially change
or when a more attractive total return candidate is identified.
Under normal market and other conditions, the Fund also expects to employ a strategy of writing (selling) call options on the stocks held in its
portfolio (the “Option Strategy”). It is expected that the Fund will ordinarily write call options on the individual stocks held in its
portfolio, and with respect to approximately 70% of the value of each position. However, the Fund’s use of the Option Strategy may vary from time
to time, depending on market conditions and other factors. The Option Strategy employed by the Fund is described in this section; options
generally are described below in this section and further under “Investment Objectives and Policies—Derivative Instruments” in the Statement of
Additional Information. The Option Strategy is designed to generate gains from option premiums in an attempt to enhance distributions payable to
the Fund’s shareholders and to reduce overall portfolio risk. However, there is no assurance that the Option Strategy will achieve its
objectives.
E-57
Call options on individual securities are contracts representing the right to purchase the underlying equity security at a specified price (the
“strike price”) at or before a specified future date (the “expiration date”). The price of the option is determined by trading activity in the
broad options market and generally reflects the relationship between factors including the current value of the underlying equity security and
the strike price, the volatility of the underlying equity security and the time remaining until the expiration date. As the writer (seller) of a
call option, the Fund would receive cash (the premium) from the purchaser of the option, and the purchaser would have the right to receive from
the Fund any appreciation in the value of the underlying security and the strike price upon exercise. In effect, the Fund would forgo the
potential appreciation in the underlying security in exchange for the premium, although it would retain the risk of loss should the price of the
underlying security decline. Therefore, the Fund’s use of the Option Strategy will generally limit the Fund’s ability to benefit from the full
upside potential of its equity portfolio. Notwithstanding the foregoing, the Fund will be exposed to an increased risk of loss to the extent that
it utilizes instruments that create leverage or otherwise engages in derivatives transactions (e.g., swaps or options) outside of the Options
Strategy described herein.
As part of the Options Strategy, the Fund generally will write call options with a strike price that is above (“out-of-the-money”) the market
value of the underlying security at the time the option is written. In addition to providing possible gains through premiums, out-of-the-money
call options allow the Fund to potentially benefit from appreciation in the underlying security held by the Fund up to the strike price, but the
Fund forgoes any appreciation above the strike price. The Fund also reserves the flexibility to write “at-the-money” (i.e., with a strike price
equal to the market value of the underlying security) and “in-the-money” call options (i.e., with a strike price below the market value of the
underlying security). The Fund will only write call options on individual securities if those options are “covered.” The Fund’s written call
options on individual portfolio securities will be covered because the Fund will hold the underlying security in its portfolio throughout the
term of the option. The Fund will not write options with respect to individual equity securities (other than exchange-traded funds (“ETFs”), as
described below) that are not held in the Fund’s portfolio (i.e., “naked” options). The Fund may also write call options on equity indexes and
ETFs. The Fund would cover any such options either by segregating liquid assets in an amount equal to its net obligations under the contract or
by entering into offsetting positions.
The Fund generally will write “listed” call options that are originated and standardized by the Options Clearing Corporation and trade on a major
exchange, although it also may write unlisted (or “over-the-counter”) call options and so-called “flex” options (options that are traded on an
exchange, but with customized strike prices and expiration dates). The Fund’s Option Strategy could cause the Fund to recognize larger amounts of
net short-term capital gains, which are taxable at the higher ordinary income tax rates when distributed to shareholders, than it otherwise would
in the absence of such strategy. The Fund’s Option Strategy also could terminate or suspend the Fund’s holding period in the underlying
securities, and, as a result, any dividends received by the Fund on those securities may not qualify for treatment as “qualified dividend income”
(which is taxable to individual shareholders at the lower long-term capital gain rates).
The Fund may invest a significant portion of its assets in securities that have not been registered for public sale, including those that are
eligible for purchase and sale pursuant to Rule 144A under the Securities Act of 1933.
E-58
The Fund may utilize foreign currency exchange contracts, options, stock index futures contracts and other derivative instruments. In response to
adverse market, economic, political or other conditions, the Fund may deviate from its principal strategies by making temporary investments of
some or all of its assets in high-quality fixed income securities, cash and cash equivalents. The Fund may be less likely to achieve its
investment objective when it does so.
Effective January 28, 2013, the Fund changed its name from “Allianz AGIC Income & Growth Fund” to “AllianzGI Income & Growth Fund.”
|
|
|
|
|
Principal Risks
|
|
Among the principal risks of investing in the Fund, which could adversely affect its net asset value, yield and total return, are (in
alphabetical order after the first six risks):
|
|
|
•
|
|
Market Risk
|
|
|
|
|
•
|
|
Issuer Risk
|
|
|
|
|
•
|
|
High Yield Risk
|
|
|
|
|
•
|
|
Equity Securities Risk
|
|
|
|
|
•
|
|
Smaller Company Risk
|
|
|
|
|
•
|
|
Derivatives Risk
|
|
|
|
|
•
|
|
Convertible Securities Risk
|
|
|
|
|
•
|
|
Credit and Counterparty Risk
|
|
|
|
|
•
|
|
Currency Risk
|
|
|
|
|
•
|
|
Emerging Markets Risk
|
|
|
|
|
•
|
|
Focused Investment Risk
|
|
|
|
|
•
|
|
Interest Rate Risk
|
|
|
|
|
•
|
|
Leveraging Risk
|
|
|
|
|
•
|
|
Liquidity Risk
|
|
|
|
|
•
|
|
Management Risk
|
|
|
|
|
•
|
|
Non-U.S. Investment Risk
|
|
|
|
|
•
|
|
Turnover Risk
|
E-59
|
|
|
|
|
|
|
|
|
AllianzGI International Managed Volatility Fund
|
|
Ticker Symbol:
|
|
|
|
NAISX (Inst. Class)
|
|
|
|
|
|
|
|
|
|
Principal Investments and Strategies
|
|
Investment Objective
Seeks maximum
long-term capital
appreciation
|
|
Fund Focus
Companies located in the developed countries
represented in the MSCI EAFE Index
|
|
Approximate Primary
Capitalization Range
All capitalizations
|
|
|
|
|
|
|
|
|
|
|
|
Fund Category
|
|
|
|
Dividend Frequency
|
|
|
|
International Stocks
|
|
|
|
At least annually
|
The Fund seeks to achieve its investment objective by investing in a portfolio of international equities that attempts to manage overall
portfolio volatility. The Fund normally invests primarily in non-U.S. equity securities, and will not allocate more than 50% of its net assets in
companies within a single country. The Fund ordinarily allocates its investments among a number of different countries, including those in the
MSCI EAFE Index and normally invests at least 80% of its assets in non-U.S. securities. The Fund normally focuses its non-U.S. investments in
developed countries but may also invest in emerging markets securities. The Fund may invest in issuers of any market capitalization, including
smaller capitalization companies. The Fund intends to utilize an investment strategy that focuses on the overall management of portfolio
volatility. This focus may result in the Fund outperforming the general securities market during periods of flat or negative market performance,
and underperforming the general securities market during periods of strong positive market performance.
The portfolio managers use a dynamic quantitative process combined with a fundamentals-based, actively-managed security selection process to make
individual security and sector selection decisions. Under the Sub-Adviser’s managed volatility strategy, the portfolio managers seek to emphasize
stocks that exhibit a lower sensitivity to broader market movements (or “beta”), as they believe that stocks with higher betas are not rewarded
with commensurately higher returns by the market. The portfolio construction process is iterative in nature. Initially, the portfolio managers
build a fully invested and diversified portfolio subject to sector and security constraints with a goal of minimizing total volatility as
measured by the standard deviation of returns. The team then overlays a proprietary stock selection model and seeks to build a final portfolio of
stocks that considers the trade off between volatility and sources of relative performance (or “alpha”). The portfolio managers consider whether
to sell a particular security when any of the above factors materially changes, or when a more attractive investment candidate is available.
In addition to equity securities (such as preferred stocks, convertible securities and warrants) and equity-related instruments, the Fund may
invest in securities issued in initial public offerings (IPOs), and utilize foreign currency exchange contracts, options, stock index futures
contracts, warrants and other derivative instruments. Although the Fund does not expect to invest significantly in derivative instruments during
its current fiscal year, it may do so at any time.
In response to adverse market, economic, political or other conditions, the Fund may deviate from its principal strategies by making temporary
investments of some or all of its assets in high-quality fixed income securities, cash and cash equivalents. The Fund may be less likely to
achieve its investment objective when it does so.
Effective February 1, 2012, the Fund changed its name from “Allianz AGIC International Fund” to “Allianz AGIC International Managed Volatility
Fund” in connection with a change in the Fund’s investment strategy. Effective January 28, 2013, the Fund changed its name from “Allianz AGIC
International Managed Volatility Fund” to “AllianzGI International Managed Volatility Fund.”
E-60
|
|
|
|
|
Principal Risks
|
|
Among the principal risks of investing in the Fund, which could adversely affect its net asset value, yield and total return, are (in
alphabetical order after the first six risks):
|
|
|
•
|
|
Market Risk
|
|
|
|
|
•
|
|
Issuer Risk
|
|
|
|
|
•
|
|
Equity Securities Risk
|
|
|
|
|
•
|
|
Non-U.S. Investment Risk
|
|
|
|
|
•
|
|
Emerging Markets Risk
|
|
|
|
|
•
|
|
Smaller Company Risk
|
|
|
|
|
•
|
|
Credit and Counterparty Risk
|
|
|
|
|
•
|
|
Currency Risk
|
|
|
|
|
•
|
|
Derivatives Risk
|
|
|
|
|
•
|
|
Focused Investment Risk
|
|
|
|
|
•
|
|
IPO Risk
|
|
|
|
|
•
|
|
Leveraging Risk
|
|
|
|
|
•
|
|
Liquidity Risk
|
|
|
|
|
•
|
|
Management Risk
|
|
|
|
|
•
|
|
Turnover Risk
|
E-61
|
|
|
|
|
|
|
|
|
AllianzGI Large-Cap Growth Fund
|
|
Ticker Symbol:
|
|
|
|
DRLCX (Inst. Class)
|
|
|
|
|
|
|
|
|
|
Principal Investments and Strategies
|
|
Investment Objective
Seeks long-term
capital appreciation
|
|
Fund Focus
Large capitalization equity securities
|
|
Approximate Primary
Capitalization Range
$5 billion or more
|
|
|
|
|
|
|
|
|
|
|
|
Fund Category
|
|
|
|
Dividend Frequency
|
|
|
|
Growth Stocks
|
|
|
|
At least annually
|
The Fund seeks to achieve its investment objective by normally investing at least 80% of its net assets (plus borrowings made for investment
purposes) in equity securities of U.S. companies with market capitalizations of at least $5 billion. The Fund may also invest up to 20% of its
assets in non-U.S. securities (but no more than 10% in any one non-U.S. country or 10% in emerging market securities). At times, depending on
market and other conditions, the Fund may also invest a significant percentage of its assets in a small number of business sectors or industries.
In analyzing specific companies for possible investment, the portfolio managers ordinarily look for several of the following characteristics:
higher than average growth and strong potential for capital appreciation; substantial capacity for growth in revenue, cash flow or earnings
through either an expanding market or expanding market share; a strong balance sheet; superior management; strong commitment to research and
product development; and differentiated or superior products and services or a steady stream of new products and services. Investments are not
restricted to companies with a record of dividend payments. The portfolio managers sell securities as they deem appropriate in accordance with
sound investment practices and the Fund’s investment objective and as necessary for redemption purposes.
In addition to traditional research activities, the portfolio managers use Grassroots
SM
Research, which prepares research reports
based on field interviews with customers, distributors and competitors of the companies in which the Fund invests or contemplates investing,
provides a “second look” at potential investments, and checks marketplace assumptions about market demand for particular products and services.
The Fund may utilize foreign currency exchange contracts, options, stock index futures contracts and other derivative instruments. Although the
Fund did not invest significantly in derivative instruments as of the most recent fiscal year end, it may do so at any time. In response to
adverse market, economic, political or other conditions, the Fund may deviate from its principal strategies by making temporary investments of
some or all of its assets in high-quality fixed income securities, cash and cash equivalents. The Fund may be less likely to achieve its
investment objective when it does so.
Effective January 28, 2013, the Fund changed its name from “Allianz RCM Large-Cap Growth Fund” to “AllianzGI Large-Cap Growth Fund.”
|
|
|
|
|
Principal Risks
|
|
Among the principal risks of investing in the Fund, which could adversely affect its net asset value, yield and total return, are (in
alphabetical order after the first three risks):
|
|
|
•
|
|
Market Risk
|
|
|
|
|
•
|
|
Issuer Risk
|
|
|
|
|
•
|
|
Equity Securities Risk
|
|
|
|
|
•
|
|
Credit and Counterparty Risk
|
|
|
|
|
•
|
|
Currency Risk
|
E-62
|
|
•
|
|
Derivatives Risk
|
|
|
|
|
•
|
|
Emerging Markets Risk
|
|
|
|
|
•
|
|
Focused Investment Risk
|
|
|
|
|
•
|
|
Leveraging Risk
|
|
|
|
|
•
|
|
Liquidity Risk
|
|
|
|
|
•
|
|
Management Risk
|
|
|
|
|
•
|
|
Non-U.S. Investment Risk
|
|
|
|
|
•
|
|
Turnover Risk
|
E-63
|
|
|
|
|
|
|
|
|
AllianzGI Mid-Cap Fund
|
|
Ticker Symbol:
|
|
|
|
DRMCX (Inst. Class)
|
|
|
|
|
|
|
|
|
|
Principal Investments and Strategies
|
|
Investment Objective
Seeks long-term
capital appreciation
|
|
Fund Focus
Medium capitalization equity securities
|
|
Approximate Primary
Capitalization Range
Same as the Russell
Midcap Growth Index
|
|
|
|
|
|
|
|
|
|
|
|
Fund Category
|
|
|
|
Dividend Frequency
|
|
|
|
Growth Stocks
|
|
|
|
At least annually
|
The Fund seeks to achieve its investment objective by normally investing at least 80% of its net assets (plus borrowings made for investment
purposes) in equity securities of medium-sized companies. The Fund currently defines medium-sized companies as those having market
capitalizations comparable to those companies included in the Russell Midcap Growth Index (between $526 million and $31 billion as of June 30,
2013). Equity securities include preferred stock, convertible preferred stock, convertible debt obligations, warrants or other rights to acquire
stock. Under normal circumstances, the Fund invests primarily in equity securities of U.S. companies, but may invest a portion of its assets in
non-U.S. securities. The Fund may invest in securities issued in initial public offerings (IPOs).
In analyzing specific companies for possible investment, the portfolio managers ordinarily look for several of the following characteristics:
higher than average growth and strong potential for capital appreciation; substantial capacity for growth in revenue through either an expanding
market or expanding market share; a strong balance sheet; superior management; strong commitment to research and product development;
differentiated or superior products and services or a steady stream of new products and services. Investments are not restricted to companies
with a record of dividend payments. The portfolio managers sell securities as they deem appropriate in accordance with sound investment practices
and the Fund’s investment objective and as necessary for redemption purposes.
In addition to traditional research activities, the portfolio managers use Grassroots
SM
Research, which prepares research reports
based on field interviews with customers, distributors and competitors of the companies in which the Fund invests or contemplates investing,
provides a “second look” at potential investments, and checks marketplace assumptions about market demand for particular products and services.
The Fund may utilize foreign currency exchange contracts, options, stock index futures contracts and other derivative instruments. Although the
Fund did not invest significantly in derivative instruments as of the most recent fiscal year end, it may do so at any time. In response to
adverse market, economic, political or other conditions, the Fund may deviate from its principal strategies by making temporary investments of
some or all of its assets in high-quality fixed income securities, cash and cash equivalents. The Fund may be less likely to achieve its
investment objective when it does so.
Effective January 28, 2013, the Fund changed its name from “Allianz RCM Mid-Cap Fund” to “AllianzGI Mid-Cap Fund.”
|
|
|
|
|
Principal Risks
|
|
Among the principal risks of investing in the Fund, which could adversely affect its net asset value, yield and total return are (in alphabetical
order after the first four risks):
|
|
|
•
|
|
Market Risk
|
|
|
|
|
•
|
|
Issuer Risk
|
|
|
|
|
•
|
|
Equity Securities Risk
|
|
|
|
|
•
|
|
Smaller Company Risk
|
E-64
|
|
•
|
|
Credit and Counterparty Risk
|
|
|
|
|
•
|
|
Currency Risk
|
|
|
|
|
•
|
|
Derivatives Risk
|
|
|
|
|
•
|
|
Focused Investment Risk
|
|
|
|
|
•
|
|
IPO Risk
|
|
|
|
|
•
|
|
Leveraging Risk
|
|
|
|
|
•
|
|
Liquidity Risk
|
|
|
|
|
•
|
|
Management Risk
|
|
|
|
|
•
|
|
Non-U.S. Investment Risk
|
|
|
|
|
•
|
|
Turnover Risk
|
E-65
|
|
|
|
|
|
|
|
|
AllianzGI NFJ All-Cap Value Fund
|
|
Ticker Symbol:
|
|
|
|
PNFIX (Inst. Class)
|
|
|
|
|
|
|
|
|
|
Principal Investments and Strategies
|
|
Investment Objective
Seeks long-term
growth of capital
and income
|
|
Fund Focus
Undervalued common stocks in a broad range of
capitalizations
|
|
Approximate Primary
Capitalization Range
All capitalizations
|
|
|
|
Fund Category
Value Stocks
|
|
|
|
Dividend Frequency
At least annually
|
The Fund seeks to achieve its investment objective by normally investing in common stocks and other equity securities of companies representing a
broad range of market capitalizations (i.e., a blend of small, medium and large capitalization companies). The Fund normally invests a
significant portion of its assets in securities that the portfolio managers expect will generate income (for example, by paying dividends). The
Fund may also invest a portion of its assets in real estate investment trusts (REITs) and in non-U.S. securities, including emerging market
securities.
The portfolio managers use a value investing style focusing on companies whose securities the portfolio managers believe are undervalued. The
portfolio managers partition the Fund’s selection universe by industry and then identify what they believe to be undervalued securities in each
industry to determine potential holdings for the Fund representing a broad range of industry groups. The portfolio managers use quantitative
factors to screen the Fund’s selection universe, analyzing factors such as price momentum (i.e., changes in security price relative to changes in
overall market prices), earnings estimate revisions (i.e., changes in analysts’ earnings-per-share estimates) and fundamental changes. The
portfolio managers further narrow the universe through a combination of qualitative analysis and fundamental research. The portfolio managers
seek to identify attractive securities within each market capitalization range and select approximately 35 to 60 securities for the Fund.
Although the Fund will normally have some exposure to small, medium and large capitalization companies, the portfolio managers reserve the
flexibility to vary the Fund’s relative weighting to each capitalization range. As a result, market capitalization weightings will vary over
time. The portfolio managers consider selling a security when any of the factors leading to its purchase materially changes or when a more
attractive candidate is identified, including when an alternative security with strong fundamentals demonstrates a lower valuation ratio, a
higher dividend yield or favorable qualitative metrics.
In response to adverse market, economic, political or other conditions, the Fund may deviate from its principal strategies by making temporary
investments of some or all of its assets in high-quality fixed income securities, cash and cash equivalents. The Fund may be less likely to
achieve its investment objective when it does so.
Effective January 28, 2013, the Fund changed its name from “Allianz NFJ All-Cap Value Fund” to “AllianzGI NFJ All-Cap Value Fund.”
|
|
|
|
|
Principal Risks
|
|
Among the principal risks of investing in the Fund, which could adversely affect its net asset value, yield and total return, are (in
alphabetical order after the first four risks):
|
|
|
•
|
|
Market Risk
|
|
|
|
|
•
|
|
Issuer Risk
|
|
|
|
|
•
|
|
Equity Securities Risk
|
|
|
|
|
•
|
|
Smaller Company Risk
|
|
|
|
|
•
|
|
Credit and Counterparty Risk
|
E-66
|
|
•
|
|
Currency Risk
|
|
|
|
|
•
|
|
Emerging Markets Risk
|
|
|
|
|
•
|
|
Focused Investment Risk
|
|
|
|
|
•
|
|
Liquidity Risk
|
|
|
|
|
•
|
|
Management Risk
|
|
|
|
|
•
|
|
Non-U.S. Investment Risk
|
|
|
|
|
•
|
|
REIT and Real Estate-Related Investment Risk
|
|
|
|
|
•
|
|
Turnover Risk
|
E-67
|
|
|
|
|
|
|
|
|
AllianzGI NFJ Dividend Value Fund
|
|
Ticker Symbol:
|
|
|
|
NFJEX (Inst. Class)
|
|
|
|
|
|
|
|
|
|
Principal Investments and Strategies
|
|
Investment Objective
Seeks long-term
growth of capital
and income
|
|
Fund Focus
Income producing common stocks with potential for
capital appreciation
|
|
Approximate Primary
Capitalization Range
Greater than $3.5 billion
|
|
|
|
|
|
|
|
|
|
|
|
Fund Category
|
|
|
|
Dividend Frequency
|
|
|
|
Value Stocks
|
|
|
|
Quarterly
|
The Fund seeks to achieve its investment objective by normally investing at least 80% of its net assets (plus borrowings made for investment
purposes) in common stocks and other equity securities of companies that pay or are expected to pay dividends. Under normal market and other
conditions, the Fund will invest primarily in common stocks of companies with market capitalizations greater than $3.5 billion. The Fund may also
invest a portion of its assets in real estate investment trusts (REITs) and in non-U.S. securities, including emerging market securities.
The portfolio managers use a value investing style focusing on companies whose securities the portfolio managers believe are undervalued. The
portfolio managers partition the Fund’s selection universe by industry and then identify what they believe to be undervalued securities in each
industry to determine potential holdings for the Fund representing a broad range of industry groups. The portfolio managers use quantitative
factors to screen the Fund’s selection universe, analyzing factors such as price momentum (i.e., changes in security price relative to changes in
overall market prices), earnings estimate revisions (i.e., changes in analysts’ earnings-per-share estimates) and fundamental changes. In
addition, a portion of the securities selected for the Fund are identified primarily on the basis of their dividend yields. After still further
narrowing the universe through a combination of qualitative analysis and fundamental research, the portfolio managers select approximately 40 to
60 securities for the Fund. The portfolio managers consider selling a security when any of the factors leading to its purchase materially changes
or when a more attractive candidate is identified, including when an alternative security with strong fundamentals demonstrates a lower valuation
ratio, a higher dividend yield or favorable qualitative metrics.
In response to adverse market, economic, political or other conditions, the Fund may deviate from its principal strategies by making temporary
investments of some or all of its assets in high-quality fixed income securities, cash and cash equivalents. The Fund may be less likely to
achieve its investment objective when it does so.
Effective January 28, 2013, the Fund changed its name from “Allianz NFJ Dividend Value Fund” to “AllianzGI NFJ Dividend Value Fund.”
|
|
|
|
|
Principal Risks
|
|
Among the principal risks of investing in the Fund, which could adversely affect its net asset value, yield and total return, are (in
alphabetical order after the first three risks):
|
|
|
•
|
|
Market Risk
|
|
|
|
|
•
|
|
Issuer Risk
|
|
|
|
|
•
|
|
Equity Securities Risk
|
|
|
|
|
•
|
|
Credit and Counterparty Risk
|
|
|
|
|
•
|
|
Currency Risk
|
|
|
|
|
•
|
|
Emerging Markets Risk
|
E-68
|
|
•
|
|
Focused Investment Risk
|
|
|
|
|
•
|
|
Liquidity Risk
|
|
|
|
|
•
|
|
Management Risk
|
|
|
|
|
•
|
|
Non-U.S. Investment Risk
|
|
|
|
|
•
|
|
REIT and Real Estate-Related Investment Risk
|
|
|
|
|
•
|
|
Turnover Risk
|
E-69
|
|
|
|
|
|
|
|
|
AllianzGI NFJ International Value Fund
|
|
Ticker Symbol:
|
|
|
|
ANJIX (Inst. Class)
|
|
|
|
|
|
|
|
|
|
Principal Investments and Strategies
|
|
Investment Objective
Seeks long-term
growth of capital
and income
|
|
Fund Focus
Undervalued equity securities of non-U.S.
companies with capitalizations greater than $1
billion
|
|
Approximate Primary
Capitalization Range
Greater than $1 billion
|
|
|
|
|
|
|
|
|
|
|
|
Fund Category
|
|
|
|
Dividend Frequency
|
|
|
|
International Stocks
|
|
|
|
Quarterly
|
The Fund seeks to achieve its investment objective by normally investing at least 65% of its net assets (plus borrowings made for investment
purposes) in common stocks and other equity securities of non-U.S. companies with market capitalizations greater than $1 billion. The Fund
normally invests a significant portion of its assets in securities that the portfolio managers expect will generate income (for example, by
paying dividends). The Fund may invest up to 50% of its assets in emerging market securities. The Fund may also achieve its exposure to non-U.S.
equity securities through investing in American Depositary Receipts (ADRs).
The portfolio managers use a value investing style focusing on companies whose securities the portfolio managers believe are undervalued. The
portfolio managers partition the Fund’s selection universe by industry and then identify what they believe to be undervalued securities in each
industry to determine potential holdings for the Fund representing a broad range of industry groups. The portfolio managers use quantitative
factors to screen the Fund’s selection universe, analyzing factors such as price momentum (i.e., changes in security price relative to changes in
overall market prices), earnings estimate revisions (i.e., changes in analysts’ earnings-per-share estimates) and fundamental changes. After
still further narrowing the universe through a combination of qualitative analysis and fundamental research, the portfolio managers select
approximately 40 to 60 securities for the Fund. The portfolio managers consider selling a security when any of the factors leading to its
purchase materially changes or when a more attractive candidate is identified, including when an alternative security with strong fundamentals
demonstrates a lower valuation ratio, a higher dividend yield or favorable qualitative metrics.
In response to adverse market, economic, political or other conditions, the Fund may deviate from its principal strategies by making temporary
investments of some or all of its assets in high-quality fixed income securities, cash and cash equivalents. The Fund may be less likely to
achieve its investment objective when it does so.
Effective January 28, 2013, the Fund changed its name from “Allianz NFJ International Value Fund” to “AllianzGI NFJ International Value Fund.”
|
|
|
|
|
Principal Risks
|
|
Among the principal risks of investing in the Fund, which could adversely affect its net asset value, yield and total return, are (in
alphabetical order after the first six risks):
|
|
|
•
|
|
Market Risk
|
|
|
|
|
•
|
|
Issuer Risk
|
|
|
|
|
•
|
|
Equity Securities Risk
|
|
|
|
|
•
|
|
Non-U.S. Investment Risk
|
|
|
|
|
•
|
|
Emerging Markets Risk
|
|
|
|
|
•
|
|
Smaller Company Risk
|
E-70
|
|
•
|
|
Credit and Counterparty Risk
|
|
|
|
|
•
|
|
Currency Risk
|
|
|
|
|
•
|
|
Focused Investment Risk
|
|
|
|
|
•
|
|
Liquidity Risk
|
|
|
|
|
•
|
|
Management Risk
|
|
|
|
|
•
|
|
Turnover Risk
|
E-71
|
|
|
|
|
|
|
|
|
AllianzGI NFJ Large-Cap Value Fund
|
|
Ticker Symbol:
|
|
|
|
ANVIX (Inst. Class)
|
|
|
|
|
|
|
|
|
|
Principal Investments and Strategies
|
|
Investment Objective
Seeks long-term
growth of capital
and income
|
|
Fund Focus
Undervalued large capitalization common stocks
|
|
Approximate Primary
Capitalization Range
Market capitalizations
that equal or exceed the
market capitalization of
the 400th largest
company represented in
the Russell 1000 Index
|
|
|
|
|
|
|
|
|
|
|
|
Fund Category
|
|
|
|
Dividend Frequency
|
|
|
|
Value Stocks
|
|
|
|
Quarterly
|
The Fund seeks to achieve its investment objective by normally investing at least 80% of its net assets (plus borrowings made for investment
purposes) in common stocks and other equity securities of companies with large market capitalizations. The Fund currently considers a company’s
market capitalization to be large if it equals or exceeds the market capitalization of the 400th largest company represented in the Russell 1000
Index (i.e., a market capitalization of at least approximately $9.1 billion as of June 30, 2013). The Fund may invest in real estate investment
trusts (REITs) and in non-U.S. securities, including emerging market securities and normally invests a significant portion of its assets in
securities that the portfolio managers expect will generate income (for example, by paying dividends).
The portfolio managers use a value investing style focusing on companies whose securities the portfolio managers believe are undervalued. The
portfolio managers partition the Fund’s selection universe by industry and then identify what they believe to be undervalued securities in each
industry to determine potential holdings for the Fund representing a broad range of industry groups. The portfolio managers use quantitative
factors to screen the Fund’s selection universe, analyzing factors such as price momentum (i.e., changes in security price relative to changes in
overall market prices), earnings estimate revisions (i.e., changes in analysts’ earnings-per-share estimates) and fundamental changes. After
still further narrowing the universe through a combination of qualitative analysis and fundamental research, the portfolio managers select
approximately 40 to 80 securities for the Fund. The portfolio managers consider selling a security when any of the factors leading to its
purchase materially changes or when a more attractive candidate is identified, including when an alternative security with strong fundamentals
demonstrates a lower valuation ratio, a higher dividend yield or favorable qualitative metrics.
In response to adverse market, economic, political or other conditions, the Fund may deviate from its principal strategies by making temporary
investments of some or all of its assets in high-quality fixed income securities, cash and cash equivalents. The Fund may be less likely to
achieve its investment objective when it does so.
Effective January 28, 2013, the Fund changed its name from “Allianz NFJ Large-Cap Value Fund” to “AllianzGI NFJ Large-Cap Value Fund.”
|
|
|
|
|
Principal Risks
|
|
Among the principal risks of investing in the Fund, which could adversely affect its net asset value, yield and total return, are (in
alphabetical order after the first three risks):
|
|
|
•
|
|
Market Risk
|
|
|
|
|
•
|
|
Issuer Risk
|
|
|
|
|
•
|
|
Equity Securities Risk
|
|
|
|
|
•
|
|
Credit and Counterparty Risk
|
|
|
|
|
•
|
|
Currency Risk
|
|
|
|
|
•
|
|
Emerging Markets Risk
|
|
|
|
|
•
|
|
Focused Investment Risk
|
E-72
|
|
•
|
|
Liquidity Risk
|
|
|
|
|
•
|
|
Management Risk
|
|
|
|
|
•
|
|
Non-U.S. Investment Risk
|
|
|
|
|
•
|
|
REIT and Real Estate-Related Investment Risk
|
|
|
|
|
•
|
|
Turnover Risk
|
E-73
|
|
|
|
|
|
|
|
|
AllianzGI NFJ Mid-Cap Value Fund
|
|
Ticker Symbol:
|
|
|
|
PRNIX (Inst. Class)
|
|
|
|
|
|
|
|
|
|
Principal Investments and Strategies
|
|
Investment Objective
Seeks long-term
growth of capital
and income
|
|
Fund Focus
Undervalued medium capitalization common stocks
|
|
Approximate Primary
Capitalization Range
Between $2 billion and
$17.5 billion
|
|
|
|
|
|
|
|
|
|
|
|
Fund Category
|
|
|
|
Dividend Frequency
|
|
|
|
Value Stocks
|
|
|
|
At least annually
|
The Fund seeks to achieve its investment objective by normally investing at least 80% of its net assets (plus borrowings made for investment
purposes) in common stocks and other equity securities of companies with medium market capitalizations. The Fund currently defines medium market
capitalization companies as those companies with market capitalizations between $2 billion and $17.5 billion. The Fund may continue to hold
securities of a portfolio company that subsequently appreciates above the medium market capitalization threshold. Because of this, the Fund may
have less than 80% of its net assets in medium market capitalization stocks at any given time. The Fund normally invests a significant portion of
its assets in securities of companies that the portfolio managers expect will generate income (for example, by paying dividends).
The portfolio managers use a value investing style focusing on companies whose securities the portfolio managers believe are undervalued. The
portfolio managers partition the Fund’s selection universe by industry and then identify what they believe to be undervalued securities in each
industry to determine potential holdings for the Fund representing a broad range of industry groups. The portfolio managers use quantitative
factors to screen the Fund’s selection universe, analyzing factors such as price momentum (i.e., changes in security price relative to changes in
overall market prices), earnings estimate revisions (i.e., changes in analysts’ earnings-per-share estimates) and fundamental changes. After
still further narrowing the universe through a combination of qualitative analysis and fundamental research, the portfolio managers select
approximately 90 to 110 securities for the Fund. The portfolio managers consider selling a security when any of the factors leading to its
purchase materially changes or when a more attractive candidate is identified, including when an alternative security with strong fundamentals
demonstrates a lower valuation ratio, a higher dividend yield or favorable qualitative metrics.
The Fund may also invest in other kinds of equity securities, including preferred stocks and convertible securities. The Fund may invest up to
25% of its assets in non-U.S. securities, including emerging market securities, except that it may invest without limit in American Depositary
Receipts (ADRs). The Fund may invest up to 20% of its assets in real estate investment trusts (REITs).
In response to adverse market, economic, political or other conditions, the Fund may deviate from its principal strategies by making temporary
investments of some or all of its assets in high-quality fixed income securities, cash and cash equivalents. The Fund may be less likely to
achieve its investment objective when it does so.
Effective December 1, 2011, the Fund changed its name from “Allianz NFJ Renaissance Fund” to “Allianz NFJ Mid-Cap Value Fund.” Effective January
28, 2013, the Fund changed its name from “Allianz NFJ Mid-Cap Value Fund” to “AllianzGI NFJ Mid-Cap Value Fund.”
E-74
|
|
|
|
|
Principal Risks
|
|
Among the principal risks of investing in the Fund, which could adversely affect its net asset value, yield and total return, are (in
alphabetical order after the first four risks):
|
|
|
•
|
|
Market Risk
|
|
|
|
|
•
|
|
Issuer Risk
|
|
|
|
|
•
|
|
Equity Securities Risk
|
|
|
|
|
•
|
|
Smaller Company Risk
|
|
|
|
|
•
|
|
Credit and Counterparty Risk
|
|
|
|
|
•
|
|
Currency Risk
|
|
|
|
|
•
|
|
Emerging Markets Risk
|
|
|
|
|
•
|
|
Focused Investment Risk
|
|
|
|
|
•
|
|
Liquidity Risk
|
|
|
|
|
•
|
|
Management Risk
|
|
|
|
|
•
|
|
Non-U.S. Investment Risk
|
|
|
|
|
•
|
|
REIT and Real Estate-Related Investment Risk
|
|
|
|
|
•
|
|
Turnover Risk
|
E-75
|
|
|
|
|
|
|
|
|
AllianzGI NFJ Small-Cap Value Fund
|
|
Ticker Symbol:
|
|
|
|
PSVIX (Inst. Class)
|
|
|
|
|
|
|
|
|
|
Principal Investments and Strategies
|
|
Investment Objective
Seeks long-term
growth of capital
and income
|
|
Fund Focus
Undervalued small
capitalization common
stocks
|
|
Approximate Primary
Capitalization
Range
Between $100
million and $4
billion
|
|
|
|
|
|
|
|
|
|
|
|
Fund Category
|
|
|
|
Dividend Frequency
|
|
|
|
Value Stocks
|
|
|
|
At least annually
|
The Fund seeks to achieve its investment objective by normally investing at least 80% of its
net assets (plus borrowings made for investment purposes) in common stocks and other equity
securities of companies with smaller market capitalizations. The Fund currently considers
smaller market capitalization companies to be companies with market capitalizations of between
$100 million and $4 billion. The Fund may continue to hold securities of a portfolio company
that subsequently appreciates above the smaller market capitalization threshold. Because of
this, the Fund may have less than 80% of its net assets in smaller market capitalization stocks
at any given time. The Fund normally invests a significant portion of its assets in securities
that the portfolio managers expect will generate income (for example, by paying dividends). The
Fund may also invest a portion of its assets in real estate investment trusts (REITs) and
non-U.S. securities, including emerging market securities.
The portfolio managers use a value investing style focusing on companies whose securities the
portfolio managers believe are undervalued. The portfolio managers partition the Fund’s
selection universe by industry and then identify what they believe to be undervalued securities
in each industry to determine potential holdings for the Fund representing a broad range of
industry groups. The portfolio managers use quantitative factors to screen the Fund’s selection
universe, analyzing factors such as price momentum (i.e., changes in security price relative to
changes in overall market prices), earnings estimate revisions (i.e., changes in analysts’
earnings-per-share estimates) and fundamental changes. After still further narrowing the
universe through a combination of qualitative analysis and fundamental research, the portfolio
managers select approximately 100 to 150 securities for the Fund. The portfolio managers
consider selling a security when any of the factors leading to its purchase materially changes
or when a more attractive candidate is identified, including when an alternative security with
strong fundamentals demonstrates a lower valuation ratio, a higher dividend yield or favorable
qualitative metrics.
In response to adverse market, economic, political or other conditions, the Fund may deviate
from its principal strategies by making temporary investments of some or all of its assets in
high-quality fixed income securities, cash and cash equivalents. The Fund may be less likely to
achieve its investment objective when it does so.
Effective January 28, 2013, the Fund changed its name from “Allianz NFJ Small-Cap Value Fund”
to “AllianzGI NFJ Small-Cap Value Fund.”
|
|
|
|
|
Principal Risks
|
|
Among the principal risks of investing in the Fund, which could adversely affect its net asset
value, yield and total return, are (in alphabetical order after the first four risks):
|
|
|
•
|
|
Market Risk
|
|
|
|
|
•
|
|
Issuer Risk
|
|
|
|
|
•
|
|
Equity Securities Risk
|
|
|
|
|
•
|
|
Smaller Company Risk
|
|
|
|
|
•
|
|
Credit and Counterparty Risk
|
E-76
|
|
•
|
|
Currency Risk
|
|
|
|
|
•
|
|
Emerging Markets Risk
|
|
|
|
|
•
|
|
Focused Investment Risk
|
|
|
|
|
•
|
|
Liquidity Risk
|
|
|
|
|
•
|
|
Management Risk
|
|
|
|
|
•
|
|
Non-U.S. Investment Risk
|
|
|
|
|
•
|
|
REIT and Real Estate-Related Investment Risk
|
|
|
|
|
•
|
|
Turnover Risk
|
E-77
|
|
|
|
|
|
|
|
|
AllianzGI Opportunity Fund
|
|
Ticker Symbol:
|
|
|
|
POFIX (Inst. Class)
|
|
|
|
|
|
|
|
|
|
Principal Investments and Strategies
|
|
Investment Objective
Seeks capital
appreciation; No
consideration is
given to income
|
|
Fund Focus
Smaller capitalization
common stocks
|
|
Approximate Primary
Capitalization
Range
Approximately that
of the Russell 2000
Index
|
|
|
|
|
|
|
|
|
|
|
|
Fund Category
|
|
|
|
Dividend Frequency
|
|
|
|
Blend Stocks
|
|
|
|
At least annually
|
The Fund seeks to achieve its objective by normally investing at least 65% of its assets in
common stocks of small-cap companies with market capitalizations comparable to those of
companies included in the Russell 2000 Index (between $23 million to $5.8 billion as of June
30, 2013). Although the Fund focuses its investments on common stocks of small-cap companies,
there may be significant exposure to mid-cap or larger stocks in the portfolio.
The portfolio managers apply a systematic approach to individual stock selection and portfolio
optimization. Through their research platform, the team utilizes a quantitative process to
identify stocks of companies that they believe exhibit positive change, sustainability, and
timely market recognition. The investment process begins by assigning each of the approximately
2,000 stocks that the portfolio managers consider to constitute the U.S. small-cap universe a
score from the team’s “alpha” model, which seeks to rank issuers on their potential to generate
returns in excess of broader market movements. Quantitative factors in the model are grouped
into three broad categories: Positive Change (accelerating earnings expectations, and recent
analyst upgrades), Sustainability (improving cash flows, attractive valuation and improving
balance sheet quality) and Timeliness (relative strength, investor sentiment and industry
strength).
The strategy incorporates risk forecasts through an optimization process that is designed to
create a portfolio that balances alpha (the stocks with the strongest alpha scores) and risk
expectations. The investment team reviews each stock recommended by the optimization process as
a fundamental check during the portfolio construction process. This fundamental check
incorporates late-breaking information that may not yet be incorporated into the model’s
forecasts and is intended to reduce risk in the final portfolio.
Industry weightings are periodically evaluated versus the Fund’s benchmark, which is currently
the Russell 2000 Index; the portfolio managers may trim positions in industries that become
significantly overweight relative to the benchmark and may sell a security when an alternative
investment opportunity is deemed more attractive. The portfolio managers seek to diversify the
portfolio among different industries, though the Fund may from time to time invest
significantly in related industries. The Fund may experience a high portfolio turnover rate as
a consequence of this investment strategy and the portfolio managers’ optimization process.
The Fund may invest in other kinds of equity securities, including preferred stocks,
convertible securities and warrants. The Fund may invest up to 15% of its assets in non-U.S.
securities, except that it may invest without limit in American Depositary Receipts (ADRs). The
Fund may invest a substantial portion of its assets in securities issued in initial public
offerings (IPOs).
In response to adverse market, economic, political or other conditions, the Fund may deviate
from its principal strategies by making temporary investments of some or all of its assets in
high-quality fixed income securities, cash and cash equivalents. The Fund may be less likely to
achieve its investment objective when it does so.
Effective January 28, 2013, the Fund changed its name from “Allianz AGIC Opportunity Fund” to
“AllianzGI Opportunity Fund.”
E-78
|
|
|
|
|
Principal Risks
|
|
Among the principal risks of investing in the Fund, which could adversely affect its net asset
value, yield and total return, are (in alphabetical order after the first four risks):
|
|
|
•
|
|
Market Risk
|
|
|
|
|
•
|
|
Issuer Risk
|
|
|
|
|
•
|
|
Equity Securities Risk
|
|
|
|
|
•
|
|
Smaller Company Risk
|
|
|
|
|
•
|
|
Credit and Counterparty Risk
|
|
|
|
|
•
|
|
Currency Risk
|
|
|
|
|
•
|
|
Focused Investment Risk
|
|
|
|
|
•
|
|
IPO Risk
|
|
|
|
|
•
|
|
Liquidity Risk
|
|
|
|
|
•
|
|
Management Risk
|
|
|
|
|
•
|
|
Non-U.S. Investment Risk
|
|
|
|
|
•
|
|
Turnover Risk
|
E-79
|
|
|
|
|
|
|
|
|
AllianzGI Small-Cap Blend Fund
|
|
Ticker Symbol:
|
|
|
|
AZBIX (Inst. Class)
|
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|
|
|
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|
|
|
|
Principal Investments and Strategies
|
|
Investment Objective
Seeks long-term
capital
appreciation
|
|
Fund Focus
Equity securities of
smaller and micro
capitalization U.S. issuers
|
|
Approximate Primary
Capitalization
Range
Smaller than the
largest company in
the Russell 2000
Index
|
|
|
|
|
|
|
|
|
|
|
|
Fund Category
|
|
|
|
Dividend Frequency
|
|
|
|
Blend Stocks
|
|
|
|
At least annually
|
The Fund seeks to achieve its objective by normally investing at
least 80% of its net assets (plus borrowings made for investment
purposes) in companies with smaller market capitalizations. The
Fund expects to invest principally in U.S. companies but may
invest to a lesser extent in non-U.S. companies. The Fund
currently considers smaller market capitalization companies to
be companies with market capitalizations that are smaller than
the largest company in the Russell 2000 Index (approximately
$5.8 billion as of June 30, 2013). The portfolio managers
generally seek exposure to smaller capitalization companies by
employing four distinct smallcap strategies or “sleeves” for
selecting individual stocks:
|
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•
|
|
U.S. Systematic Small-Cap;
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|
•
|
|
Small-Cap Managed Volatility;
|
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|
•
|
|
U.S. Emerging Growth; and
|
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|
|
•
|
|
Micro-cap.
|
The allocation of Fund assets among these sleeves is set
from time to time and periodically adjusted through a
collaborative effort among the portfolio managers. Such
allocations will not be equal and allocations to certain sleeves
may be significantly larger than allocations to other sleeves.
The portfolio managers consider whether to sell a particular
security when a factor applicable to the relevant sleeve, or to
the Fund as a whole, materially changes or when a more
attractive investment candidate is available. While the sleeves
may use investment strategies that are similar to those used by
other Funds managed by the Adviser with the same or similar
names as the sleeves, the investment strategies used by the Fund
will not be identical to the investment strategies used by other
such Funds.
The portion of the Fund’s assets allocated to the U.S.
Systematic Small-Cap sleeve will, under normal conditions, be
invested primarily in common stocks of companies with smaller
market capitalizations that are listed on U.S. exchanges.
Securities are selected using a quantitative process
incorporating a proprietary alpha model to identify stocks of
companies that exhibit positive change (i.e., seeking to
generate “alpha”), sustainability, and timely market
recognition. Quantitative factors in this alpha model are
grouped into three broad categories: positive change
(accelerating earnings expectations, recent analyst upgrades),
sustainability (improving cash flows, attractive valuation and
improving balance sheet quality) and timeliness (relative
strength, investor sentiment and industry strength). The
strategy incorporates risk forecasts through an optimization
process to create a portfolio that balances expected alpha and
risk. The investment team reviews each stock recommended by the
optimization process as a qualitative check of the investment
thesis during the portfolio construction process.
The Small-Cap Managed Volatility sleeve employs a strategy
for selecting individual stocks while also focusing on the
sleeve’s volatility profile. This focus may result in the sleeve
outperforming the general securities market during periods of
flat or negative market performance, and underperforming the
general securities market during periods of strong positive
market performance that are typically led by growth oriented
stocks with higher correlation to broader market movements. This
strategy
E-80
utilizes a dynamic quantitative process combined with a
fundamentals-based, actively-managed security selection process
to make individual security and sector selection decisions.
Under the Small-Cap Managed Volatility strategy, the portfolio
managers seek to emphasize stocks that exhibit a lower
sensitivity to broader market movements (or “beta”), as they
believe that stocks with higher betas are not rewarded with
commensurately higher returns by the market. The portfolio
construction process for the Small-Cap Managed Volatility sleeve
is iterative in nature. Initially, the portfolio managers build
a fully invested and diversified portfolio subject to sector and
security constraints with a goal of minimizing total volatility
as measured by the standard deviation of returns. The team then
overlays a proprietary stock selection model and seeks to build
a final portfolio of stocks that considers the trade off between
volatility and sources of relative performance (or “alpha”).
Under the U.S. Emerging Growth strategy, the portfolio
managers follow a disciplined, fundamental, bottom-up research
process for selecting individual stocks. Their strategy focuses
on companies undergoing positive fundamental change, with
sustainable growth characteristics. Under this strategy, the
portfolio managers look for what they believe to be the best
risk-reward candidates within the investment universe, defined
as equities that are expected to appreciate based on
accelerating fundamental performance, rising expectations and
related multiple expansion. Once the portfolio managers believe
that positive fundamental change is occurring and will likely
lead to accelerating fundamental performance, they seek evidence
that such change will be a longer-term sustainable trend.
Lastly, the portfolio managers determine if the investment is
timely with regard to relative valuation and price strength,
exploiting stocks that they believe are under-priced relative to
their potential.
Under the Micro-cap strategy, the portfolio managers invest
in stocks of micro-cap companies. The Fund currently considers
micro-cap companies to be companies with market capitalizations
that are smaller than the largest company in the Russell
Microcap Growth Index (approximately $2.4 billion as of June 30,
2013). The Micro-cap sleeve is focused on micro-cap stocks which
the portfolio managers believe have the potential for robust
growth. The portfolio managers believe that the performance of
micro-cap stocks is generally based on factors specific to an
individual stock rather than general economic conditions, and
the Micro-cap strategy therefore generally favors an actively
managed approach.
In addition to common stocks and other equity securities
(such as preferred stocks, convertible securities and warrants),
the Fund may invest a substantial portion of its assets in
securities issued in initial public offerings (IPOs). The Fund
may invest up to 15% of its assets in non-U.S. securities,
except that it may invest without limit in American Depositary
Receipts (ADRs). The Fund may also invest a portion of its
assets in real estate investment trusts (REITs). In order to
gain exposure to desired asset classes or securities, or for
hedging or other investment purposes, the Fund may also utilize
foreign currency exchange contracts, options, stock index
futures contracts, warrants and other derivative instruments.
In response to adverse market, economic, political and
other conditions, the Fund may deviate from its principal
strategies by making temporary investments of some or all of its
assets in high-quality fixed income securities, cash and cash
equivalents. The Fund may be less likely to achieve its
investment objective when it does so.
E-81
|
|
|
|
|
Principal Risks
|
|
Among the principal risks of investing in the
Fund, which could adversely affect its net asset
value, yield and total return, are (in
alphabetical order after the first five risks):
|
|
|
•
|
|
Market Risk
|
|
|
|
|
•
|
|
Issuer Risk
|
|
|
|
|
•
|
|
Equity Securities Risk
|
|
|
|
|
•
|
|
Non-U.S. Investment Risk
|
|
|
|
|
•
|
|
Smaller Company Risk
|
|
|
|
|
•
|
|
Credit and Counterparty
Risk
|
|
|
|
|
•
|
|
Currency Risk
|
|
|
|
|
•
|
|
Derivatives Risk
|
|
|
|
|
•
|
|
Focused Investment Risk
|
|
|
|
|
•
|
|
IPO Risk
|
|
|
|
|
•
|
|
Leveraging Risk
|
|
|
|
|
•
|
|
Liquidity Risk
|
|
|
|
|
•
|
|
Management Risk
|
|
|
|
|
•
|
|
REIT and Real
Estate-Related Investment Risk
|
|
|
|
|
•
|
|
Turnover Risk
|
E-82
|
|
|
|
|
|
|
|
|
AllianzGI Technology Fund
|
|
Ticker Symbol:
|
|
|
|
DRGTX (Inst. Class)
|
|
|
|
|
|
|
|
|
|
Principal Investments and Strategies
|
|
Investment Objective
Seeks long-term
capital appreciation
|
|
Fund Focus
Equity securities of U.S.
and non-U.S.
technology-related
companies
|
|
Approximate Primary
Capitalization
Range
Greater than $500
million
|
|
|
|
|
|
|
|
|
|
|
|
Fund Category
|
|
|
|
Dividend Frequency
|
|
|
|
Sector-Related Stocks
|
|
|
|
At least annually
|
The Fund seeks to achieve its investment objective by normally investing at least 80% of its net
assets (plus borrowings made for investment purposes) in common stocks and other equity
securities of technology companies and in derivatives and other synthetic instruments that have
economic characteristics similar to common stocks and other equity securities of technology
companies. The Fund’s use of derivative instruments will often give rise to forms of leverage and
could have the effect of either magnifying or limiting the Fund’s gains and losses depending upon
the particular derivative strategies used. The Fund normally will allocate its investments among
securities of issuers located in at least three different countries, and may invest up to 50% of
its assets in non-U.S. securities, including emerging market securities. Under normal market and
other conditions, the Fund will invest no more than 25% of its assets in any one country outside
of the United States or Japan. The Fund intends to invest primarily in companies with market
capitalizations greater than $500 million, with no more than 15% of its assets in technology
companies with market capitalizations below $100 million. The Fund is “non-diversified,” which
means that it may invest a significant portion of its assets in a relatively small number of
issuers, which may increase risk. The Fund may invest a substantial portion of its assets in
securities issued in initial public offerings (IPOs).
The portfolio managers define technology companies as those that provide technology products or
services or utilize technology to gain competitive advantages. These include internet products
and services, computers and computer peripherals, software, electronic components and systems,
communications equipment and services, semiconductors, media and information services,
pharmaceuticals, hospital supply and medical devices, biotechnology products, environmental
services, chemical products and synthetic materials, defense and aerospace products and services,
nanotechnology, energy equipment and services and others. The portfolio managers evaluate the
fundamental value and prospects for growth of individual companies and focus on those companies
that they expect will have higher than average rates of growth and strong potential for capital
appreciation. Investments are not restricted to companies with a record of dividend payments.
The portfolio managers develop forecasts of economic growth, inflation, and interest rates that
they use to help identity those regions and individual countries that are believed likely to
offer the best investment opportunities. In addition to traditional research activities, the
portfolio managers use Grassroots
SM
Research, which prepares research reports based on
field interviews with customers, distributors and competitors of the companies in which the Fund
invests or contemplates investing, and provides a “second look” at potential investments and
checks marketplace assumptions about market demand for particular products and services.
The Fund ordinarily expects to use derivative instruments and related techniques in an attempt to
take advantage of perceived market inefficiencies or expected security price movements, to
enhance the Fund’s investment returns, to hedge against market and other risks in the portfolio
and/or to obtain market exposure with reduced transactions costs. In an effort to maximize
opportunities and the use of research gathered as described below, portfolio managers will also
employ techniques based on derivative instruments. Specifically, the Fund expects, from time to
time, to (i) purchase call options on securities whose prices the portfolio managers believe will
increase, (ii) purchase and write (sell) put and call options (including “naked” options
E-83
on
individual securities not held in the Fund’s portfolio), including combinations of put and call
options, (iii) engage in short sales, and (iv) employ other derivative instruments with respect
to securities, indices, currencies and other assets. The Fund may write “naked” options and
engage in short sales to the maximum extent permitted under applicable regulation. The Fund may
enter into futures and forward contracts, and may write call options on indices and
exchanged-traded funds. The Fund may enter into credit default, cross-currency, interest rate,
total return, variance and other forms of swap agreements in order to manage its exposure to
credit, currency and interest rate risk. There is no assurance that these strategies will achieve
their objectives and they may result in losses to the Fund. Short sales may expose the Fund to
the risk that it will be required to cover its short position at a time when the securities have
appreciated in value, thus resulting in a loss to the Fund, which may be theoretically unlimited.
The derivative instruments to be employed by the Fund are described generally under “Investment
Objectives and Policies—Derivative Instruments” in the Statement of Additional Information.
The portfolio managers sell securities as they deem appropriate in accordance with sound
investment practices and the Fund’s investment objectives and as necessary for redemption
purposes. In response to adverse market, economic, political or other conditions, the Fund may
deviate from its principal strategies by making temporary investments of some or all of its
assets in high-quality fixed income securities, cash and cash equivalents. The Fund may be less
likely to achieve its investment objective when it does so.
Effective January 28, 2013, the Fund changed its name from “Allianz RCM Technology Fund” to
“AllianzGI Technology Fund.”
|
|
|
|
|
Principal Risks
|
|
Among the principal risks of investing in the Fund, which could adversely affect its net asset
value, yield and total return, are (in alphabetical order after the first six risks):
|
|
|
•
|
|
Market Risk
|
|
|
|
|
•
|
|
Issuer Risk
|
|
|
|
|
•
|
|
Equity Securities Risk
|
|
|
|
|
•
|
|
Focused Investment Risk (Technology-Related Risk)
|
|
|
|
|
•
|
|
Derivatives Risk
|
|
|
|
|
•
|
|
Smaller Company Risk
|
|
|
|
|
•
|
|
Credit and Counterparty Risk
|
|
|
|
|
•
|
|
Currency Risk
|
|
|
|
|
•
|
|
Emerging Markets Risk
|
|
|
|
|
•
|
|
IPO Risk
|
|
|
|
|
•
|
|
Leveraging Risk
|
|
|
|
|
•
|
|
Liquidity Risk
|
|
|
|
|
•
|
|
Management Risk
|
|
|
|
|
•
|
|
Non-U.S. Investment Risk
|
|
|
|
|
•
|
|
Short Selling Risk
|
|
|
|
|
•
|
|
Turnover Risk
|
E-84
|
|
|
|
|
|
|
|
|
AllianzGI U.S. Managed Volatility Fund
|
|
Ticker Symbol:
|
|
|
|
NGFIX (Inst. Class)
|
|
|
|
|
|
|
|
|
|
Principal Investments and Strategies
|
|
Investment Objective
Seeks long-term
capital appreciation
|
|
Fund Focus
U.S. large-cap equity
securities
|
|
Approximate Primary
Capitalization
Range
Same as the Russell
1000 Index
|
|
|
|
|
|
|
|
|
|
|
|
Fund Category
|
|
|
|
Dividend Frequency
|
|
|
|
Blend Stocks
|
|
|
|
At least annually
|
The Fund seeks to achieve its investment objective by normally investing at least 80% of its net
assets (plus borrowings made for investment purposes) in equity securities of U.S. companies. The
Fund currently defines “U.S. companies” as those companies that (i) are incorporated in the U.S.,
(ii) derive at least 50% of their revenue or profits from business activities in the U.S. or
(iii) maintain at least 50% of their assets in the U.S. The Fund expects to invest typically in
companies with market capitalizations at or above the lowest market capitalization of companies
represented in the Russell 1000 Index (approximately $487 million as of June 30, 2013). The Fund
intends to utilize an investment strategy that focuses on the overall management of portfolio
volatility. This focus may result in the Fund outperforming the general securities market during
periods of flat or negative market performance, and underperforming the general securities market
during periods of strong positive market performance.
The portfolio managers use a dynamic quantitative process combined with a fundamentals-based,
actively-managed security selection process to make individual security and sector selection
decisions. Under the Sub-Adviser’s managed volatility strategy, the portfolio managers seek to
emphasize stocks that exhibit a lower sensitivity to broader market movements (or “beta”), as
they believe that stocks with higher betas are not rewarded with commensurately higher returns by
the market. The portfolio construction process is iterative in nature. Initially, the portfolio
managers build a fully invested and diversified portfolio subject to sector, capitalization and
security constraints with a goal of minimizing total volatility as measured by the standard
deviation of returns. The team then overlays a proprietary stock selection model and seeks to
build a final portfolio of stocks that considers the trade off between volatility and sources of
relative performance (or “alpha”). The portfolio managers consider whether to sell a particular
security when any of the above factors materially changes, or when a more attractive investment
candidate is available.
In addition to equity securities (such as preferred stocks, convertible securities and warrants)
and equity-related instruments, the Fund may invest in securities issued in initial public
offerings (IPOs), and utilize foreign currency exchange contracts, options, stock index futures
contracts, warrants and other derivative instruments. Although the Fund does not expect to invest
significantly in derivative instruments during its current fiscal year, it may do so at any time.
In response to adverse market, economic, political or other conditions, the Fund may deviate from
its principal strategies by making temporary investments of some or all of its assets in
high-quality fixed income securities, cash and cash equivalents. The Fund may be less likely to
achieve its investment objective when it does so.
Effective December 1, 2011, the Fund changed its name from “Allianz AGIC Systematic Growth Fund”
to “Allianz AGIC U.S. Managed Volatility Fund” in connection with a change in the Fund’s
investment strategy. Effective January 28, 2013, the Fund changed its name from “Allianz AGIC
U.S. Managed Volatility Fund” to “AllianzGI U.S. Managed Volatility Fund.”
E-85
|
|
|
|
|
Principal Risks
|
|
Among the principal risks of investing in the Fund, which could adversely affect its net asset
value, yield and total return, are (in alphabetical order after the first three risks):
|
|
|
•
|
|
Market Risk
|
|
|
|
|
•
|
|
Issuer Risk
|
|
|
|
|
•
|
|
Equity Securities Risk
|
|
|
|
|
•
|
|
Credit and Counterparty Risk
|
|
|
|
|
•
|
|
Derivatives Risk
|
|
|
|
|
•
|
|
Focused Investment Risk
|
|
|
|
|
•
|
|
IPO Risk
|
|
|
|
|
•
|
|
Liquidity Risk
|
|
|
|
|
•
|
|
Management Risk
|
|
|
|
|
•
|
|
Smaller Company Risk
|
|
|
|
|
•
|
|
Turnover Risk
|
E-86
|
|
|
|
|
|
|
|
|
PIMCO Build America Bond Exchange-Traded Fund
|
|
Ticker Symbol:
|
|
|
|
BABZ
|
|
|
|
|
|
|
|
Principal Investments and Strategies
|
|
Investment Objective
Seeks maximum income,
consistent with
preservation of capital
|
|
Credit Quality
B to Aaa; max 20% of total assets below Baa
|
|
|
|
|
|
|
|
|
|
Fund Category
|
|
Dividend Frequency
|
|
|
|
Taxable Municipal
|
|
Monthly
|
|
|
|
|
|
|
|
|
|
Main Investments
|
|
Duration
|
|
|
|
Taxable municipal securities
issued under the Build
America Bond program
|
|
+/- 2 years of its benchmark
|
|
|
|
|
|
|
|
|
|
Non-U.S. Dollar Denominated
Instruments
|
|
|
|
|
|
0%
|
|
|
|
|
|
|
|
|
|
|
|
The Fund seeks to achieve its investment objective by investing under normal
circumstances at least 80% of its assets in taxable municipal debt
securities publicly issued under the Build America Bond program. The Build
America Bond program was created as part of the American Recovery and
Reinvestment Act of 2009 (the “Act”) and provided for the issuance of
taxable municipal securities on which the issuer receives U.S. Government
subsidies for the interest paid (“Build America Bonds”). Because the U.S.
Congress did not extend the Build America Bond program, issuance of Build
America Bonds ceased on December 31, 2010. The Build America Bonds
outstanding as of December 31, 2010 will continue to be eligible for U.S.
Government subsidies for the interest paid for the life of the Build America
Bonds. There can be no assurance when or if the Build America Bond program
will be reinstated in any form.
|
|
|
|
|
|
|
|
|
|
The Fund invests in U.S. dollar-denominated Fixed Income Instruments that
are primarily investment grade, but may invest up to 20% of its total assets
in high yield securities (“junk bonds”) rated B or higher by Moody’s
Investors Service, Inc. (“Moody’s”), or equivalently rated by Standard &
Poor’s Ratings Services (“S&P”) or Fitch, Inc. (“Fitch”), or, if unrated,
determined by Pacific Investment Management Company LLC (“PIMCO”) to be of
comparable quality. “Fixed Income Instruments” include bonds, debt
securities and other similar instruments issued by various U.S. and non-U.S.
public- or private-sector entities. The average portfolio duration of the
Fund normally varies within two years (plus or minus) of the portfolio
duration of the securities comprising the Barclays Build America Bond Index,
as calculated by PIMCO, which as of September 30, 2013, was 10.87 years.
Duration is a measure used to determine the sensitivity of a security’s
price to changes in interest rates. The longer a security’s duration, the
more sensitive it will be to changes in interest rates.
|
|
|
|
|
|
|
|
|
|
Municipal bonds generally are issued by or on behalf of states and local
governments and their agencies, authorities and other instrumentalities.
Unlike most municipal bonds, interest received on Build America Bonds is
subject to federal and state income tax. The Fund may invest 25% or more of
its total assets in bonds that finance similar projects, such as those
relating to education, health care, housing, transportation, and utilities.
The portfolio manager focuses on bonds with the potential to offer
attractive current income, typically looking for bonds that can provide
consistently attractive current yields or that are trading at competitive
market prices. The Fund may purchase and sell securities on a when-issued,
delayed delivery or forward commitment basis. The Fund may, without
limitation, 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).
|
E-87
|
|
|
|
|
|
|
Principal Risks
|
|
|
|
|
|
|
|
It is possible to lose money on an investment in the Fund. The principal
risks of investing in the Fund, which could adversely affect its net asset
value, yield and total return are:
|
|
|
|
|
|
|
|
|
|
Market Trading Risk:
the risk that an active secondary trading market for
Fund shares does not continue once developed, that the Fund may not continue
to meet a listing exchange’s trading or listing requirements, or that Fund
shares trade at prices other than the Fund’s net asset value
|
|
|
|
|
|
|
|
|
|
Limited Issuance Risk:
the risk that Build America Bonds will not be
actively traded, that the Fund may experience difficulty in locating
suitable Build America Bonds for purchase, that the non-extension of the
program will negatively affect the value of existing Build America Bonds and
that Build America Bonds may experience greater illiquidity as compared to
other municipal obligations
|
|
|
|
|
|
|
|
|
|
Interest Rate Risk:
the risk that fixed income securities will decline in
value because of an increase in interest rates; a fund with a longer average
portfolio duration will be more sensitive to changes in interest rates than
a fund with a shorter average portfolio duration
|
|
|
|
|
|
|
|
|
|
Credit Risk:
the risk that the Fund could lose money if the issuer or
guarantor of a fixed income security, or the counterparty to a forward
commitment transaction, is unable or unwilling to meet its financial
obligations
|
|
|
|
|
|
|
|
|
|
High Yield Risk:
the risk that high yield securities and unrated securities
of similar credit quality (commonly known as “junk bonds”) are subject to
greater levels of credit and liquidity risks. High yield securities are
considered primarily speculative with respect to the issuer’s continuing
ability to make principal and interest payments
|
|
|
|
|
|
|
|
|
|
Market Risk:
the risk that the value of securities owned by the Fund may go
up or down, sometimes rapidly or unpredictably, due to factors affecting
securities markets generally or particular sectors
|
|
|
|
|
|
|
|
|
|
Issuer Risk:
the risk that the value of a security may decline for reasons
directly related to the issuer, such as management performance, financial
leverage and reduced demand for the issuer’s goods or services
|
|
|
|
|
|
|
|
|
|
Liquidity Risk:
the risk that a particular investment may be difficult to
purchase or sell and that the Fund may be unable to sell illiquid securities
at an advantageous time or price or achieve its desired level of exposure to
a certain sector
|
|
|
|
|
|
|
|
|
|
Issuer Non-Diversification Risk:
the risks of focusing investments in a
small number of issuers, including being more susceptible to risks
associated with a single economic, political or regulatory occurrence than a
more diversified portfolio might be. Funds that are “non-diversified” may
invest a greater percentage of their assets in the securities of a single
issuer (such as bonds issued by a particular foreign government) than funds
that are “diversified”
|
|
|
|
|
|
|
|
|
|
Leveraging Risk:
the risk that certain transactions of the Fund, such as
reverse repurchase agreements, loans of portfolio securities, and the use of
when-issued, delayed delivery or forward commitment transactions, may give
rise to leverage, causing the Fund to be more volatile than if it had not
been leveraged
|
|
|
|
|
|
|
|
|
|
Management Risk:
the risk that the investment techniques and risk analyses
applied by PIMCO and each portfolio manager will not produce the desired
results, and that legislative, regulatory, or tax restrictions, policies or
developments may affect the investment techniques available to PIMCO and
each portfolio manager in connection with managing the Fund. There is no
guarantee that the investment objective of the Fund will be achieved
|
E-88
|
|
|
|
|
|
|
|
|
Municipal
Project-Specific Risk:
the risk that the Fund may be more sensitive to adverse economic, business or political
developments if it invests a substantial portion of its assets in the bonds of similar projects
(such as those relating to education, health care, housing, transportation, and utilities),
industrial development bonds, or in bonds from issuers in a single state
|
E-89
|
|
|
|
|
|
|
|
|
PIMCO Enhanced Short Maturity Exchange-Traded Fund
|
|
Ticker Symbol:
|
|
|
|
MINT
|
|
|
|
|
|
|
|
Principal Investments and Strategies
|
|
Investment Objective
|
|
Credit Quality
|
|
|
|
Seeks maximum current income,
consistent with preservation
of capital and daily
liquidity.
|
|
Baa to Aaa
|
|
|
|
|
|
|
|
|
|
Fund Category
|
|
Dividend Frequency
|
|
|
|
Short Duration
|
|
Monthly
|
|
|
|
|
|
|
|
|
|
Main Investments
|
|
Duration
|
|
|
|
Short to intermediate maturity
fixed income instruments
|
|
Less than or equal to 1 year
|
|
|
|
|
|
|
|
|
|
Non-U.S. Dollar Denominated
Instruments
|
|
|
|
|
|
0%
|
|
|
The Fund seeks to achieve its investment objective by investing under normal circumstances at least
65% of its total assets in a diversified portfolio of Fixed Income Instruments of varying
maturities, which may be represented by forwards. “Fixed Income Instruments” include bonds, debt
securities and other similar instruments issued by various U.S. and non-U.S. public- or
private-sector entities. The average portfolio duration of this Fund will vary based on Pacific
Investment Management Company LLC’s (“PIMCO”) forecast for interest rates and will normally not
exceed one year. Duration is a measure used to determine the sensitivity of a security’s price to
changes in interest rates. The longer a security’s duration, the more sensitive it will be to
changes in interest rates. The dollar-weighted average portfolio maturity of the Fund is normally
not expected to exceed three years.
The Fund primarily invests in U.S. dollar-denominated investment grade debt securities, rated Baa
or higher by Moody’s Investors Service, Inc. (“Moody’s”), or equivalently rated by Standard &
Poor’s Ratings Services (“S&P”) or Fitch, Inc. (“Fitch”), or, if unrated, determined by PIMCO to be
of comparable quality. The Fund may invest, without limitation, in U.S. dollar-denominated
securities and instruments of foreign issuers.
The Fund may invest, without limitation, in mortgage or asset-backed securities, including
to-be-announced transactions. The Fund may purchase and sell securities on a when-issued, delayed
delivery or forward commitment basis. The Fund may, without limitation, 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 or dollar rolls).
Principal Risks
It is possible to lose money on an investment in the Fund. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
Market Trading Risk:
the risk that an active secondary trading market for Fund shares does not
continue once developed, that the Fund may not continue to meet a listing exchange’s trading or
listing requirements, or that Fund shares trade at prices other than the Fund’s net asset value
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that the Fund could lose money if the issuer or guarantor of a fixed income
security, or the counterparty to a forward commitment transaction, is unable or unwilling to meet
its financial obligations
Market Risk:
the risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
sectors
Issuer Risk:
the risk that the value of a security may decline for reasons directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
E-90
Mortgage-Related and Other Asset-Backed Securities Risk:
the risk of investing in mortgage-related
and other asset-backed securities, including interest rate risk, extension risk and prepayment risk
Foreign (Non-U.S.) Investment Risk:
the risk that investing in foreign (non-U.S.) securities may
result in the Fund experiencing more rapid and extreme changes in value than a fund that invests
exclusively in securities of U.S. companies, due to smaller markets, differing reporting,
accounting and auditing standards, increased risk of delayed settlements of portfolio transactions
or loss of certificates of portfolio securities, and the risk of unfavorable foreign government
actions, including nationalization, expropriation or confiscatory taxation, currency blockage, or
political changes or diplomatic developments. Foreign securities may also be less liquid and more
difficult to value than securities of U.S. issuers
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, may give rise to leverage, causing the Fund to be more volatile than if it
had not been leveraged
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO and
each portfolio manager will not produce the desired results, and that legislative, regulatory, or
tax restrictions, policies or developments may affect the investment techniques available to PIMCO
and each portfolio manager in connection with managing the Fund. There is no guarantee that the
investment objective of the Fund will be achieved
E-91
|
|
|
|
|
|
|
|
|
PIMCO Intermediate Municipal Bond Exchange-Traded Fund
|
|
Ticker Symbol: MUNI
|
|
|
|
|
|
|
|
Principal Investments and Strategies
|
|
Investment Objective
|
|
Credit Quality
|
|
|
|
Seeks attractive
tax-exempt income,
consistent with
preservation of
capital
|
|
Baa to Aaa
|
|
|
|
|
|
|
|
|
|
Fund Category
|
|
Dividend Frequency
|
|
|
|
Tax-Exempt Municipal
|
|
Monthly
|
|
|
|
|
|
|
|
|
|
Main Investments
|
|
Duration
|
|
|
|
Intermediate
maturity municipal
securities (exempt
from federal income
tax)
|
|
3-8 years
|
|
|
|
|
|
|
|
|
|
Non-U.S. Dollar
Denominated
Instruments
|
|
|
|
|
|
0%
|
|
|
The Fund seeks to achieve its investment objective by investing under normal circumstances at least
80% of its assets in a diversified portfolio of 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 does not intend to invest in Municipal Bonds whose interest is subject to the federal
alternative minimum tax. The Fund may only invest in U.S. dollar-denominated investment grade debt
securities, rated Baa or higher by Moody’s Investors Service, Inc. (“Moody’s”), or equivalently
rated by Standard & Poor’s Ratings Services (“S&P”) or Fitch, Inc. (“Fitch”), or, if unrated,
determined by Pacific Investment Management Company LLC (“PIMCO”) to be of comparable quality. The
Fund may invest 25% or more of its total assets in Municipal Bonds that finance similar projects,
such as those relating to education, health care, housing, transportation, and utilities, and 25%
or more of its total assets in industrial development bonds. The average portfolio duration of this
Fund normally varies from three to eight years, based on PIMCO’s forecast for interest rates.
Duration is a measure used to determine the sensitivity of a security’s price to changes in
interest rates. The longer a security’s duration, the more sensitive it will be to changes in
interest rates. The portfolio manager focuses on bonds with the potential to offer attractive
current income, typically looking for bonds that can provide consistently attractive current yields
or that are trading at competitive market prices.
The Fund may purchase and sell securities on a when-issued, delayed delivery or forward commitment
basis. The Fund may, without limitation, 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 or dollar rolls).
Principal Risks
It is possible to lose money on an investment in the Fund. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
Market Trading Risk:
the risk that an active secondary trading market for Fund shares does not
continue once developed, that the Fund may not continue to meet a listing exchange’s trading or
listing requirements, or that Fund shares trade at prices other than the Fund’s net asset value
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that the Fund could lose money if the issuer or guarantor of a fixed income
security, or the counterparty to a forward commitment transaction, is unable or unwilling to meet
its financial obligations
Market Risk:
the risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
sectors
Municipal Bond Risk:
the risk that by investing in Municipal Bonds the Fund may be affected
significantly by the economic, regulatory or political developments affecting the ability of
issuers of Municipal Bonds to pay interest or repay principal
E-92
Issuer Risk:
the risk that the value of a security may decline for reasons directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, may give rise to leverage, causing the Fund to be more volatile than if it
had not been leveraged
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO and
each portfolio manager will not produce the desired results, and that legislative, regulatory, or
tax restrictions, policies or developments may affect the investment techniques available to PIMCO
and each portfolio manager in connection with managing the Fund. There is no guarantee that the
investment objective of the Fund will be achieved
E-93
|
|
|
|
|
|
|
|
|
PIMCO Short Term Municipal Bond Exchange-Traded Fund
|
|
Ticker Symbol: SMMU
|
|
|
|
|
|
|
|
Principal Investments and Strategies
|
|
Investment Objective
|
|
Credit Quality
|
|
|
|
Seeks attractive
tax-exempt income,
consistent with
preservation of
capital
|
|
Baa to Aaa
|
|
|
|
|
|
|
|
|
|
Fund Category
|
|
Dividend Frequency
|
|
|
|
Tax-Exempt Municipal
|
|
Monthly
|
|
|
|
|
|
|
|
|
|
Main Investments
|
|
Duration
|
|
|
|
Short maturity
municipal
securities (exempt
from federal income
tax)
|
|
<
3 years
|
|
|
|
|
|
|
|
|
|
Non-U.S. Dollar
Denominated
Instruments
|
|
|
|
|
|
0%
|
|
|
The Fund seeks to achieve its investment objective by investing under normal circumstances at least
80% of its assets in a diversified portfolio of 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 does not intend to invest in Municipal Bonds whose interest is subject to the federal
alternative minimum tax. The Fund may only invest in U.S. dollar-denominated investment grade debt
securities, rated Baa or higher by Moody’s Investors Service, Inc. (“Moody’s”), or equivalently
rated by Standard & Poor’s Ratings Services (“S&P”) or Fitch, Inc. (“Fitch”), or, if unrated,
determined by Pacific Investment Management Company LLC (‘PIMCO”) to be of comparable quality. The
Fund may invest 25% or more of its total assets in Municipal Bonds that finance similar projects,
such as those relating to education, health care, housing, transportation, and utilities, and 25%
or more of its total assets in industrial development bonds. The average portfolio duration of this
Fund varies based on PIMCO’s forecast for interest rates and under normal market conditions is not
expected to exceed three years. Duration is a measure used to determine the sensitivity of a
security’s price to changes in interest rates. The longer a security’s duration, the more sensitive
it will be to changes in interest rates. The dollar-weighted average portfolio maturity of the Fund
is normally not expected to exceed three years. The portfolio manager focuses on bonds with the
potential to offer attractive current income, typically looking for bonds that can provide
consistently attractive current yields or that are trading at competitive market prices.
The Fund may purchase and sell securities on a when-issued, delayed delivery or forward commitment
basis. The Fund may, without limitation, 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 or dollar rolls).
Principal Risks
It is possible to lose money on an investment in the Fund. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
Market Trading Risk:
the risk that an active secondary trading market for Fund shares does not
continue once developed, that the Fund may not continue to meet a listing exchange’s trading or
listing requirements, or that Fund shares trade at prices other than the Fund’s net asset value
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that the Fund could lose money if the issuer or guarantor of a fixed income
security, or the counterparty to a forward commitment transaction, is unable or unwilling to meet
its financial obligations
Market Risk:
the risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
sectors
Municipal Bond Risk:
the risk that by investing in Municipal Bonds the Fund may be affected
significantly by the economic, regulatory or political developments affecting the ability of
issuers of Municipal Bonds to pay interest or repay principal
E-94
Issuer Risk:
the risk that the value of a security may decline for reasons directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, may give rise to leverage, causing the Fund to be more volatile than if it
had not been leveraged
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO and
each portfolio manager will not produce the desired results, and that legislative, regulatory, or
tax restrictions, policies or developments may affect the investment techniques available to PIMCO
and each portfolio manager in connection with managing the Fund. There is no guarantee that the
investment objective of the Fund will be achieved
E-95
|
|
|
|
|
|
|
|
|
PIMCO Total Return Exchange-Traded Fund
|
|
Ticker Symbol:
|
|
|
|
BOND
|
|
|
|
|
|
|
|
Principal Investments and Strategies
|
|
Investment Objective
|
|
Credit Quality
|
|
|
|
Seeks maximum total
return, consistent with
preservation of capital
and prudent investment
management.
|
|
B to Aaa; max 10% of total assets below Baa
|
|
|
|
|
|
|
|
|
|
Fund Category
|
|
Dividend Frequency
|
|
|
|
Core
|
|
Monthly
|
|
|
|
|
|
|
|
|
|
Main Investments
|
|
Duration
|
|
|
|
Intermediate maturity fixed
income instruments
|
|
+/- 2 years of its benchmark
|
|
|
|
|
|
|
|
|
|
Non-U.S. Dollar
Denominated Instruments
|
|
|
|
|
|
0-30% of total assets
|
|
|
The Fund invests under normal circumstances at least 65% of its total assets in a diversified
portfolio of Fixed Income Instruments of varying maturities. “Fixed Income Instruments” include
bonds, debt securities and other similar instruments issued by various U.S. and non-U.S. public- or
private-sector entities. The average portfolio duration of this Fund normally varies within two
years (plus or minus) of the portfolio duration of the securities comprising the Barclays U.S.
Aggregate Index, as calculated by PIMCO, which as of September 30, 2013 was 5.11 years. Duration is
a measure used to determine the sensitivity of a security’s price to changes in interest rates. The
longer a security’s duration, the more sensitive it will be to changes in interest rates.
The Fund invests primarily in investment-grade debt securities, but may invest up to 10% of its
total assets in high yield securities (“junk bonds”) rated B or higher by Moody’s Investors
Service, Inc. (“Moody’s”), or equivalently rated by Standard & Poor’s Ratings Services (“S&P”) or
Fitch, Inc. (“Fitch”), or, if unrated, determined by PIMCO to be of comparable quality. The Fund
may invest up to 30% of its total assets in securities denominated in foreign currencies, and may
invest beyond this limit in U.S. dollar-denominated securities of foreign issuers. The Fund may
invest up to 15% of its total assets in securities and instruments that are economically tied to
emerging market countries. The Fund will normally limit its foreign currency exposure (from
non-U.S. dollar-denominated securities or currencies) to 20% of its total assets.
The Fund may invest, without limitation, in mortgage- or asset-backed securities, subject to
applicable law and any other restrictions described in the Fund’s prospectus or Statement of
Additional Information. The Fund may purchase or sell securities on a when-issued, delayed delivery
or forward commitment basis and may engage in short sales. The Fund may invest up to 10% of its
total assets in preferred stock, convertible securities and other equity related securities.
The Fund may, without limitation, 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 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, foreign currency appreciation, or improving
credit fundamentals for a particular sector or security.
Principal Risks
It is possible to lose money on an investment in the Fund. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
Market Trading Risk:
the risk that an active secondary trading market for Fund shares does not
continue once developed, that the Fund may not continue to meet a listing exchange’s trading or
listing requirements, or that Fund shares trade at prices other than the Fund’s net asset value
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that the Fund could lose money if the issuer or guarantor of a fixed income
security, or the counterparty to a forward commitment transaction, is unable or unwilling to meet
its financial obligations
E-96
High Yield Risk:
the risk that high yield securities and unrated securities of similar credit
quality (commonly known as “junk bonds”) are subject to greater levels of credit and liquidity
risks. High yield securities are considered primarily speculative with respect to the issuer’s
continuing ability to make principal and interest payments
Market Risk:
the risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
sectors
Issuer Risk:
the risk that the value of a security may decline for reasons directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Equity Risk:
the risk that the value of equity or equity-related securities may decline due to
general market conditions which are not specifically related to a particular company or to factors
affecting a particular industry or industries. Equity or equity-related securities generally have
greater price volatility than fixed income securities
Mortgage-Related and Other Asset-Backed Securities Risk:
the risk of investing in mortgage-related
and other asset-backed securities, including interest rate risk, extension risk and prepayment risk
Foreign (Non-U.S.) Investment Risk:
the risk that investing in foreign (non-U.S.) securities may
result in the Fund experiencing more rapid and extreme changes in value than a fund that invests
exclusively in securities of U.S. companies, due to smaller markets, differing reporting,
accounting and auditing standards, increased risk of delayed settlement of portfolio transactions
or loss of certificates of portfolio securities, and the risk of unfavorable foreign government
actions, including nationalization, expropriation or confiscatory taxation, currency blockage, or
political changes or diplomatic developments. Foreign securities may also be less liquid and more
difficult to value than securities of U.S. issuers
Emerging Markets Risk:
the risk of investing in emerging market securities, primarily increased
foreign (non-U.S.) investment risk
Currency Risk:
the risk that foreign currencies will decline in value relative to the U.S. dollar
and affect the Fund’s investments in foreign (non-U.S.) currencies or in securities that trade in,
and receive revenues in foreign (non-U.S.) currencies
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, may give rise to leverage, causing the Fund to be more volatile than if it
had not been leveraged
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO and
each portfolio manager will not produce the desired results, and that legislative, regulatory, or
tax restrictions, policies or developments may affect the investment techniques available to PIMCO
and each portfolio manager in connection with managing the Fund. There is no guarantee that the
investment objective of the Fund will be achieved
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
Convertible Securities Risk:
as convertible securities share both fixed income and equity
characteristics, they are subject to risks to which fixed income and equity investments are
subject. These risks include equity risk, interest rate risk and credit risk
E-97
|
|
|
|
|
|
|
|
|
PIMCO 1-3 Year U.S. Treasury Index Exchange-Traded Fund
|
|
Ticker Symbol:
|
|
|
|
TUZ
|
|
|
|
|
|
|
|
Principal Investments and Strategies
|
|
Investment Objective
|
|
Fund Category
|
|
|
|
Seeks to provide total
return that closely
corresponds, before fees
and expenses, to the
total return of The
BofAMerrill Lynch 1-3
Year US Treasury
Index
SM
|
|
Treasury
|
|
|
|
|
|
|
|
|
|
Underlying Index Duration
(as of 09/30/13)
|
|
Dividend Frequency
Monthly
|
|
|
|
1.90 years
|
|
|
The Fund seeks to achieve its investment objective by investing under normal circumstances at least
80% of its total assets (exclusive of collateral held from securities lending) in the component
securities (“Component Securities”) of The BofA Merrill Lynch 1-3 Year US Treasury
Index
SM
(the “Underlying Index”). The Fund may invest the remainder of its assets in
Fixed Income Instruments that are not Component Securities, but which PIMCO believes will help the
Fund track its Underlying Index, as well as in cash and investment grade, liquid short-term
instruments, forwards or derivatives, such as options, futures contracts or swap agreements, and
shares of affiliated bond funds. “Fixed Income Instruments” include bonds, debt securities and
other similar instruments issued by various U.S. and non-U.S. public- or private-sector entities.
The average portfolio duration of this Fund will closely correspond to the portfolio duration of
the securities comprising its Underlying Index, as calculated by PIMCO, which as of September 30,
2013 was 1.90 years. Duration is a measure used to determine the sensitivity of a security’s price
to changes in interest rates. The longer a security’s duration, the more sensitive it will be to
changes in interest rates.
The Underlying Index is an unmanaged index comprised of U.S. dollar denominated sovereign debt
securities publicly issued by the U.S. Treasury having a maturity of at least 1 year and less than
3 years. As of September 30, 2013, there were 81 issues in the Underlying Index. The securities in
the Underlying Index have a minimum $1 billion of outstanding face value, have one to three years
remaining to maturity, are fixed-rate and are non-convertible. Bills, inflation-indexed debt and
strips are excluded from the Underlying Index; however, original issue zero coupon bonds are
included in the Underlying Index and the amounts outstanding of qualifying coupon securities are
not reduced by any portions that have been stripped. The Underlying Index is
capitalization-weighted and the composition of Component Securities is updated monthly. It is not
possible to invest directly in the Underlying Index. Intra-month cash flows are reinvested daily,
at the beginning-of-month 1-month LIBID rate, until the end of the month at which point all cash is
removed from the Underlying Index. The Underlying Index does not reflect deductions for fees,
expenses or taxes.
PIMCO uses an indexing approach in managing the Fund’s investments. The Fund employs a
representative sampling strategy in seeking to achieve its investment objective. In using this
strategy, PIMCO seeks to invest in a combination of Component Securities and other instruments such
that the combination effectively provides exposure to the Underlying Index. In using a
representative sampling strategy, the Fund may not track its Underlying Index with the same degree
of accuracy as a fund that replicates the composition of the Underlying Index. Unlike many
investment companies, the Fund does not attempt to outperform the index the Fund tracks. An
indexing approach may eliminate the chance that the Fund will substantially outperform its
Underlying Index but also may reduce some of the risks of active management. Indexing seeks to
achieve lower costs by keeping portfolio turnover low in comparison to actively managed investment
companies.
The Fund may invest in derivative instruments, such as options, futures contracts or swap
agreements. The Fund may purchase and sell securities on a when-issued, delayed delivery or forward
commitment basis. The Fund may, without limitation, 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). 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.
Principal Risks
It is possible to lose money on an investment in the Fund. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
Market Trading Risk:
the risk that an active secondary trading market for Fund shares does not
continue once developed, that the Fund may not continue to meet a listing exchange’s trading or
listing requirements, or that Fund shares trade at prices other than the Fund’s net asset value
E-98
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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 risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
sectors
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management and Tracking Error Risk:
the risk that the portfolio manager’s investment decisions may
not produce the desired results or that the Fund’s portfolio may not closely track the Underlying
Index for a number of reasons. The Fund incurs operating expenses, which are not applicable to the
Underlying Index, and the costs of buying and selling securities, especially when rebalancing the
Fund’s portfolio to reflect changes in the composition of the Underlying Index. Performance of the
Fund and the Underlying Index may vary due to asset valuation differences and differences between
the Fund’s portfolio and the Underlying Index due to legal restrictions, cost or liquidity
restraints. In addition, the Fund’s use of a representative sampling approach may cause the Fund to
be less correlated to the return of the Underlying Index than if the Fund held all of the
securities in the Underlying Index
Indexing Risk:
the risk that the Fund is negatively affected by general declines in the asset
classes represented by the Underlying Index
E-99
|
|
|
|
|
|
|
|
|
PIMCO 3-7 Year U.S. Treasury Index Exchange-Traded Fund
|
|
Ticker Symbol:
|
|
|
|
FIVZ
|
|
|
|
|
|
|
|
Principal Investments and Strategies
|
|
Investment Objective
|
|
Fund Category
|
|
|
|
Seeks to provide total
return that closely
corresponds, before fees
and expenses, to the
total return of The
BofAMerrill Lynch 3-7
Year US Treasury
Index
SM
|
|
Treasury
|
|
|
|
|
|
|
|
|
|
Underlying Index Duration
|
|
Dividend Frequency
|
|
|
|
(as of 09/30/13)
|
|
Monthly
|
|
|
|
4.56 years
|
|
|
The Fund seeks to achieve its investment objective by investing under normal circumstances at least
80% of its total assets (exclusive of collateral held from securities lending) in the component
securities (“Component Securities”) of The BofA Merrill Lynch 3-7 Year US Treasury
Index
SM
(the “Underlying Index”). The Fund may invest the remainder of its assets in
Fixed Income Instruments that are not Component Securities, but which Pacific Investment Management
Company LLC (“PIMCO”) believes will help the Fund track its Underlying Index, as well as in cash
and investment grade, liquid short-term instruments, forwards or derivatives, such as options,
futures contracts or swap agreements, and shares of affiliated bond funds. “Fixed Income
Instruments” include bonds, debt securities and other similar instruments issued by various U.S.
and non-U.S. public- or private-sector entities. The average portfolio duration of this Fund will
closely correspond to the portfolio duration of the securities comprising its Underlying Index, as
calculated by PIMCO, which as of September 30, 2013 was 4.56 years. Duration is a measure used to
determine the sensitivity of a security’s price to changes in interest rates. The longer a
security’s duration, the more sensitive it will be to changes in interest rates.
The Underlying Index is an unmanaged index comprised of U.S. dollar denominated sovereign debt
securities publicly issued by the U.S. Treasury having a maturity of at least 3 years and less than
7 years. As of September 30, 2013, there were 97 issues in the Underlying Index. The securities in
the Underlying Index have a minimum $1 billion of outstanding face value, have 3 to 7 years
remaining to maturity, are fixed-rate and are non-convertible. Bills, inflation-linked debt and
strips are excluded from the Underlying Index; however, original issue zero coupon bonds are
included in the Underlying Index and the amounts outstanding of qualifying coupon securities are
not reduced by any portions that have been stripped. The Underlying Index is
capitalization-weighted and the composition of Component Securities is updated monthly. Intra-month
cash flows are reinvested daily, at the beginning-of-month 1-month LIBID rate, until the end of the
month at which point all cash is removed from the Underlying Index. It is not possible to invest
directly in the Underlying Index. The Underlying Index does not reflect deductions for fees,
expenses or taxes.
PIMCO uses an indexing approach in managing the Fund’s investments. The Fund employs a
representative sampling strategy in seeking to achieve its investment objective. In using this
strategy, PIMCO seeks to invest in a combination of Component Securities and other instruments such
that the combination effectively provides exposure to the Underlying Index. In using a
representative sampling strategy, the Fund may not track its Underlying Index with the same degree
of accuracy as a fund that replicates the composition of the Underlying Index. Unlike many
investment companies, the Fund does not attempt to outperform the index the Fund tracks. An
indexing approach may eliminate the chance that the Fund will substantially outperform its
Underlying Index but also may reduce some of the risks of active management. Indexing seeks to
achieve lower costs by keeping portfolio turnover low in comparison to actively managed investment
companies.
The Fund may invest in derivative instruments, such as options, futures contracts or swap
agreements. The Fund may purchase and sell securities on a when-issued, delayed delivery or forward
commitment basis. The Fund may, without limitation, 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). 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.
Principal Risks
It is possible to lose money on an investment in the Fund. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
Market Trading Risk:
the risk that an active secondary trading market for Fund shares does not
continue once developed, that the Fund may not continue to meet a listing exchange’s trading or
listing requirements, or that Fund shares trade at prices other than the Fund’s net asset value
E-100
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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 risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
sectors
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management and Tracking Error Risk:
the risk that the portfolio manager’s investment decisions may
not produce the desired results or that the Fund’s portfolio may not closely track the Underlying
Index for a number of reasons. The Fund incurs operating expenses, which are not applicable to the
Underlying Index, and the costs of buying and selling securities, especially when rebalancing the
Fund’s portfolio to reflect changes in the composition of the Underlying Index. Performance of the
Fund and the Underlying Index may vary due to asset valuation differences and differences between
the Fund’s portfolio and the Underlying Index due to legal restrictions, cost or liquidity
restraints. In addition, the Fund’s use of a representative sampling approach may cause the Fund to
be less correlated to the return of the Underlying Index than if the Fund held all of the
securities in the Underlying Index
Indexing Risk:
the risk that the Fund is negatively affected by general declines in the asset
classes represented by the Underlying Index
E-101
|
|
|
|
|
|
|
|
|
PIMCO 7-15 Year U.S. Treasury Index Exchange-Traded Fund
|
|
Ticker Symbol:
|
|
|
|
TENZ
|
|
|
|
|
|
|
|
Principal Investments and Strategies
|
|
Investment Objective
|
|
Fund Category
|
|
|
|
Seeks to provide total
return that closely
corresponds, before fees
and expenses, to the
total return of The
BofAMerrill Lynch 7-15
Year US Treasury
Index
SM
.
|
|
Treasury
|
|
|
|
|
|
|
|
|
|
Underlying Index Duration
|
|
Dividend Frequency
|
|
|
|
(as of 09/30/13)
|
|
Monthly
|
|
|
|
7.99 years
|
|
|
The Fund seeks to achieve its investment objective by investing under normal circumstances at least
80% of its total assets (exclusive of collateral held from securities lending) in the component
securities (“Component Securities”) of The BofA Merrill Lynch 7-15 Year US Treasury
Index
SM
(the “Underlying Index”). The Fund may invest the remainder of its assets in
Fixed Income Instruments that are not Component Securities, but which Pacific Investment Management
Company LLC (“PIMCO”) believes will help the Fund track its Underlying Index, as well as in cash
and investment grade, liquid short-term instruments, forwards or derivatives, such as options,
futures contracts or swap agreements, and shares of affiliated bond funds. “Fixed Income
Instruments” include bonds, debt securities and other similar instruments issued by various U.S.
and non-U.S. public- or private-sector entities. The average portfolio duration of this Fund will
closely correspond to the portfolio duration of the securities comprising its Underlying Index, as
calculated by PIMCO, which as of September 30, 2013 was 7.99 years. Duration is a measure used to
determine the sensitivity of a security’s price to changes in interest rates. The longer a
security’s duration, the more sensitive it will be to changes in interest rates.
The Underlying Index is an unmanaged index comprised of U.S. dollar denominated sovereign debt
securities publicly issued by the U.S. Treasury having a maturity of at least 7 years and less than
15 years. As of September 30, 2013, there were 30 issues in the Underlying Index. The securities in
the Underlying Index have a minimum $1 billion of outstanding face value, have 7 to 15 years
remaining to maturity, are fixed-rate and are non-convertible. Bills, inflation-linked debt and
strips are excluded from the Underlying Index; however, original issue zero coupon bonds are
included in the Underlying Index and the amounts outstanding of qualifying coupon securities are
not reduced by any portions that have been stripped. The Underlying Index is
capitalization-weighted and the composition of Component Securities is updated monthly. Intra-month
cash flows are reinvested daily, at the beginning-of-month 1-month LIBID rate, until the end of the
month at which point all cash is removed from the Underlying Index. It is not possible to invest
directly in the Underlying Index. The Underlying Index does not reflect deductions for fees,
expenses or taxes.
PIMCO uses an indexing approach in managing the Fund’s investments. The Fund employs a
representative sampling strategy in seeking to achieve its investment objective. In using this
strategy, PIMCO seeks to invest in a combination of Component Securities and other instruments such
that the combination effectively provides exposure to the Underlying Index. In using a
representative sampling strategy, the Fund may not track its Underlying Index with the same degree
of accuracy as a fund that replicates the composition of the Underlying Index. Unlike many
investment companies, the Fund does not attempt to outperform the index the Fund tracks. An
indexing approach may eliminate the chance that the Fund will substantially outperform its
Underlying Index but also may reduce some of the risks of active management. Indexing seeks to
achieve lower costs by keeping portfolio turnover low in comparison to actively managed investment
companies.
The Fund may invest in derivative instruments, such as options, futures contracts or swap
agreements. The Fund may purchase and sell securities on a when-issued, delayed delivery or forward
commitment basis. The Fund may, without limitation, 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). 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.
Principal Risks
It is possible to lose money on an investment in the Fund. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
Market Trading Risk:
the risk that an active secondary trading market for Fund shares does not
continue once developed, that the Fund may not continue to meet a listing exchange’s trading or
listing requirements, or that Fund shares trade at prices other than the Fund’s net asset value
E-102
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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 risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
sectors
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management and Tracking Error Risk:
the risk that the portfolio manager’s investment decisions may
not produce the desired results or that the Fund’s portfolio may not closely track the Underlying
Index for a number of reasons. The Fund incurs operating expenses, which are not applicable to the
Underlying Index, and the costs of buying and selling securities, especially when rebalancing the
Fund’s portfolio to reflect changes in the composition of the Underlying Index. Performance of the
Fund and the Underlying Index may vary due to asset valuation differences and differences between
the Fund’s portfolio and the Underlying Index due to legal restrictions, cost or liquidity
restraints. In addition, the Fund’s use of a representative sampling approach may cause the Fund to
be less correlated to the return of the Underlying Index than if the Fund held all of the
securities in the Underlying Index
Indexing Risk:
the risk that the Fund is negatively affected by general declines in the asset
classes represented by the Underlying Index
E-103
|
|
|
|
|
|
|
|
|
PIMCO 25+ Year Zero Coupon U.S. Treasury Index Exchange-Traded Fund
|
Ticker Symbol:
|
|
|
|
ZROZ
|
|
|
|
|
|
|
|
Principal Investments and Strategies
|
|
Investment Objective
|
|
Fund Category
|
|
|
|
Seeks to provide total
return that closely
corresponds, before fees
and expenses, to the
total return of The
BofAMerrill Lynch Long
US Treasury Principal
STRIPS
Index
SM
.
|
|
Treasury
|
|
|
|
|
|
|
|
|
|
Underlying Index Duration
|
|
Dividend Frequency
|
|
|
|
(as of 09/30/13)
|
|
Quarterly
|
|
|
|
29.91 years
|
|
|
The Fund seeks to achieve its investment objective by investing under normal circumstances at least
80% of its total assets (exclusive of collateral held from securities lending) in the component
securities (“Component Securities”) of The BofA Merrill Lynch Long US Treasury Principal STRIPS
Index
SM
(the “Underlying Index”). The Fund may invest the remainder of its assets in
Fixed Income Instruments that are not Component Securities, but which Pacific Investment Management
Company LLC (“PIMCO”) believes will help the Fund track its Underlying Index, as well as in cash
and investment grade, liquid short-term instruments, forwards or derivatives, such as options,
futures contracts or swap agreements, and shares of affiliated bond funds. “Fixed Income
Instruments” include bonds, debt securities and other similar instruments issued by various U.S.
and non-U.S. public- or private-sector entities. The average portfolio duration of this Fund will
closely correspond to the portfolio duration of the securities comprising its Underlying Index, as
calculated by PIMCO, which as of September 30, 2013 was 29.91 years. Duration is a measure used to
determine the sensitivity of a security’s price to changes in interest rates. The longer a
security’s duration, the more sensitive it will be to changes in interest rates.
The Underlying Index is an unmanaged index comprised of long maturity Separate Trading of
Registered Interest and Principal of Securities (“STRIPS”) representing the final principal payment
of U.S. Treasury bonds. The principal STRIPS comprising the Underlying Index must have 25 years or
more remaining term to final maturity and must be stripped from U.S. Treasury bonds having at least
$1 billion in outstanding face value. As of September 30, 2013, there were 19 issues in the
Underlying Index. Index constituents are capitalization-weighted based on the security prices times
an assumed face value of $1 billion per constituent security. The Underlying Index is rebalanced
quarterly on March 31, June 30, September 30 and December 31, based on information available up to
and including the third business day before the last business day of the rebalancing month.
Securities that no longer meet the qualifying criteria during the course of the quarter remain in
the Underlying Index until the next quarterly rebalancing date at which point they are dropped from
the Underlying Index. It is not possible to invest directly in the Underlying Index. The Underlying
Index does not reflect deductions for fees, expenses or taxes.
PIMCO uses an indexing approach in managing the Fund’s investments. The Fund employs a
representative sampling strategy in seeking to achieve its investment objective. In using this
strategy, PIMCO seeks to invest in a combination of Component Securities and other instruments such
that the combination effectively provides exposure to the Underlying Index. In using a
representative sampling strategy, the Fund may not track its Underlying Index with the same degree
of accuracy as a fund that replicates the composition of the Underlying Index. Unlike many
investment companies, the Fund does not attempt to outperform the index the Fund tracks. An
indexing approach may eliminate the chance that the Fund will substantially outperform its
Underlying Index but also may reduce some of the risks of active management. Indexing seeks to
achieve lower costs by keeping portfolio turnover low in comparison to actively managed investment
companies.
The Fund may invest in derivative instruments, such as options, futures contracts or swap
agreements. The Fund may purchase and sell securities on a when-issued, delayed delivery or forward
commitment basis. The Fund may, without limitation, 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). 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.
Principal Risks
It is possible to lose money on an investment in the Fund. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
E-104
Market Trading Risk:
the risk that an active secondary trading market for Fund shares does not
continue once developed, that the Fund may not continue to meet a listing exchange’s trading or
listing requirements, or that Fund shares trade at prices other than the Fund’s net asset value
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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 risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
sectors
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management and Tracking Error Risk:
the risk that the portfolio manager’s investment decisions may
not produce the desired results or that the Fund’s portfolio may not closely track the Underlying
Index for a number of reasons. The Fund incurs operating expenses, which are not applicable to the
Underlying Index, and the costs of buying and selling securities, especially when rebalancing the
Fund’s portfolio to reflect changes in the composition of the Underlying Index. Performance of the
Fund and the Underlying Index may vary due to asset valuation differences and differences between
the Fund’s portfolio and the Underlying Index due to legal restrictions, cost or liquidity
restraints. In addition, the Fund’s use of a representative sampling approach may cause the Fund to
be less correlated to the return of the Underlying Index than if the Fund held all of the
securities in the Underlying Index
Indexing Risk:
the risk that the Fund is negatively affected by general declines in the asset
classes represented by the Underlying Index
E-105
|
|
|
|
|
|
|
|
|
PIMCO Broad U.S. Treasury Index Exchange-Traded Fund
|
|
Ticker Symbol:
|
|
|
|
TRSY
|
|
|
|
|
|
|
|
Principal Investments and Strategies
|
|
Investment Objective
|
|
Fund Category
|
|
|
|
Seeks to provide total
return that closely
corresponds, before fees
and expenses, to the
total return
of The BofA Merrill
Lynch Liquid US Treasury
Index
SM
|
|
Treasury
|
|
|
|
|
|
|
|
|
|
Underlying Index Duration
|
|
Dividend Frequency
|
|
|
|
(as of 09/30/13)
|
|
Monthly
|
|
|
|
7.17 years
|
|
|
The Fund seeks to achieve its investment objective by investing under normal circumstances at least
80% of its total assets (exclusive of collateral held from securities lending) in the component
securities (“Component Securities”) of The BofA Merrill Lynch Liquid US Treasury Index
SM
(the “Underlying Index”). The Fund may invest the remainder of its assets in Fixed Income
Instruments that are not Component Securities, but which Pacific Investment Management Company LLC
(“PIMCO”) believes will help the Fund track its Underlying Index, as well as in cash and investment
grade, liquid short-term instruments, forwards or derivatives, such as options, futures contracts
or swap agreements, and shares of affiliated bond funds. “Fixed Income Instruments” include bonds,
debt securities and other similar instruments issued by various U.S. and non-U.S. public- or
private-sector entities. The average portfolio duration of this Fund will closely correspond to the
portfolio duration of the securities comprising its Underlying Index, as calculated by PIMCO, which
as of September 30, 2013 was 7.17 years. Duration is a measure used to determine the sensitivity of
a security’s price to changes in interest rates. The longer a security’s duration, the more
sensitive it will be to changes in interest rates.
The Underlying Index is an unmanaged index comprised of U.S. dollar denominated sovereign debt
securities publicly issued by the U.S. Treasury. As of September 30, 2013, there were 18 issues in
the Underlying Index. The securities in the Underlying Index have a minimum $1 billion of
outstanding face value, are fixed-rate and are non-convertible. Bills, inflation-linked debt and
strips are excluded from the Underlying Index; however, original issue zero coupon bonds are
included in the Underlying Index and the amounts outstanding of qualifying coupon securities are
not reduced by any portions that have been stripped. The Underlying Index is
capitalization-weighted and the composition of Component Securities is updated monthly. Intra-month
cash flows are reinvested daily, at the beginning-of-month 1-month LIBID rate, until the end of the
month at which point all cash is removed from the Underlying Index. It is not possible to invest
directly in the Underlying Index. The Underlying Index does not reflect deductions for fees,
expenses or taxes.
PIMCO uses an indexing approach in managing the Fund’s investments. The Fund employs a
representative sampling strategy in seeking to achieve its investment objective. In using this
strategy, PIMCO seeks to invest in a combination of Component Securities and other instruments such
that the combination effectively provides exposure to the Underlying Index. In using a
representative sampling strategy, the Fund may not track its Underlying Index with the same degree
of accuracy as a fund that replicates the composition of the Underlying Index. Unlike many
investment companies, the Fund does not attempt to outperform the index the Fund tracks. An
indexing approach may eliminate the chance that the Fund will substantially outperform its
Underlying Index but also may reduce some of the risks of active management. Indexing seeks to
achieve lower costs by keeping portfolio turnover low in comparison to actively managed investment
companies.
The Fund may invest in derivative instruments, such as options, futures contracts or swap
agreements. The Fund may purchase and sell securities on a when-issued, delayed delivery or forward
commitment basis. The Fund may, without limitation, 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). 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.
Principal Risks
It is possible to lose money on an investment in the Fund. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
Market Trading Risk:
the risk that an active secondary trading market for Fund shares does not
continue once developed, that the Fund may not continue to meet a listing exchange’s trading or
listing requirements, or that Fund shares trade at prices other than the Fund’s net asset value
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
E-106
Credit Risk:
the risk that 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 risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
sectors
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management and Tracking Error Risk:
the risk that the portfolio manager’s investment decisions may
not produce the desired results or that the Fund’s portfolio may not closely track the Underlying
Index for a number of reasons. The Fund incurs operating expenses, which are not applicable to the
Underlying Index, and the costs of buying and selling securities, especially when rebalancing the
Fund’s portfolio to reflect changes in the composition of the Underlying Index. Performance of the
Fund and the Underlying Index may vary due to asset valuation differences and differences between
the Fund’s portfolio and the Underlying Index due to legal restrictions, cost or liquidity
restraints. In addition, the Fund’s use of a representative sampling approach may cause the Fund to
be less correlated to the return of the Underlying Index than if the Fund held all of the
securities in the Underlying Index
Indexing Risk:
the risk that the Fund is negatively affected by general declines in the asset
classes represented by the Underlying Index
E-107
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|
PIMCO 1-5 Year U.S. TIPS Index Exchange-Traded Fund
|
|
Ticker Symbol:
|
|
|
|
STPZ
|
|
|
|
|
|
|
|
Principal Investments and Strategies
|
|
Investment Objective
|
|
Fund Category
|
|
|
|
Seeks to provide
total return that
closely
corresponds, before
fees and expenses,
to the total return
of The BofAMerrill
Lynch 1-5 Year US
Inflation-Linked
Treasury
Index
SM
.
|
|
Treasury Inflation Protected Securities (TIPS)
|
|
|
|
|
|
|
|
|
|
Underlying Index
Average Maturity
(as of 09/30/13)
|
|
Dividend Frequency
Monthly
|
|
|
|
3.05 years
|
|
|
The Fund seeks to achieve its investment objective by investing under normal circumstances at least
80% of its total assets (exclusive of collateral held from securities lending) in the component
securities (“Component Securities”) of The BofA Merrill Lynch 1-5 Year US Inflation-Linked Treasury
Index
SM
(the “Underlying Index”). The Fund may invest the remainder of its assets in
Fixed Income Instruments that are not Component Securities, but which Pacific Investment Management
Company LLC (“PIMCO”) believes will help the Fund track its Underlying Index, as well as in cash
and investment grade, liquid short-term instruments, forwards or derivatives, such as options,
futures contracts or swap agreements, and shares of affiliated bond funds. “Fixed Income
Instruments” include bonds, debt securities and other similar instruments issued by various U.S.
and non-U.S. public- or private-sector entities. The dollar-weighted average portfolio maturity of
this Fund will closely correspond to the average maturity of its Underlying Index, which as of
September 30, 2013 was 3.05 years.
The Underlying Index is an unmanaged index comprised of TIPS (Treasury Inflation Protected
Securities) with a maturity of at least 1 year and less than 5 years. TIPS are publicly issued,
dollar denominated U.S. Government securities issued by the U.S. Treasury that have principal and
interest payments linked to official inflation (as measured by the Consumer Price Index, or CPI).
Their payments are supported by the full faith and credit of the United States. The TIPS in the
Underlying Index have a minimum $1 billion of outstanding face value, have 1 to 5 years remaining
to maturity and have interest and principal payments tied to inflation. Original issue zero coupon
bonds can be included in the Underlying Index and the amounts outstanding of qualifying coupon
securities are not reduced by any portions that have been stripped. As of September 30, 2013, there
were 12 TIPS issues in the Underlying Index. The Underlying Index is capitalization-weighted and
the composition of TIPS is updated monthly. Intra-month cash flows are reinvested daily, at the
beginning-of-month 1-month LIBID rate, until the end of the month at which point all cash is
removed from the Underlying Index. It is not possible to invest directly in the Underlying Index.
The Underlying Index does not reflect deductions for fees, expenses or taxes.
PIMCO uses an indexing approach in managing the Fund’s investments. The Fund employs a
representative sampling strategy in seeking to achieve its investment objective. In using this
strategy, PIMCO seeks to invest in a combination of Component Securities and other instruments such
that the combination effectively provides exposure to the Underlying Index. In using a
representative sampling strategy, the Fund may not track its Underlying Index with the same degree
of accuracy as a fund that replicates the composition of the Underlying Index. Unlike many
investment companies, the Fund does not attempt to outperform the index the Fund tracks. An
indexing approach may eliminate the chance that the Fund will substantially outperform its
Underlying Index but also may reduce some of the risks of active management. Indexing seeks to
achieve lower costs by keeping portfolio turnover low in comparison to actively managed investment
companies.
The Fund may invest in derivative instruments, such as options, futures contracts or swap
agreements. The Fund may purchase and sell securities on a when-issued, delayed delivery or forward
commitment basis. The Fund may, without limitation, 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). 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 real interest rates and in the case of inflation-linked bonds,
increased inflation.
Principal Risks
It is possible to lose money on an investment in the Fund. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
E-108
Market Trading Risk:
the risk that an active secondary trading market for Fund shares does not
continue once developed, that the Fund may not continue to meet a listing exchange’s trading or
listing requirements, or that Fund shares trade at prices other than the Fund’s net asset value
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Inflation-Indexed Security Risk:
the risk that the value of an inflation-indexed security (such as
TIPS) tends to decrease when real interest rates increase and increase when real interest rates
decrease and interest payments on inflation-indexed securities will vary along with changes in the
CPI
Credit Risk:
the risk that 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 risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
sectors
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management and Tracking Error Risk:
the risk that the portfolio manager’s investment decisions may
not produce the desired results or that the Fund’s portfolio may not closely track the Underlying
Index for a number of reasons. The Fund incurs operating expenses, which are not applicable to the
Underlying Index, and the costs of buying and selling securities, especially when rebalancing the
Fund’s portfolio to reflect changes in the composition of the Underlying Index. Performance of the
Fund and the Underlying Index may vary due to asset valuation differences and differences between
the Fund’s portfolio and the Underlying Index due to legal restrictions, cost or liquidity
restraints. In addition, the Fund’s use of a representative sampling approach may cause the Fund to
be less correlated to the return of the Underlying Index than if the Fund held all of the
securities in the Underlying Index
Indexing Risk:
the risk that the Fund is negatively affected by general declines in the asset
classes represented by the Underlying Index
E-109
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|
|
|
|
|
|
|
|
PIMCO 15+ Year U.S. TIPS Index Exchange-Traded Fund
|
|
Ticker Symbol:
|
|
|
|
LTPZ
|
|
|
|
|
|
|
|
Principal Investments and Strategies
|
|
Investment Objective
|
|
Fund Category
|
|
|
|
Seeks to provide
total return that
closely
corresponds, before
fees and expenses,
to the total return
of The BofAMerrill
Lynch 15+ Year US
Inflation-Linked
Treasury
Index
SM
.
|
|
Treasury Inflation Protected Securities (TIPS)
|
|
|
|
|
|
|
|
|
|
Underlying Index
Average Maturity
(as of 09/30/13)
|
|
Dividend Frequency
Monthly
|
|
|
|
22.35 years
|
|
|
The Fund seeks to achieve its investment objective by investing under normal circumstances at least
80% of its total assets (exclusive of collateral held from securities lending) in the component
securities (“Component Securities”) of The BofA Merrill Lynch 15+ Year US Inflation-Linked Treasury
Index
SM
(the “Underlying Index”). The Fund may invest the remainder of its assets in
Fixed Income Instruments that are not Component Securities, but which Pacific Investment Management
Company LLC (“PIMCO”) believes will help the Fund track its Underlying Index, as well as in cash
and investment grade, liquid short-term instruments, forwards or derivatives, such as options,
futures contracts or swap agreements, and shares of affiliated bond funds. “Fixed Income
Instruments” include bonds, debt securities and other similar instruments issued by various U.S.
and non-U.S. public- or private-sector entities. The dollar-weighted average portfolio maturity of
this Fund will closely correspond to the average maturity of its Underlying Index, which as of
September 30, 2013 was 22.35 years.
The Underlying Index is an unmanaged index comprised of TIPS (Treasury Inflation Protected
Securities) with a maturity of at least 15 years. TIPS are publicly issued, dollar denominated U.S.
Government securities issued by the U.S. Treasury that have principal and interest payments linked
to official inflation (as measured by the Consumer Price Index, or CPI). Their payments are
supported by the full faith and credit of the United States. The TIPS in the Underlying Index have
a minimum $1 billion of outstanding face value, have at least 15 years remaining to maturity and
have interest and principal payments tied to inflation. Original issue zero coupon bonds can be
included in the Underlying Index and the amounts outstanding of qualifying coupon securities are
not reduced by any portions that have been stripped. As of September 30, 2013, there were 7 TIPS
issues in the Underlying Index. The Underlying Index is capitalization-weighted and the composition
of TIPS is updated monthly. Intra-month cash flows are reinvested daily, at the beginning-of-month
1-month LIBID rate, until the end of the month at which point all cash is removed from the
Underlying Index. It is not possible to invest directly in the Underlying Index. The Underlying
Index does not reflect deductions for fees, expenses or taxes.
PIMCO uses an indexing approach in managing the Fund’s investments. The Fund employs a
representative sampling strategy in seeking to achieve its investment objective. In using this
strategy, PIMCO seeks to invest in a combination of Component Securities and other instruments such
that the combination effectively provides exposure to the Underlying Index. In using a
representative sampling strategy, the Fund may not track its Underlying Index with the same degree
of accuracy as a fund that replicates the composition of the Underlying Index. Unlike many
investment companies, the Fund does not attempt to outperform the index the Fund tracks. An
indexing approach may eliminate the chance that the Fund will substantially outperform its
Underlying Index but also may reduce some of the risks of active management. Indexing seeks to
achieve lower costs by keeping portfolio turnover low in comparison to actively managed investment
companies.
The Fund may invest in derivative instruments, such as options, futures contracts or swap
agreements. The Fund may purchase and sell securities on a when-issued, delayed delivery or forward
commitment basis. The Fund may, without limitation, 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). 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 real interest rates and in the case of inflation-linked bonds,
increased inflation.
Principal Risks
It is possible to lose money on an investment in the Fund. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
E-110
Market Trading Risk:
the risk that an active secondary trading market for Fund shares does not
continue once developed, that the Fund may not continue to meet a listing exchange’s trading or
listing requirements, or that Fund shares trade at prices other than the Fund’s net asset value
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Inflation-Indexed Security Risk:
the risk that the value of an inflation-indexed security (such as
TIPS) tends to decrease when real interest rates increase and increase when real interest rates
decrease and interest payments on inflation-indexed securities will vary along with changes in the
CPI
Credit Risk:
the risk that 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 risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
sectors
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management and Tracking Error Risk:
the risk that the portfolio manager’s investment decisions may
not produce the desired results or that the Fund’s portfolio may not closely track the Underlying
Index for a number of reasons. The Fund incurs operating expenses, which are not applicable to the
Underlying Index, and the costs of buying and selling securities, especially when rebalancing the
Fund’s portfolio to reflect changes in the composition of the Underlying Index. Performance of the
Fund and the Underlying Index may vary due to asset valuation differences and differences between
the Fund’s portfolio and the Underlying Index due to legal restrictions, cost or liquidity
restraints. In addition, the Fund’s use of a representative sampling approach may cause the Fund to
be less correlated to the return of the Underlying Index than if the Fund held all of the
securities in the Underlying Index
Indexing Risk:
the risk that the Fund is negatively affected by general declines in the asset
classes represented by the Underlying Index
E-111
|
|
|
|
|
|
|
|
|
PIMCO Broad U.S. TIPS Index Exchange-Traded Fund
|
|
Ticker Symbol:
|
|
|
|
TIPZ
|
|
|
|
|
|
|
|
Principal Investments and Strategies
|
|
Investment Objective
|
|
Fund Category
|
|
|
|
Seeks to provide
total return that
closely
corresponds, before
fees and expenses,
to the total return
of The BofAMerrill
Lynch US
Inflation-Linked
Treasury
Index
SM
|
|
Treasury Inflation Protected Securities (TIPS)
|
|
|
|
|
|
|
|
|
|
Underlying Index
Average Maturity
(as of 09/30/13)
|
|
Dividend Frequency
Monthly
|
|
|
|
9.34 years
|
|
|
The Fund seeks to achieve its investment objective by investing under normal circumstances at least
80% of its total assets (exclusive of collateral held from securities lending) in the component
securities (“Component Securities”) of The BofA Merrill Lynch US Inflation-Linked Treasury
Index
SM
(the “Underlying Index”). The Fund may invest the remainder of its assets in
Fixed Income Instruments that are not Component Securities, but which Pacific Investment Management
Company LLC (“PIMCO”) believes will help the Fund track its Underlying Index, as well as in cash
and investment grade, liquid short-term instruments, forwards or derivatives, such as options,
futures contracts or swap agreements, and shares of affiliated bond funds. “Fixed Income
Instruments” include bonds, debt securities and other similar instruments issued by various U.S.
and non-U.S. public or private-sector entities. The dollar-weighted average portfolio maturity of
this Fund will closely correspond to the average maturity of its Underlying Index, which as of
September 30, 2013 was 9.34 years.
The Underlying Index is an unmanaged index comprised of TIPS (Treasury Inflation Protected
Securities). TIPS are publicly issued, dollar denominated U.S. Government securities issued by the
U.S. Treasury that have principal and interest payments linked to official inflation (as measured
by the Consumer Price Index, or CPI). Their payments are supported by the full faith and credit of
the United States. The TIPS in the Underlying Index have a minimum $1 billion of outstanding face
value, have at least 1 year remaining to maturity and have interest and principal payments tied to
inflation. Original issue zero coupon bonds can be included in the Underlying Index and the amounts
outstanding of qualifying coupon securities are not reduced by any portions that have been
stripped. As of September 30, 2013, there were 34 TIPS issues in the Underlying Index. The
Underlying Index is capitalization-weighted and the composition of TIPS is updated monthly.
Intra-month cash flows are reinvested daily, at the beginning-of-month 1-month LIBID rate, until
the end of the month at which point all cash is removed from the Underlying Index. It is not
possible to invest directly in the Underlying Index. The Underlying Index does not reflect
deductions for fees, expenses or taxes.
PIMCO uses an indexing approach in managing the Fund’s investments. The Fund employs a
representative sampling strategy in seeking to achieve its investment objective. In using this
strategy, PIMCO seeks to invest in a combination of Component Securities and other instruments such
that the combination effectively provides exposure to the Underlying Index. In using a
representative sampling strategy, the Fund may not track its Underlying Index with the same degree
of accuracy as a fund that replicates the composition of the Underlying Index. Unlike many
investment companies, the Fund does not attempt to outperform the index the Fund tracks. An
indexing approach may eliminate the chance that the Fund will substantially outperform its
Underlying Index but also may reduce some of the risks of active management. Indexing seeks to
achieve lower costs by keeping portfolio turnover low in comparison to actively managed investment
companies.
The Fund may invest in derivative instruments, such as options, futures contracts or swap
agreements. The Fund may purchase and sell securities on a when-issued, delayed delivery or forward
commitment basis. The Fund may, without limitation, 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). 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 real interest rates and in the case of inflation-linked bonds,
increased inflation.
Principal Risks
It is possible to lose money on an investment in the Fund. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
Market Trading Risk:
the risk that an active secondary trading market for Fund shares does not
continue once developed, that the Fund may not continue to meet a listing exchange’s trading or
listing requirements, or that Fund shares trade at prices other than the Fund’s net asset value
E-112
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Inflation-Indexed Security Risk:
the risk that the value of an inflation-indexed security (such as
TIPS) tends to decrease when real interest rates increase and increase when real interest rates
decrease and interest payments on inflation-indexed securities will vary along with changes in the
CPI
Credit Risk:
the risk that 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 risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
sectors
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management and Tracking Error Risk:
the risk that the portfolio manager’s investment decisions may
not produce the desired results or that the Fund’s portfolio may not closely track the Underlying
Index for a number of reasons. The Fund incurs operating expenses, which are not applicable to the
Underlying Index, and the costs of buying and selling securities, especially when rebalancing the
Fund’s portfolio to reflect changes in the composition of the Underlying Index. Performance of the
Fund and the Underlying Index may vary due to asset valuation differences and differences between
the Fund’s portfolio and the Underlying Index due to legal restrictions, cost or liquidity
restraints. In addition, the Fund’s use of a representative sampling approach may cause the Fund to
be less correlated to the return of the Underlying Index than if the Fund held all of the
securities in the Underlying Index
Indexing Risk:
the risk that the Fund is negatively affected by general declines in the asset
classes represented by the Underlying Index
E-113
|
|
|
|
|
|
|
|
|
PIMCO 0-5 Year High Yield Corporate Bond Index Exchange-Traded Fund
|
Ticker Symbol:
|
|
|
|
HYS
|
|
|
|
|
|
|
|
Principal Investments and Strategies
|
|
Investment Objective
|
|
Fund Category
|
|
|
|
Seeks to provide total
return that closely
corresponds, before fees
and expenses, to the
total return of The BofA
Merrill Lynch 0-5 Year
US High Yield
Constrained
Index
SM
|
|
Corporate
|
|
|
|
|
|
|
|
|
|
Underlying Index Duration
|
|
Dividend Frequency
|
|
|
|
(as of 09/30/13)
|
|
Monthly
|
|
|
|
2.03 years
|
|
|
|
|
|
|
|
|
|
|
|
Credit Quality
|
|
|
|
|
|
The securities
comprising the
Underlying Index have a
below investment grade
rating
|
|
|
The Fund seeks to achieve its investment objective by investing under normal circumstances at least
80% of its total assets (exclusive of collateral held from securities lending) in the component
securities (“Component Securities”) of The BofA Merrill Lynch 0-5 Year US High Yield Constrained
Index
SM
(the “Underlying Index”). The Fund may invest the remainder of its assets in
Fixed Income Instruments that are not Component Securities, but which PIMCO believes will help the
Fund track its Underlying Index, as well as in cash and investment grade, liquid short-term
instruments, forwards or derivatives, such as options, futures contracts or swap agreements, and
shares of affiliated bond funds. “Fixed Income Instruments” include bonds, debt securities and
other similar instruments issued by various U.S. and non-U.S. public- or private-sector entities.
The average portfolio duration of this Fund will closely correspond to the portfolio duration of
the securities comprising its Underlying Index, as calculated by PIMCO, which as of September 30,
2013 was 2.03 years. Duration is a measure used to determine the sensitivity of a security’s price
to changes in interest rates. The longer a security’s duration, the more sensitive it will be to
changes in interest rates.
The Underlying Index is an unmanaged index comprised of U.S. dollar denominated below investment
grade corporate debt securities publicly issued in the U.S. domestic market with remaining
maturities of less than 5 years. Underlying Index constituents are capitalization-weighted, based
on their current amount outstanding, provided the total allocation to an individual issuer does not
exceed 2%. As of September 30, 2013, there were 819 issues in the Underlying Index. The securities
comprising the Underlying Index have a below investment grade rating (based on an average of the
ratings of Moody’s Investors Service, Inc. (“Moody’s”), Standard & Poor’s Ratings Services (“S&P”)
and Fitch, Inc. (“Fitch”)) and a country of risk exposure to investment grade countries that are
members of the FXG10, Western Europe or territories of the U.S. and Western Europe. Country ratings
are based on an average of Moody’s, S&P and Fitch foreign currency long term sovereign debt
ratings. For each issuer, the country of risk is the principal place of business derived from
management location, country of primary listing, location of sales and reporting currency. In
addition, qualifying securities must have a minimum $100 million of outstanding face value and a
fixed coupon schedule. Original issue zero coupon bonds, debt issued simultaneously in the Eurobond
and U.S. domestic bond markets, 144A securities and pay-in-kind securities qualify for inclusion in
the Underlying Index. Callable perpetual securities qualify for inclusion in the Underlying Index
provided they are at least one year from the first call date. Fixed-to-floating rate securities
also qualify provided they are callable within the fixed rate period and are at least one year from
last call prior to the date the bond transitions from a fixed to a floating rate security. The
Underlying Index is capitalization-weighted, provided the total allocation to an individual issuer
does not exceed 2%, and the composition of Component Securities is updated monthly. Cash flows from
bond payments that are received during the month are retained in the Underlying Index, without
earning reinvestment income, until removal at the end of the month as part of the rebalancing. It
is not possible to invest directly in the Underlying Index. The Underlying Index does not reflect
deductions for fees, expenses or taxes.
PIMCO uses an indexing approach in managing the Fund’s investments. The Fund employs a
representative sampling strategy in seeking to achieve its investment objective. In using this
strategy, PIMCO seeks to invest in a combination of Component Securities and other instruments such
that the combination effectively provides exposure to the Underlying Index. In using a
representative sampling strategy, the Fund may not track its Underlying Index with the same degree
of accuracy as a fund that replicates the composition of the Underlying Index. Unlike many
investment companies, the Fund does not attempt to outperform the index the Fund tracks. An
indexing approach may eliminate the chance that the Fund will substantially outperform its
Underlying Index but also may reduce some of the risks of active management. Indexing seeks to
achieve lower costs by keeping portfolio turnover low in comparison to actively managed investment
companies.
E-114
The Fund may invest in derivative instruments, such as options, futures contracts or swap
agreements, and may invest in mortgage-related and other asset-backed securities. The Fund may
invest in U.S. dollar-denominated securities of foreign issuers, including securities and
instruments economically tied to emerging market countries. The Fund may purchase and sell
securities on a when-issued, delayed delivery or forward commitment basis. The Fund may, without
limitation, 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). 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.
Principal Risks
It is possible to lose money on an investment in the Fund. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
Market Trading Risk:
the risk that an active secondary trading market for Fund shares does not
continue once developed, that the Fund may not continue to meet a listing exchange’s trading or
listing requirements, or that Fund shares trade at prices other than the Fund’s net asset value
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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 risk that high yield securities and unrated securities of similar credit
quality (commonly known as “junk bonds”) are subject to greater levels of credit and liquidity
risks. High yield securities are considered primarily speculative with respect to the issuer’s
continuing ability to make principal and interest payments
Market Risk:
the risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
sectors
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Issuer Risk:
the risk that the value of a security may decline for reasons directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Mortgage-Related and Other Asset-Backed Securities Risk:
the risk of investing in mortgage-related
and other asset-backed securities, including interest rate risk, extension risk and prepayment risk
Foreign (Non-U.S.) Investment Risk:
the risk that investing in foreign (non-U.S.) securities may
result in the Fund experiencing more rapid and extreme changes in value than a fund that invests
exclusively in securities of U.S. companies, due to smaller markets, differing reporting,
accounting and auditing standards, increased risk of delayed settlement of portfolio transactions
or loss of certificates of portfolio securities, and the risk of unfavorable foreign government
actions, including nationalization, expropriation or confiscatory taxation, currency blockage, or
political changes or diplomatic developments. Foreign securities may also be less liquid and more
difficult to value than securities of U.S. issuers
Emerging Markets Risk:
the risk of investing in emerging market securities, primarily increased
foreign (non-U.S.) investment risk
Issuer Non-Diversification Risk:
the risks of focusing investments in a small number of issuers,
including being more susceptible to risks associated with a single economic, political or
regulatory occurrence than a more diversified portfolio might be. Funds that are “non-diversified”
may invest a greater percentage of their assets in the securities of a single issuer (such as bonds
issued by a particular foreign government) than funds that are “diversified”
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
E-115
Management and Tracking Error Risk:
the risk that the portfolio manager’s investment decisions may
not produce the desired results or that the Fund’s portfolio may not closely track the Underlying
Index for a number of reasons. The Fund incurs operating expenses, which are not applicable to the
Underlying Index, and the costs of buying and selling securities, especially when rebalancing the
Fund’s portfolio to reflect changes in the composition of the Underlying Index. Performance of the
Fund and the Underlying Index may vary due to asset valuation differences and differences between
the Fund’s portfolio and the Underlying Index due to legal restrictions, cost or liquidity
restraints. In addition, the Fund’s use of a representative sampling approach may cause the Fund to
be less correlated to the return of the Underlying Index than if the Fund held all of the
securities in the Underlying Index
Indexing Risk:
the risk that the Fund is negatively affected by general declines in the asset
classes represented by the Underlying Index
E-116
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PIMCO Investment Grade Corporate Bond Index Exchange - Traded Fund
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Ticker Symbol:
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CORP
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Principal Investments and Strategies
|
|
Investment Objective
|
|
Fund Category
|
|
|
|
Seeks to provide total
return that closely
corresponds, before fees
and expenses, to the
total return of The BofA
Merrill Lynch US
Corporate
Index
SM
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|
Corporate
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Underlying Index Duration
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Dividend Frequency
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(as of 09/30/13)
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Monthly
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|
6.33 years
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Credit Quality
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May invest in securities
rated Baa or higher by
Moody’s Investors
Service, Inc.
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|
The Fund seeks to achieve its investment objective by investing under normal circumstances at least
80% of its total assets (exclusive of collateral held from securities lending) in the component
securities (“Component Securities”) of The BofA Merrill Lynch US Corporate Index
SM
(the
“Underlying Index”). The Fund may invest the remainder of its assets in Fixed Income Instruments
that are not Component Securities, but which PIMCO believes will help the Fund track its Underlying
Index, as well as in cash and investment grade, liquid short-term instruments, forwards or
derivatives, such as options, futures contracts or swap agreements, and shares of affiliated bond
funds. “Fixed Income Instruments” include bonds, debt securities and other similar instruments
issued by various U.S. and non-U.S. public- or private-sector entities. The Fund may invest in
securities rated Baa or higher by Moody’s Investors Service, Inc. (“Moody’s”), or equivalently
rated by Standard & Poor’s Ratings Services (“S&P”) or Fitch, Inc. (“Fitch”), or, if unrated,
determined by PIMCO to be of comparable quality. The average portfolio duration of this Fund will
closely correspond to the portfolio duration of the securities comprising its Underlying Index, as
calculated by PIMCO, which as of September 30, 2013 was 6.33 years. Duration is a measure used to
determine the sensitivity of a security’s price to changes in interest rates. The longer a
security’s duration, the more sensitive it will be to changes in interest rates.
The Underlying Index is an unmanaged index comprised of U.S. dollar denominated investment grade
corporate debt securities publicly issued in the U.S. domestic market with at least one year
remaining term to final maturity. As of September 30, 2013, there were 5840 issues in the
Underlying Index. The securities comprising the Underlying Index have an investment grade rating
(based on an average of the ratings of Moody’s, S&P and Fitch) and an investment grade rated
country of risk (based on an average of Moody’s, S&P and Fitch foreign currency long term sovereign
debt ratings). In addition, qualifying securities must have a minimum $250 million of outstanding
face value and a fixed coupon schedule. Original issue zero coupon bonds, debt issued
simultaneously in the Eurobond and U.S. domestic bond markets, 144A securities and corporate
pay-in-kind securities qualify for inclusion in the Underlying Index. Callable perpetual securities
qualify for inclusion in the Underlying Index provided they are at least one year from the first
call date. Fixed-to-floating rate securities also qualify provided they are callable within the
fixed rate period and are at least one year from last call prior to the date the bond transitions
from a fixed to a floating rate security. The Underlying Index is capitalization-weighted and the
composition of Component Securities is updated monthly. Cash flows from bond payments that are
received during the month are retained in the Underlying Index, without earning reinvestment
income, until removal at the end of the month as part of the rebalancing. It is not possible to
invest directly in the Underlying Index. The Underlying Index does not reflect deductions for fees,
expenses or taxes.
PIMCO uses an indexing approach in managing the Fund’s investments. The Fund employs a
representative sampling strategy in seeking to achieve its investment objective. In using this
strategy, PIMCO seeks to invest in a combination of Component Securities and other instruments such
that the combination effectively provides exposure to the Underlying Index. In using a
representative sampling strategy, the Fund may not track its Underlying Index with the same degree
of accuracy as a fund that replicates the composition of the Underlying Index. Unlike many
investment companies, the Fund does not attempt to outperform the index the Fund tracks. An
indexing approach may eliminate the chance that the Fund will substantially outperform its
Underlying Index but also may reduce some of the risks of active management. Indexing seeks to
achieve lower costs by keeping portfolio turnover low in comparison to actively managed investment
companies.
The Fund may invest in derivative instruments, such as options, futures contracts or swap
agreements, and may invest in mortgage related and other asset-backed securities. The Fund may
invest in U.S. dollar-denominated securities of foreign issuers, including securities and
instruments economically tied to emerging market countries. The Fund may purchase and sell
securities on a when-issued, delayed delivery or forward commitment basis. The Fund may, without
limitation, 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). 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.
E-117
Principal Risks
It is possible to lose money on an investment in the Fund. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
Market Trading Risk:
the risk that an active secondary trading market for Fund shares does not
continue once developed, that the Fund may not continue to meet a listing exchange’s trading or
listing requirements, or that Fund shares trade at prices other than the Fund’s net asset value
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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 risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
sectors
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Issuer Risk:
the risk that the value of a security may decline for reasons directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Mortgage-Related and Other Asset-Backed Securities Risk:
the risk of investing in mortgage-related
and other asset-backed securities, including interest rate risk, extension risk and prepayment risk
Foreign (Non-U.S.) Investment Risk:
the risk that investing in foreign (non-U.S.) securities may
result in the Fund experiencing more rapid and extreme changes in value than a fund that invests
exclusively in securities of U.S. companies, due to smaller markets, differing reporting,
accounting and auditing standards, increased risk of delayed settlement of portfolio transactions
or loss of certificates of portfolio securities, and the risk of unfavorable foreign government
actions, including nationalization, expropriation or confiscatory taxation, currency blockage, or
political changes or diplomatic developments. Foreign securities may also be less liquid and more
difficult to value than securities of U.S. issuers
Emerging Markets Risk:
the risk of investing in emerging market securities, primarily increased
foreign (non-U.S.) investment risk
Issuer Non-Diversification Risk:
the risks of focusing investments in a small number of issuers,
including being more susceptible to risks associated with a single economic, political or
regulatory occurrence than a more diversified portfolio might be. Funds that are “non-diversified”
may invest a greater percentage of their assets in the securities of a single issuer (such as bonds
issued by a particular foreign government) than funds that are “diversified”
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management and Tracking Error Risk:
the risk that the portfolio manager’s investment decisions may
not produce the desired results or that the Fund’s portfolio may not closely track the Underlying
Index for a number of reasons. The Fund incurs operating expenses, which are not applicable to the
Underlying Index, and the costs of buying and selling securities, especially when rebalancing the
Fund’s portfolio to reflect changes in the composition of the Underlying Index. Performance of the
Fund and the Underlying Index may vary due to asset valuation differences and differences between
the Fund’s portfolio and the Underlying Index due to legal restrictions, cost or liquidity
restraints. In addition, the Fund’s use of a representative sampling approach may cause the Fund to
be less correlated to the return of the Underlying Index than if the Fund held all of the
securities in the Underlying Index
Indexing Risk:
the risk that the Fund is negatively affected by general declines in the asset
classes represented by the Underlying Index
E-118
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|
PIMCO Australia Bond Index Exchange-Traded Fund
|
|
Ticker Symbol:
|
|
|
|
AUD
|
|
|
|
|
|
|
|
Principal Investments and Strategies
|
|
Investment Objective
|
|
Fund Category
|
|
|
|
Seeks to provide total
return that closely
corresponds, before fees
and expenses, to the
total return of The BofA
Merrill Lynch
Diversified Australia
Bond Index
SM
|
|
Global
|
|
|
|
|
|
|
|
|
|
Underlying Index Duration
|
|
Dividend Frequency
|
|
|
|
(as of 09/30/13)
|
|
Monthly
|
|
|
|
4.20 years
|
|
|
|
|
|
|
|
|
|
|
|
Credit Quality
|
|
|
|
|
|
The securities
comprising the
Underlying Index have an
investment grade rating
|
|
|
The Fund seeks to achieve its investment objective by investing under normal circumstances at least
80% of its total assets (exclusive of collateral held from securities lending) in the component
securities (“Component Securities”) of The BofA Merrill Lynch Diversified Australia Bond
Index
SM
(the “Underlying Index”). The Fund may invest the remainder of its assets in
Fixed Income Instruments that are not Component Securities, but which PIMCO believes will help the
Fund track its Underlying Index, as well as in cash and investment grade, liquid short-term
instruments, forwards or derivatives, such as options, futures contracts or swap agreements, and
shares of affiliated bond funds. “Fixed Income Instruments” include bonds, debt securities and
other similar instruments issued by various U.S. and non-U.S. public- or private-sector entities.
The average portfolio duration of this Fund will closely correspond to the portfolio duration of
the securities comprising its Underlying Index, as calculated by PIMCO, which as of September 30,
2013 was 4.20 years. Duration is a measure used to determine the sensitivity of a security’s price
to changes in interest rates. The longer a security’s duration, the more sensitive it will be to
changes in interest rates.
The Underlying Index tracks the performance of large, Australian dollar (“AUD”)-denominated
investment grade debt instruments publicly issued in the Australian domestic market, including
sovereign, quasi-government, corporate, securitized and collateralized securities. As of September
30, 2013, there were 210 issues in the Underlying Index. Qualifying constituents must have an
investment grade rating (based on an average of Moody’s Investors Service, Inc. (“Moody’s”),
Standard & Poor’s Ratings Services (“S&P”) and Fitch, Inc. (“Fitch”)), an investment grade country
of risk (based on an average of Moody’s, S&P and Fitch foreign currency long term sovereign debt
ratings), at least one year remaining term to final maturity and a fixed coupon schedule. Callable
perpetual securities qualify provided they are at least one year from the first call date.
Fixed-to-floating rate securities also qualify provided they are callable within the fixed rate
period and are at least one year from the last call prior to the date the bond transitions from a
fixed to a floating rate security.
Qualifying Australian sovereign securities must have a minimum amount outstanding of AUD 1 billion.
Both nominal and inflation linked local currency Australia sovereign debt are included in the
Underlying Index. Original issue zero coupon bonds are included in the Underlying Index and the
amounts outstanding of qualifying coupon securities are not reduced by any portions that have been
stripped. Qualifying non-sovereign securities must have a minimum amount outstanding of AUD 500
million. Original issue zero coupon bonds, “global” securities (debt issued simultaneously in the
eurobond and Australian domestic bond markets) and corporate pay-in-kind securities, including
toggle notes, qualify for inclusion in the Underlying Index. Defaulted securities are excluded from
the Underlying Index. The Underlying Index is rebalanced on the last calendar day of the month. It
is not possible to invest directly in the Underlying Index. The Underlying Index does not reflect
deductions for fees, expenses or taxes.
PIMCO uses an indexing approach in managing the Fund’s investments. The Fund employs a
representative sampling strategy in seeking to achieve its investment objective. In using this
strategy, PIMCO seeks to invest in a combination of Component Securities and other instruments such
that the combination effectively provides exposure to the Underlying Index. In using a
representative sampling strategy, the Fund may not track its Underlying Index with the same degree
of accuracy as a fund that replicates the composition of the Underlying Index. Unlike many
investment companies, the Fund does not attempt to outperform the index the Fund tracks. An
indexing approach may eliminate the chance that the Fund will substantially outperform its
Underlying Index but also may reduce some of the risks of active management. Indexing seeks to
achieve lower costs by keeping portfolio turnover low in comparison to actively managed investment
companies.
The Fund is non-diversified, which means that it may invest its assets in a smaller number of
issuers than a diversified fund. The Fund may invest in derivative instruments, such as options,
futures contracts or swap agreements. The Fund may purchase and sell securities on a when-issued,
delayed delivery or forward commitment basis. The Fund may, without limitation, 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). 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, foreign currency
appreciation, or improving credit fundamentals for a particular sector or security.
E-119
Principal Risks
It is possible to lose money on an investment in the Fund. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
Market Trading Risk:
the risk that an active secondary trading market for Fund shares does not
continue once developed, that the Fund may not continue to meet a listing exchange’s trading or
listing requirements, or that Fund shares trade at prices other than the Fund’s net asset value
Australian Securities Risk:
the Australian economy is heavily dependent upon trade and any
reduction in trading with its key partners may cause an adverse impact on the Australian economy
and the securities in which the Fund invests. The Fund is therefore exposed to the risks that could
affect the economies of its Asian, Australasian, European and American trading partners, such as
fluctuations in commodities markets, exchange rates, high unemployment, trade regulations and
deficits, among others. Additionally, Australia is prone to natural disasters, which could further
impact the Australian economy
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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 risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
sectors
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Issuer Risk:
the risk that the value of a security may decline for reasons directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Mortgage-Related and Other Asset-Backed Securities Risk:
the risk of investing in mortgage-related
and other asset-backed securities, including interest rate risk, extension risk and prepayment risk
Foreign (Non-U.S.) Investment Risk:
the risk that investing in foreign (non-U.S.) securities may
result in the Fund experiencing more rapid and extreme changes in value than a fund that invests
exclusively in securities of U.S. companies, due to smaller markets, differing reporting,
accounting and auditing standards, increased risk of delayed settlement of portfolio transactions
or loss of certificates of portfolio securities, and the risk of unfavorable foreign government
actions, including nationalization, expropriation or confiscatory taxation, currency blockage, or
political changes or diplomatic developments. Foreign securities may also be less liquid and more
difficult to value than securities of U.S. issuers
Currency Risk:
the risk that foreign currencies will decline in value relative to the U.S. dollar
and affect the Fund’s investments in foreign (non-U.S.) currencies or in securities that trade in,
and receive revenues in, or in derivatives that provide exposure to, foreign (non-U.S.) currencies
Issuer Non-Diversification Risk:
the risks of focusing investments in a small number of issuers,
including being more susceptible to risks associated with a single economic, political or
regulatory occurrence than a more diversified portfolio might be. Funds that are “non-diversified”
may invest a greater percentage of their assets in the securities of a single issuer (such as bonds
issued by a particular foreign government) than funds that are “diversified”
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
E-120
Management and Tracking Error Risk:
the risk that the portfolio manager’s investment decisions may
not produce the desired results or that the Fund’s portfolio may not closely track the Underlying
Index for a number of reasons. The Fund incurs operating expenses, which are not applicable to the
Underlying Index, and the costs of buying and selling securities, especially when rebalancing the
Fund’s portfolio to reflect changes in the composition of the Underlying Index. Performance of the
Fund and the Underlying Index may vary due to asset valuation differences and differences between
the Fund’s portfolio and the Underlying Index due to legal restrictions, cost or liquidity
restraints. In addition, the Fund’s use of a representative sampling approach may cause the Fund to
be less correlated to the return of the Underlying Index than if the Fund held all of the
securities in the Underlying Index
Indexing Risk:
the risk that the Fund is negatively affected by general declines in the asset
classes represented by the Underlying Index
E-121
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|
PIMCO Canada Bond Index Exchange-Traded Fund
|
|
Ticker symbol: CAD
|
|
|
|
|
|
|
|
Principal Investments and Strategies
|
|
Investment Objective
|
|
Fund Category
|
|
|
|
Seeks to provide total
return that closely
corresponds, before fees
and expenses, to the
total return of The BofA
Merrill Lynch
Diversified Canada
Government Bond
Index
SM
|
|
Global
|
|
|
|
|
|
|
|
|
|
Underlying Index Duration
|
|
Dividend Frequency
|
|
|
|
(as of 09/30/13)
|
|
Monthly
|
|
|
|
8.92 years
|
|
|
|
|
|
|
|
|
|
|
|
Credit Quality
|
|
|
|
|
|
The securities
comprising the
Underlying Index have an
investment grade rating
|
|
|
The Fund seeks to achieve its investment objective by investing under normal circumstances at least
80% of its total assets (exclusive of collateral held from securities lending) in the component
securities (“Component Securities”) of The BofA Merrill Lynch Diversified Canada Government Bond
Index
SM
(the “Underlying Index”). The Fund may invest the remainder of its assets in
Fixed Income Instruments that are not Component Securities, but which PIMCO believes will help the
Fund track its Underlying Index, as well as in cash and investment grade, liquid short-term
instruments, forwards or derivatives, such as options, futures contracts or swap agreements, and
shares of affiliated bond funds. “Fixed Income Instruments” include bonds, debt securities and
other similar instruments issued by various U.S. and non-U.S. public- or private-sector entities.
The average portfolio duration of this Fund will closely correspond to the portfolio duration of
the securities comprising its Underlying Index, as calculated by PIMCO, which as of September 30,
2013 was 8.92 years. Duration is a measure used to determine the sensitivity of a security’s price
to changes in interest rates. The longer a security’s duration, the more sensitive it will be to
changes in interest rates.
The Underlying Index tracks the performance of large, Canadian dollar (“CAD”)-denominated
investment grade debt instruments publicly issued in the Canadian domestic market, Canadian
sovereign and quasi-government. As of September 30, 2013, there were 346 issues in the Underlying
Index. Qualifying constituents must have an investment-grade rating (based on an average of the
ratings of Moody’s Investors Service, Inc. (“Moody’s”), Standard & Poor’s Ratings Services (“S&P”)
and Fitch, Inc. (“Fitch”)), an investment grade country of risk (based on an average of Moody’s,
S&P and Fitch foreign currency long term sovereign debt ratings), at least one year remaining term
to final maturity and a fixed coupon schedule.
Qualifying Canadian sovereign securities must have a minimum amount outstanding of CAD 1 billion.
Both nominal and inflation linked local currency Canada sovereign debt are included in the
Underlying Index. Original issue zero coupon bonds are included in the Underlying Index and the
amounts outstanding of qualifying coupon securities are not reduced by any portions that have been
stripped. Qualifying quasi-government securities must have a minimum amount outstanding of CAD 200
million. Original issue zero coupon bonds and “global” securities (debt issued simultaneously in
the eurobond and Canadian domestic bond markets) qualify for inclusion in the Underlying Index. The
Underlying Index is rebalanced on the last calendar day of the month. It is not possible to invest
directly in the Underlying Index. The Underlying Index does not reflect deductions for fees,
expenses or taxes.
PIMCO uses an indexing approach in managing the Fund’s investments. The Fund employs a
representative sampling strategy in seeking to achieve its investment objective. In using this
strategy, PIMCO seeks to invest in a combination of Component Securities and other instruments such
that the combination effectively provides exposure to the Underlying Index. In using a
representative sampling strategy, the Fund may not track its Underlying Index with the same degree
of accuracy as a fund that replicates the composition of the Underlying Index. Unlike many
investment companies, the Fund does not attempt to outperform the index the Fund tracks. An
indexing approach may eliminate the chance that the Fund will substantially outperform its
Underlying Index but also may reduce some of the risks of active management. Indexing seeks to
achieve lower costs by keeping portfolio turnover low in comparison to actively managed investment
companies.
The Fund is non-diversified, which means that it may invest its assets in a smaller number of
issuers than a diversified fund. The Fund may invest in derivative instruments, such as options,
futures contracts or swap agreements. The Fund may purchase and sell securities on a when-issued,
delayed delivery or forward commitment basis. The Fund may, without limitation, 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). 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, foreign currency
appreciation, or improving credit fundamentals for a particular sector or security.
E-122
Principal Risks
It is possible to lose money on an investment in the Fund. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
Market Trading Risk:
the risk that an active secondary trading market for Fund shares does not
continue once developed, that the Fund may not continue to meet a listing exchange’s trading or
listing requirements, or that Fund shares trade at prices other than the Fund’s net asset value
Canadian Securities Risk:
the Canadian economy may be significantly affected by the U.S. economy
because the U.S. is Canada’s largest trading partner and foreign investor. Canada’s largest exports
are its natural resources, so the Canadian economy is dependent on the demand for, and supply and
price of, natural resources, and any market developments that reduce the price of such goods could
disproportionately affect the Canadian economy
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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 risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
sectors
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Issuer Risk:
the risk that the value of a security or currency may decline for reasons directly
related to the issuer, such as management performance, financial leverage and reduced demand for
the issuer’s goods or services
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Mortgage-Related and Other Asset-Backed Securities Risk:
the risk of investing in mortgage-related
and other asset-backed securities, including interest rate risk, extension risk and prepayment risk
Foreign (Non-U.S.) Investment Risk:
the risk that investing in foreign (non-U.S.) securities may
result in the Fund experiencing more rapid and extreme changes in value than a fund that invests
exclusively in securities of U.S. companies, due to smaller markets, differing reporting,
accounting and auditing standards, increased risk of delayed settlement of portfolio transactions
or loss of certificates of portfolio securities, and the risk of unfavorable foreign government
actions, including nationalization, expropriation or confiscatory taxation, currency blockage, or
political changes or diplomatic developments. Foreign securities may also be less liquid and more
difficult to value than securities of U.S. issuers
Currency Risk:
the risk that foreign currencies will decline in value relative to the U.S. dollar
and affect the Fund’s investments in foreign (non-U.S.) currencies or in securities that trade in,
and receive revenues in, or in derivatives that provide exposure to, foreign (non-U.S.) currencies
Issuer Non-Diversification Risk:
the risks of focusing investments in a small number of issuers,
including being more susceptible to risks associated with a single economic, political or
regulatory occurrence than a more diversified portfolio might be. Funds that are “non-diversified”
may invest a greater percentage of their assets in the securities of a single issuer (such as bonds
issued by a particular foreign government) than funds that are “diversified”
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management and Tracking Error Risk:
the risk that the portfolio manager’s investment decisions may
not produce the desired results or that the Fund’s portfolio may not closely track the Underlying
Index for a number of reasons. The Fund incurs operating expenses, which are not applicable to the
Underlying Index, and the costs of buying and selling securities, especially when rebalancing the
Fund’s portfolio to reflect changes in the composition of the Underlying Index. Performance of the
Fund and the Underlying Index may vary due to asset valuation differences and differences between
the Fund’s portfolio and the Underlying Index due to legal restrictions, cost or liquidity
restraints. In addition, the Fund’s use of a representative sampling approach may cause the Fund to
be less correlated to the return of the Underlying Index than if the Fund held all of the
securities in the Underlying Index
Indexing Risk:
the risk that the Fund is negatively affected by general declines in the asset
classes represented by the Underlying Index
E-123
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PIMCO Germany Bond Index Exchange-Traded Fund
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Ticker symbol:
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BUND
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Principal Investments and Strategies
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Investment Objective
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Fund Category
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Seeks to provide total
return that closely
corresponds, before fees
and expenses, to the
total return of The BofA
Merrill Lynch
Diversified Germany Bond
Index
SM
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Global
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Underlying Index Duration
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Dividend Frequency
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(as of 09/30/13)
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Monthly
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4.53 years
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Credit Quality
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Qualifying constituents
must be an obligation of
a German entity with an
investment-grade rating
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The Fund seeks to achieve its investment objective by investing under normal circumstances at least
80% of its total assets (exclusive of collateral held from securities lending) in the component
securities (“Component Securities”) of The BofA Merrill Lynch Diversified Germany Bond
Index
SM
(the “Underlying Index”). The Fund may invest the remainder of its assets in
Fixed Income Instruments that are not Component Securities, but which Pacific Investment Management
Company LLC (“PIMCO”) believes will help the Fund track its Underlying Index, as well as in cash
and investment grade, liquid short-term instruments, forwards or derivatives, such as options,
futures contracts or swap agreements, and shares of affiliated bond funds. “Fixed Income
Instruments” include bonds, debt securities and other similar instruments issued by various U.S.
and non-U.S. public or private-sector entities. The average portfolio duration of this Fund will
closely correspond to the portfolio duration of the securities comprising its Underlying Index, as
calculated by PIMCO, which as of September 30, 2013 was 4.53 years. Duration is a measure used to
determine the sensitivity of a security’s price to changes in interest rates. The longer a
security’s duration, the more sensitive it will be to changes in interest rates.
The Underlying Index tracks the performance of large, Euro (“EUR”)-denominated investment grade
debt instruments of German issuers publicly issued in the eurobond or Euro member domestic markets,
including sovereign, quasi-government, corporate, securitized and collateralized securities. As of
September 30, 2013, there were 631 issues in the Underlying Index. Qualifying constituents must be
an obligation of a German entity with an investment-grade rating (based on an average of the
ratings of Moody’s Investors Service, Inc. (“Moody’s”), Standard & Poor’s Ratings Services (“S&P”)
and Fitch, Inc. (“Fitch”)), at least one year remaining term to final maturity and a fixed coupon
schedule. Callable perpetual securities qualify provided they are at least one year from the first
call date. Fixed-to-floating rate securities also qualify provided they are callable within the
fixed rate period and are at least one year from the last call prior to the date the bond
transitions from a fixed to a floating rate security.
Qualifying German sovereign securities must have a minimum amount outstanding of EUR 1 billion.
Both nominal and inflation linked local currency German sovereign debt are included in the
Underlying Index. Original issue zero coupon bonds and corporate pay-in-kind securities, including
toggle notes, are included in the Underlying Index and the amounts outstanding of qualifying coupon
securities are not reduced by any portions that have been stripped. Qualifying non-sovereign
securities must have a minimum amount outstanding of EUR 500 million. Original issue zero coupon
securities qualify for inclusion in the Underlying Index. The Underlying Index is rebalanced on the
last calendar day of the month.
PIMCO uses an indexing approach in managing the Fund’s investments. The Fund employs a
representative sampling strategy in seeking to achieve its investment objective. In using this
strategy, PIMCO seeks to invest in a combination of Component Securities and other instruments such
that the combination effectively provides exposure to the Underlying Index. In using a
representative sampling strategy, the Fund may not track its Underlying Index with the same degree
of accuracy as a fund that replicates the composition of the Underlying Index. Unlike many
investment companies, the Fund does not attempt to outperform the index the Fund tracks. An
indexing approach may eliminate the chance that the Fund will substantially outperform its
Underlying Index but also may reduce some of the risks of active management. Indexing seeks to
achieve lower costs by keeping portfolio turnover low in comparison to actively managed investment
companies.
The Fund is non-diversified, which means that it may invest its assets in a smaller number of
issuers than a diversified fund. The Fund may invest in derivative instruments, such as options,
futures contracts or swap agreements. The Fund may purchase and sell securities on a when-issued,
delayed delivery or forward commitment basis. The Fund may, without limitation, 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). 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, foreign currency
appreciation, or improving credit fundamentals for a particular sector or security.
E-124
Principal Risks
It is possible to lose money on an investment in the Fund. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
Market Trading Risk:
the risk that an active secondary trading market for Fund shares does not
continue once developed, that the Fund may not continue to meet a listing exchange’s trading or
listing requirements, or that Fund shares trade at prices other than the Fund’s net asset value
German Securities Risk:
the German economy is dependent on trade, with exports accounting for more
than one-third of Germany’s output. Therefore, a reduction in spending by Germany’s trade partners
on German products and services or negative changes in any of these countries may cause an adverse
impact on the German economy. Internal factors, such as high unemployment and government regulation
of labor markets, may also affect the performance of the German economy. The European financial
markets have recently experienced volatility due to concerns about rising government debt levels of
several European countries
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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 risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
sectors
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Issuer Risk:
the risk that the value of a security may decline for reasons directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Mortgage-Related and Other Asset-Backed Securities Risk:
the risk of investing in mortgage-related
and other asset-backed securities, including interest rate risk, extension risk and prepayment risk
Foreign (Non-U.S.) Investment Risk:
the risk that investing in foreign (non-U.S.) securities may
result in the Fund experiencing more rapid and extreme changes in value than a fund that invests
exclusively in securities of U.S. companies, due to smaller markets, differing reporting,
accounting and auditing standards, increased risk of delayed settlement of portfolio transactions
or loss of certificates of portfolio securities, and the risk of unfavorable foreign government
actions, including nationalization, expropriation or confiscatory taxation, currency blockage, or
political changes or diplomatic developments. Foreign securities may also be less liquid and more
difficult to value than securities of U.S. issuers
Currency Risk:
the risk that foreign currencies will decline in value relative to the U.S. dollar
and affect the Fund’s investments in foreign (non-U.S.) currencies or in securities that trade in,
and receive revenues in, or in derivatives that provide exposure to, foreign (non-U.S.) currencies
Issuer Non-Diversification Risk:
the risks of focusing investments in a small number of issuers,
including being more susceptible to risks associated with a single economic, political or
regulatory occurrence than a more diversified portfolio might be. Funds that are “non-diversified”
may invest a greater percentage of their assets in the securities of a single issuer (such as bonds
issued by a particular foreign government) than funds that are “diversified”
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
E-125
Management and Tracking Error Risk:
the risk that the portfolio manager’s investment decisions may
not produce the desired results or that the Fund’s portfolio may not closely track the Underlying
Index for a number of reasons. The Fund incurs operating expenses, which are not applicable to the
Underlying Index, and the costs of buying and selling securities, especially when rebalancing the
Fund’s portfolio to reflect changes in the composition of the Underlying Index. Performance of the
Fund and the Underlying Index may vary due to asset valuation differences and differences between
the Fund’s portfolio and the Underlying Index due to legal restrictions, cost or liquidity
restraints. In addition, the Fund’s use of a representative sampling approach may cause the Fund to
be less correlated to the return of the Underlying Index than if the Fund held all of the
securities in the Underlying Index
Indexing Risk:
the risk that the Fund is negatively affected by general declines in the asset
classes represented by the Underlying Index
E-126
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PIMCO CommodityRealReturn Strategy Fund
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Ticker symbol:
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PCRIX (Inst. Class)
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Principal Investments and Strategies
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Investment Objective
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Fund Focus
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Credit Quality
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Seeks maximum real
return consistent with
prudent investment
management
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Commodity-linked
derivative instruments
backed by a portfolio of
inflation-indexed and
other Fixed Income
Instruments
Average Portfolio Duration
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B to Aaa; maximum 10% of total
assets below Baa
Dividend Frequency
Declared and distributed quarterly
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<
10 years
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The Fund seeks to achieve its investment objective by investing under normal circumstances in
commodity-linked derivative instruments backed by a portfolio of inflation-indexed securities and
other Fixed Income Instruments. “Fixed Income Instruments” include bonds, debt securities and other
similar instruments issued by various U.S. and non-U.S. public- or private-sector entities. “Real
Return” equals total return less the estimated cost of inflation, which is typically measured by
the change in an official inflation measure. The Fund invests in commodity-linked derivative
instruments, including commodity index-linked notes, swap agreements, commodity options, futures
and options on futures, that provide exposure to the investment returns of the commodities markets,
without investing directly in physical commodities. Commodities are assets that have tangible
properties, such as oil, metals, and agricultural products. The value of commodity-linked
derivative instruments may be affected by overall market movements and other factors affecting the
value of a particular industry or commodity, such as weather, disease, embargoes, or political and
regulatory developments. The Fund may also invest in common and preferred stocks as well as
convertible securities of issuers in commodity-related industries.
The Fund will seek to gain exposure to the commodity markets primarily through investments in
leveraged or unleveraged commodity index-linked notes, which are derivative debt instruments with
principal and/or coupon payments linked to the performance of commodity indices, and through
investments in the PIMCO Cayman Commodity Fund I Ltd., a wholly-owned subsidiary of the Fund
organized under the laws of the Cayman Islands (the “Subsidiary”). These commodity index-linked
notes are sometimes referred to as “structured notes” because the terms of these notes may be
structured by the issuer and the purchaser of the note. The value of these notes will rise or fall
in response to changes in the underlying commodity or related index of investment. The Fund may
also gain exposure to commodity markets by investing in the Subsidiary. The Subsidiary is advised
by Pacific Investment Management Company LLC (“PIMCO”), and has the same investment objective as
the Fund. As discussed in greater detail elsewhere in this prospectus, the Subsidiary (unlike the
Fund) may invest without limitation in commodity-linked swap agreements and other commodity-linked
derivative instruments.
The derivative instruments in which the Fund and the Subsidiary primarily intend to invest are
instruments linked to certain commodity indices and instruments linked to the value of a particular
commodity or commodity futures contract, or a subset of commodities or commodity futures contracts.
These instruments may specify exposure to commodity futures with different roll dates, reset dates
or contract months than those specified by a particular commodity index. As a result, the
commodity-linked derivatives component of the Fund’s portfolio may deviate from the returns of any
particular commodity index. The Fund or the Subsidiary may over-weight or under-weight its exposure
to a particular commodity index, or a subset of commodities, such that the Fund has greater or
lesser exposure to that index than the value of the Fund’s net assets, or greater or lesser
exposure to a subset of commodities than is represented by a particular commodity index. Such
deviations will frequently be the result of temporary market fluctuations, and under normal
circumstances the Fund will seek to maintain notional exposure to one or more commodity indices
within 5% (plus or minus) of the value of the Fund’s net assets.
Assets not invested in commodity-linked derivative instruments or the Subsidiary may be invested in
inflation-indexed securities and other Fixed Income Instruments, including derivative Fixed Income
Instruments. The Fund is non-diversified, which means that it may invest its assets in a smaller
number of issuers than a diversified fund. In addition, the Fund may invest its assets in
particular sectors of the commodities market.
The average portfolio duration of the fixed income portion of this Fund will vary based on PIMCO’s
forecast for interest rates and under normal market conditions is not expected to exceed ten years.
Duration is a measure used to determine the sensitivity of a security’s price to changes in
interest rates. The longer a security’s duration, the more sensitive it will be to changes in
interest rates. The Fund may invest up to 10% of its total assets in high yield securities (“junk
bonds”) rated B or higher by Moody’s Investors Service, Inc. (“Moody’s”), or equivalently rated by
Standard & Poor’s Ratings Services (“S&P”) or Fitch, Inc. (“Fitch”), or, if unrated, determined by
PIMCO to be of comparable quality. The Fund may invest up to 30% of its total assets in securities
denominated in foreign currencies and may invest beyond this limit in U.S. dollar-denominated
securities of foreign issuers. The Fund may invest up to 10% of its total assets in securities and
instruments that are economically tied to emerging market countries. The Fund will normally limit
its foreign currency exposure (from non-U.S. dollar-denominated securities or currencies) to 20% of
its total assets. The Fund may, without limitation, 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 or dollar rolls). The Fund may also
invest up to 10% of its total assets in preferred stocks. The Fund may purchase and sell securities
on a when-issued, delayed delivery or forward commitment basis and may engage in short sales.
E-127
Principal Risks
It is possible to lose money on an investment in the Fund. Under certain conditions, generally in a
market where the value of both commodity-linked derivative instruments and fixed income securities
are declining, the Fund may experience substantial losses. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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 risk that high yield securities and unrated securities of similar credit
quality (commonly known as “junk bonds”) are subject to greater levels of credit and liquidity
risks. High yield securities are considered primarily speculative with respect to the issuer’s
continuing ability to make principal and interest payments
Market Risk:
the risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
Issuer Risk:
the risk that the value of a security may decline for a reason directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Commodity Risk:
the risk that investing in commodity-linked derivative instruments may subject the
Fund to greater volatility than investments in traditional securities. The value of
commodity-linked derivative instruments may be affected by changes in overall market movements,
commodity index volatility, changes in interest rates, or factors affecting a particular industry
or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs and
international economic, political and regulatory developments
Equity Risk:
the risk that the value of equity securities, such as common stocks and preferred
stocks, may decline due to general market conditions which are not specifically related to a
particular company or to factors affecting a particular industry or industries. Equity securities
generally have greater price volatility than fixed income securities
Mortgage-Related and Other Asset-Backed Securities Risk:
the risk of investing in mortgage-related
and other asset-backed securities, including interest rate risk, extension risk and prepayment risk
Foreign (Non-U.S.) Investment Risk:
the risk that investing in foreign (non-U.S.) securities may
result in the Fund experiencing more rapid and extreme changes in value than a fund that invests
exclusively in securities of U.S. companies, due to smaller markets, differing reporting,
accounting and auditing standards, and nationalization, expropriation or confiscatory taxation,
currency blockage, or political changes or diplomatic developments. Foreign securities may also be
less liquid and more difficult to value than securities of U.S. issuers
Emerging Markets Risk:
the risk of investing in emerging market securities, primarily increased
foreign (non-U.S.) investment risk
Currency Risk:
the risk that foreign currencies will decline in value relative to the U.S. dollar
and affect the Fund’s investments in foreign (non-U.S.) currencies or in securities that trade in,
and receive revenues in, or in derivatives that provide exposure to, foreign (non-U.S.) currencies
Issuer Non-Diversification Risk:
the risk of focusing investments in a small number of issuers,
including being more susceptible to risks associated with a single economic, political or
regulatory occurrence than a more diversified portfolio might be. Funds that are “non-diversified”
may invest a greater percentage of their assets in the securities of a single issuer (such as bonds
issued by a particular state) than funds that are “diversified”
E-128
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
Tax Risk:
the risk that the tax treatment of swap agreements and other derivative instruments, such
as commodity-linked derivative instruments, including commodity index-linked notes, swap
agreements, commodity options, futures, and options on futures, may be affected by future
regulatory or legislative changes that could affect whether income from such investments is
“qualifying income” under Subchapter M of the Internal Revenue Code, or otherwise affect the
character, timing and/or amount of the Fund’s taxable income or gains and distributions
Subsidiary Risk:
the risk that, by investing in the Subsidiary, the Fund is indirectly exposed to
the risks associated with the Subsidiary’s investments. The Subsidiary is not registered under the
1940 Act and may not be subject to all the investor protections of the 1940 Act. There is no
guarantee that the investment objective of the Subsidiary will be achieved
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
E-129
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PIMCO California Intermediate Municipal Bond Fund
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Ticker symbol:
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PCIMX (Inst. Class)
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Principal Investments and Strategies
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Investment Objective
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Fund Focus
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Credit Quality
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Seeks high current
income exempt from
federal and California
income tax. Capital
appreciation is a
secondary objective.
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Intermediate maturity
municipal securities
(exempt from federal and
California income tax)
Average Portfolio Duration
3-7 years
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B to Aaa; maximum 10% of total assets
below Baa
Dividend Frequency
Declared daily and distributed monthly
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The Fund seeks to achieve its investment objective by investing under normal circumstances at least
80% of its assets in debt securities whose interest is, in the opinion of bond counsel for the
issuer at the time of issuance, exempt from regular federal income tax and California income tax
(“California Municipal Bonds”). California Municipal Bonds generally are issued by or on behalf of
the State of California and its political subdivisions, financing authorities and their agencies.
The Fund may invest in debt securities of an issuer located outside of California whose interest
is, in the opinion of bond counsel for the issuer at the time of issuance, exempt from regular
federal income tax and California income tax. By concentrating its investments in California, the
Fund will be subject to California State-Specific Risk.
The Fund may invest without limitation in “private activity” bonds whose interest is a
tax-preference item for purposes of the federal alternative minimum tax (“AMT”). For shareholders
subject to the AMT, a substantial portion of the Fund’s distributions may not be exempt from
federal income tax. The Fund may invest 25% or more of its total 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”) that finance education, health care, housing,
transportation, utilities and other similar projects, and 25% or more of its total assets in
industrial development bonds. The Fund may invest the remainder of its net assets in other types of
Fixed Income Instruments. “Fixed Income Instruments” include bonds, debt securities and other
similar instruments issued by various U.S. and non-U.S. public- or private-sector entities. The
average portfolio duration of this Fund normally varies from three to seven years based on Pacific
Investment Management Company LLC’s (“PIMCO”) forecast for interest rates. Duration is a measure
used to determine the sensitivity of a security’s price to changes in interest rates. The longer a
security’s duration, the more sensitive it will be to changes in interest rates. The portfolio
manager focuses on bonds with the potential to offer attractive current income, typically looking
for bonds that can provide consistently attractive current yields or that are trading at
competitive market prices. Capital appreciation, if any, generally arises from decreases in
interest rates or improving credit fundamentals for a particular state, municipality or issuer.
The Fund invests primarily in investment grade debt securities, but may invest up to 10% of its
total assets in high yield securities (“junk bonds”) rated B or higher by Moody’s Investors
Service, Inc. (“Moody’s”), or equivalently rated by Standard & Poor’s Ratings Services (“S&P”) or
Fitch, Inc. (“Fitch”), or, if unrated, determined by PIMCO to be of comparable quality. The Fund is
non-diversified, which means that it may invest its assets in a smaller number of issuers than a
diversified fund.
The Fund may invest in derivative instruments, such as options, futures contracts or swap
agreements, or in mortgage- or asset-backed securities. The Fund may purchase or sell securities on
a when-issued, delayed delivery or forward commitment basis and may engage in short sales. The Fund
may also invest in securities issued by entities, such as trusts, whose underlying assets are
municipal bonds, including, without limitation, residual interest bonds. The Fund may, without
limitation, 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 or dollar rolls). The Fund may also invest up to 10% of its total assets in preferred
stocks.
Principal Risks
It is possible to lose money on an investment in the Fund. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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 risk that high yield securities and unrated securities of similar credit
quality (commonly known as “junk bonds”) are subject to greater levels of credit and liquidity
risks. High yield securities are considered primarily speculative with respect to the issuer’s
continuing ability to make principal and interest payments
E-130
Market Risk:
the risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
Issuer Risk:
the risk that the value of a security may decline for a reason directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Equity Risk:
the risk that the value of equity securities, such as common stocks and preferred
stocks, may decline due to general market conditions which are not specifically related to a
particular company or to factors affecting a particular industry or industries. Equity securities
generally have greater price volatility than fixed income securities
Mortgage-Related and Other Asset-Backed Securities Risk:
the risk of investing in mortgage-related
and other asset-backed securities, including interest rate risk, extension risk and prepayment risk
Issuer Non-Diversification Risk:
the risk of focusing investments in a small number of issuers,
including being more susceptible to risks associated with a single economic, political or
regulatory occurrence than a more diversified portfolio might be. Funds that are “non-diversified”
may invest a greater percentage of their assets in the securities of a single issuer (such as bonds
issued by a particular state) than funds that are “diversified”
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
California State-Specific Risk:
the risk that by concentrating its investments in California
Municipal Bonds, the Fund may be affected significantly by economic, regulatory or political
developments affecting the ability of California issuers to pay interest or repay principal
Municipal Project-Specific Risk:
the risk that the Fund may be more sensitive to adverse economic,
business or political developments if it invests a substantial portion of its assets in the bonds
of similar projects (such as those relating to education, health care, housing, transportation, and
utilities), industrial development bonds, or in bonds from issuers in a single state
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
E-131
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PIMCO California Municipal Bond Fund
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Ticker symbol:
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PCTIX (Inst. Class)
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Principal Investments and Strategies
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Investment Objective
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Fund Focus
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Credit Quality
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|
Seeks high current
income exempt from
federal and California
income tax
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Municipal securities
(exempt from federal and
California income tax)
|
|
B to Aaa; maximum of 10% of total
assets below Baa
|
|
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Average Portfolio Duration
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Dividend Frequency
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7-12 years
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Declared daily and distributed monthly
|
The Fund seeks to achieve its investment objective by investing under normal circumstances at least
80% of its assets in debt securities whose interest is, in the opinion of bond counsel for the
issuer at the time of issuance, exempt from regular federal income tax and California income tax
(“California Municipal Bonds”). California Municipal Bonds generally are issued by or on behalf of
the State of California and its political subdivisions, financing authorities and their agencies.
The Fund may invest in debt securities of an issuer located outside of California whose interest
is, in the opinion of bond counsel for the issuer at the time of issuance, exempt from regular
federal income tax and California income tax. By concentrating its investments in California, the
Fund will be subject to California State-Specific Risk.
The Fund may invest in Fixed Income Instruments which include bonds, debt securities and other
similar instruments issued by various U.S. and non-U.S. public- or private-sector entities. The
Fund may invest without limitation in “private activity” bonds whose interest is a tax-preference
item for purposes of the federal alternative minimum tax (“AMT”). For shareholders subject to the
AMT, a substantial portion of the Fund’s distributions may not be exempt from federal income tax.
The Fund may invest 25% or more of its total 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”) that finance education, health care, housing, transportation, utilities and
other similar projects, and 25% or more of its total assets in industrial development bonds. The
Fund may invest the remainder of its net assets in other types of Fixed Income Instruments. “Fixed
Income Instruments” include bonds, debt securities and other similar instruments issued by various
U.S. and non-U.S. public- or private-sector entities. The average portfolio duration of this Fund
normally varies from seven to twelve years based on Pacific Investment Management Company LLC’s
(“PIMCO”) forecast for interest rates. Duration is a measure used to determine the sensitivity of a
security’s price to changes in interest rates. The longer a security’s duration, the more sensitive
it will be to changes in interest rates. The portfolio manager focuses on bonds with the potential
to offer attractive current income, typically looking for bonds that can provide consistently
attractive current yields or that are trading at competitive market prices. Capital appreciation,
if any, generally arises from decreases in interest rates or improving credit fundamentals for a
particular state, municipality or issuer.
The Fund invests primarily in investment grade debt securities, but may invest up to 10% of its
total assets in high yield securities (“junk bonds”) rated B or higher by Moody’s Investors
Service, Inc. (“Moody’s”), or equivalently rated by Standard & Poor’s Ratings Services (“S&P”) or
Fitch, Inc. (“Fitch”), or, if unrated, determined by PIMCO to be of comparable quality. The Fund is
non-diversified, which means that it may invest its assets in a smaller number of issuers than a
diversified fund.
The Fund may invest in derivative instruments, such as options, futures contracts or swap
agreements, or in mortgage- or asset backed securities. The Fund may purchase or sell securities on
a when-issued, delayed delivery or forward commitment basis and may engage in short sales. The Fund
may also invest in securities issued by entities, such as trusts, whose underlying assets are
municipal bonds, including, without limitation, residual interest bonds. The Fund may, without
limitation, 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 or dollar rolls). The Fund may also invest up to 10% of its total assets in preferred
stocks.
Principal Risks
It is possible to lose money on an investment in the Fund. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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
E-132
High Yield Risk:
the risk that high yield securities and unrated securities of similar credit
quality (commonly known as “junk bonds”) are subject to greater levels of credit and liquidity
risks. High yield securities are considered primarily speculative with respect to the issuer’s
continuing ability to make principal and interest payments
Market Risk:
the risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
Issuer Risk:
the risk that the value of a security may decline for a reason directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Equity Risk:
the risk that the value of equity securities, such as common stocks and preferred
stocks, may decline due to general market conditions which are not specifically related to a
particular company or to factors affecting a particular industry or industries. Equity securities
generally have greater price volatility than fixed income securities
Mortgage-Related and Other Asset-Backed Securities Risk:
the risk of investing in mortgage-related
and other asset-backed securities, including interest rate risk, extension risk and prepayment risk
Issuer Non-Diversification Risk:
the risk of focusing investments in a small number of issuers,
including being more susceptible to risks associated with a single economic, political or
regulatory occurrence than a more diversified portfolio might be. Funds that are “non-diversified”
may invest a greater percentage of their assets in the securities of a single issuer (such as bonds
issued by a particular state) than funds that are “diversified”
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
California State-Specific Risk:
the risk that by concentrating its investments in California
Municipal Bonds, the Fund may be affected significantly by economic, regulatory or political
developments affecting the ability of California issuers to pay interest or repay principal
Municipal Project-Specific Risk:
the risk that the Fund may be more sensitive to adverse economic,
business or political developments if it invests a substantial portion of its assets in the bonds
of similar projects (such as those relating to education, health care, housing, transportation, and
utilities), industrial development bonds, or in bonds from issuers in a single state
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
E-133
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PIMCO California Short Duration Municipal Income Fund
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Ticker symbol:
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PCDIX (Inst. Class)
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Principal Investments and Strategies
|
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|
|
Investment Objective
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Fund Focus
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Credit Quality
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|
Seeks maximum total
return, consistent
with preservation
of capital and
prudent investment
management.
|
|
Short to intermediate
maturity municipal
securities (exempt from
federal and California
income tax)
Average Portfolio Duration
<
3 years
|
|
Caa to Aaa; maximum 10% of
total
assets below Baa
Dividend Frequency
Declared daily and distributed monthly
|
The Fund seeks to achieve its investment objective by investing under normal circumstances at least
80% of its assets in debt securities whose interest is, in the opinion of bond counsel for the
issuer at the time of issuance, exempt from federal and California income tax (“California
Municipal Bonds”). California Municipal Bonds generally are issued by or on behalf of the State of
California and its political subdivisions, financing authorities and their agencies. The Fund may
invest in debt securities of an issuer located outside of California whose interest is, in the
opinion of bond counsel for the issuer at the time of issuance, exempt from regular federal income
tax and California income tax. By concentrating its investments in California, the Fund will be
subject to California State-Specific Risk.
The Fund does not intend to invest in securities whose interest is subject to the federal
alternative minimum tax. The Fund may invest 25% or more of its total 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”) that finance education, health care, housing,
transportation, utilities and other similar projects, and 25% or more of its total assets in
industrial development bonds. The Fund may invest the remainder of its net assets in other types of
Fixed Income Instruments. “Fixed Income Instruments” include bonds, debt securities and other
similar instruments issued by various U.S. and non-U.S. public- or private-sector entities. The
average portfolio duration of this Fund varies based on Pacific Investment Management Company LLC’s
(“PIMCO”) forecast for interest rates and under normal market conditions is not expected to exceed
three years. Duration is a measure used to determine the sensitivity of a security’s price to
changes in interest rates. The longer a security’s duration, the more sensitive it will be to
changes in interest rates. The total return sought by the Fund consists of both income earned on
the Fund’s investments and capital appreciation. The portfolio manager focuses on bonds with the
potential to offer attractive current income, typically looking for bonds that can provide
consistently attractive current yields or that are trading at competitive market prices. Capital
appreciation, if any, generally arises from decreases in interest rates or improving credit
fundamentals for a particular state, municipality or issuer.
The Fund invests primarily in investment grade debt securities, but may invest up to 10% of its
total assets in high yield securities (“junk bonds”) that are rated Caa or higher by Moody’s
Investors Service, Inc. (“Moody’s”), or equivalently rated by Standard & Poor’s Ratings Services
(“S&P”) or Fitch, Inc. (“Fitch”), or, if unrated, determined by PIMCO to be of comparable quality.
The Fund is non-diversified, which means that it may invest its assets in a smaller number of
issuers than a diversified fund.
The Fund may invest in derivative instruments, such as options, futures contracts or swap
agreements, or in mortgage- or asset-backed securities. The Fund may purchase or sell securities on
a when-issued, delayed delivery or forward commitment basis and may engage in short sales. The Fund
may also invest in securities issued by entities, such as trusts, whose underlying assets are
California Municipal Bonds, including, without limitation, residual interest bonds. The Fund may,
without limitation, 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 or dollar rolls). The Fund may also invest up to 10% of its total assets in
preferred stocks.
Principal Risks
It is possible to lose money on an investment in the Fund. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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 risk that high yield securities and unrated securities of similar credit
quality (commonly known as “junk bonds”) are subject to greater levels of credit and liquidity
risks. High yield securities are considered primarily speculative with respect to the issuer’s
continuing ability to make principal and interest payments
E-134
Market Risk:
the risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
Issuer Risk:
the risk that the value of a security may decline for a reason directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Equity Risk:
the risk that the value of equity securities, such as common stocks and preferred
stocks, may decline due to general market conditions which are not specifically related to a
particular company or to factors affecting a particular industry or industries. Equity securities
generally have greater price volatility than fixed income securities
Mortgage-Related and Other Asset-Backed Securities Risk:
the risk of investing in mortgage-related
and other asset-backed securities, including interest rate risk, extension risk and prepayment risk
Issuer Non-Diversification Risk:
the risk of focusing investments in a small number of issuers,
including being more susceptible to risks associated with a single economic, political or
regulatory occurrence than a more diversified portfolio might be. Funds that are “non-diversified”
may invest a greater percentage of their assets in the securities of a single issuer (such as bonds
issued by a particular state) than funds that are “diversified”
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
California State-Specific Risk:
the risk that by concentrating its investments in California
Municipal Bonds, the Fund may be affected significantly by economic, regulatory or political
developments affecting the ability of California issuers to pay interest or repay principal
Municipal Project-Specific Risk:
the risk that the Fund may be more sensitive to adverse economic,
business or political developments if it invests a substantial portion of its assets in the bonds
of similar projects (such as those relating to education, health care, housing, transportation, and
utilities), industrial development bonds, or in bonds from issuers in a single state
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
E-135
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PIMCO CommoditiesPLUS
TM
Strategy Fund
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Ticker symbol:
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PCLIX
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Principal Investments and Strategies
|
|
|
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Investment Objective
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Fund Focus
|
|
Credit Quality
|
|
Seeks total return which
exceeds that of its
benchmark, consistent
with prudent investment
management
|
|
Commodity-linked
derivative instruments
backed by an actively
managed low volatility
bond portfolio
Average Portfolio Duration
<
1 year
|
|
Baa to Aaa; max 10%
of total assets
below A
Dividend Frequency
Quarterly
|
The Fund seeks to achieve its investment objective by investing under normal circumstances in
commodity-linked derivative instruments backed by an actively managed, low volatility portfolio of
Fixed Income Instruments. “Fixed Income Instruments” include bonds, debt securities and other
similar instruments issued by various U.S. and non-U.S. public- or private-sector entities. The
Fund invests in commodity-linked derivative instruments, including swap agreements, futures,
options on futures, commodity index-linked notes and commodity options that provide exposure to the
investment returns of the commodities futures markets. Commodities are assets that have tangible
properties, such as oil, metals, and agricultural products. The value of commodity-linked
derivative instruments may be affected by overall market movements and other factors affecting the
value of a particular industry or commodity, such as weather, disease, embargoes, or political and
regulatory developments.
The Fund will seek to gain exposure to the commodity futures markets primarily through investments
in swap agreements and futures, and through investments in the PIMCO Cayman Commodity Fund III
Ltd., a wholly-owned subsidiary of the Fund organized under the laws of the Cayman Islands (the
“Subsidiary”). The Subsidiary is advised by PIMCO, and has the same investment objective as the
Fund. As discussed in greater detail elsewhere in the prospectus, the Subsidiary (unlike the Fund)
may invest without limitation in commodity-linked swap agreements and other commodity-linked
derivative instruments. The derivative instruments in which the Fund and the Subsidiary primarily
intend to invest are instruments linked to certain commodity indices and instruments linked to the
value of a particular commodity or commodity futures contract, or a subset of commodities or
commodity futures contracts. These instruments may specify exposure to commodity futures with
different roll dates, reset dates or contract months than those specified by a particular commodity
index. As a result, the commodity-linked derivatives component of the Fund’s portfolio may deviate
from the returns of any particular commodity index. The Fund or the Subsidiary may over-weight or
under-weight its exposure to a particular commodity index, or a subset of commodities, such that
the Fund has greater or lesser exposure to that index than the value of the Fund’s net assets, or
greater or lesser exposure to a subset of commodities than is represented by a particular commodity
index. Such deviations will frequently be the result of temporary market fluctuations, and under
normal circumstances the Fund will seek to maintain notional exposure to one or more commodity
indices within 5% (plus or minus) of the value of the Fund’s net assets.
The Fund may also invest in leveraged or unleveraged commodity index-linked notes, which are
derivative debt instruments with principal and/or coupon payments linked to the performance of
commodity indices. These commodity index-linked notes are sometimes referred to as “structured
notes” because the terms of these notes may be structured by the issuer and the purchaser of the
note. The value of these notes will rise or fall in response to changes in the underlying commodity
or related index of investment.
Assets not invested in commodity-linked derivative instruments or the Subsidiary may be invested in
Fixed Income Instruments, including derivative Fixed Income Instruments. The Fund is
non-diversified, which means that it may invest its assets in a smaller number of issuers than a
diversified fund. In addition, the Fund may invest its assets in particular sectors of the
commodities futures market.
The average portfolio duration of the fixed income portion of this Fund will vary based on PIMCO’s
forecast for interest rates and under normal market conditions is not expected to exceed one year.
Duration is a measure used to determine the sensitivity of a security’s price to changes in
interest rates. The longer a security’s duration, the more sensitive it will be to changes in
interest rates. The Fund may invest in investment grade securities that are rated at least Baa,
including up to 10% of its total assets in securities rated below A, by Moody’s Investors Service,
Inc. (“Moody’s”), or equivalently rated by Standard & Poor’s Ratings Services (“S&P”) or Fitch,
Inc. (“Fitch”), or, if unrated, determined by PIMCO to be of comparable quality. The Fund may
invest up to 10% of its total assets in securities denominated in foreign currencies and may invest
without limit in U.S. dollar-denominated securities of foreign issuers. The Fund will normally
limit its foreign currency exposure (from non-U.S. dollar-denominated securities or currencies) to
5% of its total assets. The Fund may, without limitation, 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 or dollar rolls). The Fund may purchase
and sell securities on a when-issued, delayed delivery or forward commitment basis and may engage
in short sales.
E-136
Principal Risks
It is possible to lose money on an investment in the Fund. Under certain conditions, generally in a
market where the value of both commodity-linked derivative instruments and fixed income securities
are declining, the Fund may experience substantial losses. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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 risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
Issuer Risk:
the risk that the value of a security may decline for a reason directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Commodity Risk:
the risk that investing in commodity-linked derivative instruments may subject the
Fund to greater volatility than investments in traditional securities. The value of
commodity-linked derivative instruments may be affected by changes in overall market movements,
commodity index volatility, changes in interest rates, or factors affecting a particular industry
or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs and
international economic, political and regulatory developments
Mortgage-Related and Other Asset-Backed Securities Risk:
the risk of investing in mortgage-related
and other asset-backed securities, including interest rate risk, extension risk and prepayment risk
Foreign (Non-U.S.) Investment Risk:
the risk that investing in foreign (non-U.S.) securities may
result in the Fund experiencing more rapid and extreme changes in value than a fund that invests
exclusively in securities of U.S. companies, due to smaller markets, differing reporting,
accounting and auditing standards, and nationalization, expropriation or confiscatory taxation,
currency blockage, or political changes or diplomatic developments. Foreign securities may also be
less liquid and more difficult to value than securities of U.S. issuers
Issuer Non-Diversification Risk:
the risk of focusing investments in a small number of issuers,
including being more susceptible to risks associated with a single economic, political or
regulatory occurrence than a more diversified portfolio might be. Funds that are “non-diversified”
may invest a greater percentage of their assets in the securities of a single issuer (such as bonds
issued by a particular state) than funds that are “diversified”
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
Tax Risk:
the risk that the tax treatment of swap agreements and other derivative instruments, such
as commodity-linked derivative instruments, including commodity index-linked notes, swap
agreements, commodity options, futures, and options on futures, may be affected by future
regulatory or legislative changes that could affect whether income from such investments is
“qualifying income” under Subchapter M of the Internal Revenue Code, or otherwise affect the
character, timing and/or amount of the Fund’s taxable income or gains and distributions
Subsidiary Risk:
the risk that, by investing in the Subsidiary, the Fund is indirectly exposed to
the risks associated with the Subsidiary’s investments. The Subsidiary is not registered under the
1940 Act and may not be subject to all the investor protections of the 1940 Act. There is no
guarantee that the investment objective of the Subsidiary will be achieved
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
E-137
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PIMCO CommoditiesPLUS
TM
Short Strategy Fund
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Ticker symbol:
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PCPIX
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Principal Investments and Strategies
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Investment Objective
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Fund Focus
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Credit Quality
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Seeks total return
which exceeds that
of the inverse
return of its
benchmark,
consistent with
prudent investment
management
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Commodity-linked
derivative instruments
backed by an actively
managed low volatility
bond portfolio
Average Portfolio Duration
<
1 year
|
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Baa to Aaa; max 10%
of total assets
below A
Dividend Frequency
Quarterly
|
The Fund seeks to achieve its investment objective by investing under normal circumstances in short
positions with respect to the Dow Jones—UBS Commodity Index Total Return (the “Index”), including
commodity-linked derivative instruments backed by an actively managed, low volatility portfolio of
Fixed Income Instruments, such that the Fund’s net asset value may vary inversely with the value of
the Index on a daily basis, subject to certain limitations summarized below. “Fixed Income
Instruments” include bonds, debt securities and other similar instruments issued by various U.S.
and non-U.S. public- or private-sector entities. The Fund will generally benefit when the price of
the Index is declining. When the Index is rising, the Fund will generally not perform as well.
Fixed Income Instruments owned by the Fund may also benefit or detract from the Fund’s net asset
value. The Fund is designed for investors seeking to take advantage of declines in the value of the
Index, or investors wishing to hedge existing long commodities positions. However, the Fund is not
designed or expected to produce returns which replicate the inverse of the performance of the Index
due to compounding, Pacific Investment Management Company LLC’s (“PIMCO”) active management, Fund
fees and expenses and other factors discussed below.
The Fund will maintain short positions through the use of a combination of commodity-linked
derivative instruments, including swap agreements, futures, options on futures, commodity
index-linked notes and commodity options that provide short exposure to the investment returns of
the commodities futures markets. Commodities are assets that have tangible properties, such as oil,
metals, and agricultural products. The value of commodity-linked derivative instruments may be
affected by overall market movements and other factors affecting the value of a particular industry
or commodity, such as weather, disease, embargoes, or political and regulatory developments. While
the Fund will, under normal circumstances, invest primarily in Index short positions backed by a
portfolio of Fixed Income Instruments, PIMCO may reduce the Fund’s exposure to Index short
positions when PIMCO deems it appropriate to do so. Additionally, the Fund may purchase call
options on Index futures contracts or on other similar Index derivatives in an effort to limit the
total potential decline in the Fund’s net asset value during a market in which prices of
commodities positions are rising or expected to rise. Because the Fund invests primarily in short
positions, gains and losses in the Fund will primarily be taxable as short-term gains or losses.
However, a portion of the gains or losses from certain types of derivatives, including futures
contracts in which the Fund may choose to invest, will be taxable as long-term gains or losses.
The Fund will seek to gain short exposure to the commodity futures markets primarily through
investments in swap agreements and futures, and through investments in the PIMCO Cayman Commodity
Fund IV Ltd., a wholly-owned subsidiary of the Fund organized under the laws of the Cayman Islands
(the “Subsidiary”). The Subsidiary is advised by PIMCO, and has the same investment objective as
the Fund. As discussed in greater detail elsewhere in the prospectus, the Subsidiary (unlike the
Fund) may invest without limitation in commodity-linked swap agreements and other commodity-linked
derivative instruments. The derivative instruments in which the Fund and the Subsidiary primarily
intend to invest are instruments inversely linked to certain commodity indices and instruments
inversely linked to the value of a particular commodity or commodity futures contract, or a subset
of commodities or commodity futures contracts. These instruments may specify short exposure to
commodity futures with different roll dates, reset dates or contract months than those specified by
a particular commodity index. As a result, the commodity-linked derivatives component of the Fund’s
portfolio may deviate from the inverse returns of any particular commodity index. The Fund or the
Subsidiary may over-weight or under-weight its short exposure to a particular commodity index, or a
subset of commodities, such that the Fund has greater or lesser short exposure to that index than
the value of the Fund’s net assets, or greater or lesser short exposure to a subset of commodities
than is represented by a particular commodity index. Such deviations will frequently be the result
of temporary market fluctuations, and under normal circumstances the Fund will seek to maintain
notional short exposure to one or more commodity indices within 5% (plus or minus) of the value of
the Fund’s net assets.
The Fund may also invest in leveraged or unleveraged commodity index-linked notes, which are
derivative debt instruments with principal and/or coupon payments linked to the inverse performance
of commodity indices. These commodity index-linked notes are sometimes referred to as “structured
notes” because the terms of these notes may be structured by the issuer and the purchaser of the
note. The value of these notes will rise or fall in response to changes in the underlying commodity
or related index of investment.
Assets not invested in commodity-linked derivative instruments or the Subsidiary may be invested in
Fixed Income Instruments, including derivative Fixed Income Instruments. The Fund is
non-diversified, which means that it may invest its assets in a smaller number of issuers than a
diversified fund. In addition, the Fund may invest its assets in particular sectors of the
commodities futures market.
E-138
The average portfolio duration of the fixed income portion of this Fund will vary based on PIMCO’s
forecast for interest rates and under normal market conditions is not expected to exceed one year.
Duration is a measure used to determine the sensitivity of a security’s price to changes in
interest rates. The longer a security’s duration, the more sensitive it will be to changes in
interest rates. The Fund may invest in investment grade securities that are rated at least Baa,
including up to 10% of its total assets in securities rated below A, by Moody’s Investors Service,
Inc. (“Moody’s”), or equivalently rated by Standard & Poor’s Ratings Services (“S&P”) or Fitch,
Inc. (“Fitch”), or, if unrated, determined by PIMCO to be of comparable quality. The Fund may
invest up to 10% of its total assets in securities denominated in foreign currencies and may invest
without limit in U.S. dollar-denominated securities of foreign issuers. The Fund will normally
limit its foreign currency exposure (from non-U.S. dollar-denominated securities or currencies) to
within 1% (plus or minus) of the foreign currency exposure of the Index, which as of June 30, 2013
was 0%. The Fund may, without limitation, 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 or dollar rolls). The Fund may purchase and sell
securities on a when-issued, delayed delivery or forward commitment basis and may engage in short
sales.
Although the Fund uses derivatives and other short positions to gain exposures that may vary
inversely with the performance of the Index on a daily basis, the Fund as a whole is not designed
or expected to produce returns which replicate the inverse of the performance of the Index, and the
degree of variation could be substantial, particularly over longer periods.
Principal Risks
It is possible to lose money on an investment in the Fund. Under certain conditions, even if the
value of a commodity index is declining (which could be beneficial to the Fund’s short strategy),
this could be offset by declining values of the Fixed Income Instruments held by the Fund.
Conversely, it is possible that rising fixed income securities prices could be offset by a rising
commodity index (which could lead to losses in a short strategy). In either scenario the Fund may
experience losses. In a market where the value of a commodity index is rising and the Fund’s Fixed
Income Instruments holdings are declining, the Fund may experience substantial losses. The
principal risks of investing in the Fund, which could adversely affect its net asset value, yield
and total return are:
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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 risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
Issuer Risk:
the risk that the value of a security may decline for a reason directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Inverse Correlation and Compounding Risk:
the risk that the Fund’s performance may vary
substantially from the inverse performance of the Index for a number of reasons, including the
effects of compounding on the performance of the Fund’s derivatives short positions for periods
greater than one day, the results of PIMCO’s active management of the Fund (including income and
gains or losses from Fixed Income Instruments and variations in the Fund’s level of short exposure)
and that derivatives positions in general may not correlate exactly with an index (due, in part, to
the possibility of different roll dates, reset dates or contract months in the case of commodity
derivatives in comparison to those specified in a commodity index)
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Commodity Risk:
the risk that investing in commodity-linked derivative instruments may subject the
Fund to greater volatility than investments in traditional securities. The value of
commodity-linked derivative instruments may be affected by changes in overall market movements,
commodity index volatility, changes in interest rates, or factors affecting a particular industry
or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs and
international economic, political and regulatory developments
Mortgage-Related and Other Asset-Backed Securities Risk:
the risk of investing in mortgage-related
and other asset-backed securities, including interest rate risk, extension risk and prepayment risk
E-139
Foreign (Non-U.S.) Investment Risk:
the risk that investing in foreign (non-U.S.) securities may
result in the Fund experiencing more rapid and extreme changes in value than a fund that invests
exclusively in securities of U.S. companies, due to smaller markets, differing reporting,
accounting and auditing standards, and nationalization, expropriation or confiscatory taxation,
currency blockage, or political changes or diplomatic developments. Foreign securities may also be
less liquid and more difficult to value than securities of U.S. issuers
Issuer Non-Diversification Risk:
the risk of focusing investments in a small number of issuers,
including being more susceptible to risks associated with a single economic, political or
regulatory occurrence than a more diversified portfolio might be. Funds that are “non-diversified”
may invest a greater percentage of their assets in the securities of a single issuer (such as bonds
issued by a particular state) than funds that are “diversified”
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
Tax Risk:
the risk that the tax treatment of swap agreements and other derivative instruments, such
as commodity-linked derivative instruments, including commodity index-linked notes, swap
agreements, commodity options, futures, and options on futures, may be affected by future
regulatory or legislative changes that could affect whether income from such investments is
“qualifying income” under Subchapter M of the Internal Revenue Code, or otherwise affect the
character, timing and/or amount of the Fund’s taxable income or gains and distributions
Subsidiary Risk:
the risk that, by investing in the Subsidiary, the Fund is indirectly exposed to
the risks associated with the Subsidiary’s investments. The Subsidiary is not registered under the
1940 Act and may not be subject to all the investor protections of the 1940 Act. There is no
guarantee that the investment objective of the Subsidiary will be achieved
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
E-140
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PIMCO Convertible Fund
|
|
Ticker symbol:
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PFCIX (Inst. Class)
|
Principal Investments and Strategies
|
|
|
|
|
|
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Investment Objective
|
|
Fund Focus
|
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Credit Quality
|
|
Seeks maximum total
return, consistent with
prudent investment
management
|
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Convertible securities
Average Portfolio Duration
N/A
|
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Max 20% of total assets below B
Dividend Frequency
Declared and distributed quarterly
|
The Fund seeks to achieve its investment objective by investing under normal circumstances at least
80% of its assets in a diversified portfolio of convertible securities, which may be represented by
forwards or derivatives such as options, futures contracts or swap agreements. 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. Convertible securities also include
“synthetic” convertible securities. Synthetic convertible securities, which may be created by a
third party or Pacific Investment Management Company LLC (“PIMCO”), are instruments that combine
(i) non-convertible fixed income securities or preferred stocks, which may be represented by
derivative instruments and (ii) securities or instruments such as warrants or call options that
together possess economic characteristics similar to a convertible security. 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 may invest in both investment-grade securities and high yield securities (“junk bonds”)
subject to a maximum of 20% of its total assets in securities rated below B by Moody’s Investors
Service, Inc. (“Moody’s”), or equivalently rated by Standard & Poor’s Ratings Services (“S&P”) or
Fitch, Inc. (“Fitch”), or, if unrated, determined by PIMCO to be of comparable quality. The Fund
may also invest up to 30% of its total assets in securities denominated in foreign currencies, and
may invest beyond this limit in U.S. dollar-denominated securities of foreign issuers. The Fund may
invest up to 15% of its total assets in securities and instruments that are economically tied to
emerging market countries. In addition, the Fund may invest in common stock or in other Fixed
Income Instruments. “Fixed Income Instruments” include bonds, debt securities and other similar
instruments issued by various U.S. and non-U.S. public- or private-sector entities.
The Fund may invest, without limitation, in derivative instruments, such as options, futures
contracts or swap agreements, or in mortgage- or asset-backed securities, subject to applicable law
and any other restrictions described in the Fund’s prospectus or Statement of Additional
Information. The Fund may purchase or sell securities on a when-issued, delayed delivery or forward
commitment basis and may engage in short sales. The Fund may also invest directly in real estate
investment trusts (“REITs”). The Fund may, without limitation, 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 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, foreign currency
appreciation, or improving credit fundamentals for a particular sector or security.
Principal Risks
It is possible to lose money on an investment in the Fund. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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 risk that high yield securities and unrated securities of similar credit
quality (commonly known as “junk bonds”) are subject to greater levels of credit and liquidity
risks. High yield securities are considered primarily speculative with respect to the issuer’s
continuing ability to make principal and interest payments
Market Risk:
the risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
Issuer Risk:
the risk that the value of a security may decline for a reason directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
E-141
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Equity Risk:
the risk that the value of equity securities, such as common stocks and preferred
stocks, may decline due to general market conditions which are not specifically related to a
particular company or to factors affecting a particular industry or industries. Equity securities
generally have greater price volatility than fixed income securities
Foreign (Non-U.S.) Investment Risk:
the risk that investing in foreign (non-U.S.) securities may
result in the Fund experiencing more rapid and extreme changes in value than a fund that invests
exclusively in securities of U.S. companies, due to smaller markets, differing reporting,
accounting and auditing standards, and nationalization, expropriation or confiscatory taxation,
currency blockage, or political changes or diplomatic developments. Foreign securities may also be
less liquid and more difficult to value than securities of U.S. issuers
Real Estate Risk:
the risk that a Fund’s investments in Real Estate Investment Trusts (“REITs”) or
real estate-linked derivative instruments will subject the Fund to risks similar to those
associated with direct ownership of real estate, including losses from casualty or condemnation,
and changes in local and general economic conditions, supply and demand, interest rates, zoning
laws, regulatory limitations on rents, property taxes and operating expenses. A Fund’s investments
in REITs or real estate-linked derivative instruments subject it to management and tax risks
Emerging Markets Risk:
the risk of investing in emerging market securities, primarily increased
foreign (non-U.S.) investment risk
Currency Risk:
the risk that foreign currencies will decline in value relative to the U.S. dollar
and affect the Fund’s investments in foreign (non-U.S.) currencies or in securities that trade in,
and receive revenues in, or in derivatives that provide exposure to, foreign (non-U.S.) currencies
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Smaller Company Risk:
the risk that the value of securities issued by a smaller company may go up
or down, sometimes rapidly and unpredictably as compared to more widely held securities, due to
narrow markets and limited resources of smaller companies. A Fund’s investments in smaller
companies subject it to greater levels of credit, market and issuer risk
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
Convertible Securities Risk:
the risk that the market values of convertible securities tend to
decline as interest rates increase and, conversely, to increase as interest rates decline. A
convertible security’s market value, however, tends to reflect the market price of the common stock
of the issuing company when that stock price approaches or is greater than the convertible
security’s “conversion price.” The value of a synthetic convertible security will respond
differently to market fluctuations than a traditional convertible security because a synthetic
convertible is composed of two or more separate securities or instruments, each with its own market
value. If the value of the underlying common stock or the level of the index involved in the
convertible component falls below the exercise price of the warrant or option, the warrant or
option may lose all value
E-142
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PIMCO Credit Absolute Return Fund
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Ticker symbol:
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PCARX (Inst. Class)
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Principal Investments and Strategies
|
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|
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|
|
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Investment Objective
|
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Fund Focus
|
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Credit Quality
|
|
Seeks maximum total
return, consistent
with preservation
of capital and
prudent investment
management
|
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Broad range of fixed income investments
Average Portfolio Duration
0-6 years
|
|
Maximum of 50% of total assets
below B-
Dividend Frequency
Declared and distributed quarterly
|
The Fund invests under normal circumstances at least 80% of its assets in a diversified portfolio
of Fixed Income Instruments of varying maturities, which may be represented by forwards or
derivatives such as options, futures contracts or swap agreements. Security selection, industry and
sector allocation, and management of market risk within and across credit and corporate markets are
expected to be the main drivers of returns over time. “Fixed Income Instruments” include bonds,
debt securities, bank loans and other similar instruments issued by various U.S. and non-U.S.
public- or private-sector entities. The average portfolio duration of this Fund normally varies
within zero to six years. Duration is a measure used to determine the sensitivity of a security’s
price to changes in interest rates. The longer a security’s duration, the more sensitive it will be
to changes in interest rates.
The Fund may invest in both investment grade and high yield securities (“junk bonds”) subject to a
maximum of 50% of its total assets in securities rated below B- by Moody’s Investors Service, Inc.
(“Moody’s”), or equivalently rated by Standard & Poor’s Ratings Services (“S&P”) or Fitch, Inc.
(“Fitch”), or, if unrated, determined by PIMCO to be of comparable quality. The Fund may invest
without limitation in securities of foreign issuers and may also invest in securities and
instruments that are economically tied to emerging market countries. The Fund will normally limit
its foreign currency exposure (from non-U.S. dollar denominated securities or currencies) to 20% of
its total assets. The Fund may invest up to 15% of its total assets in preferred stock, convertible
securities and other equity-related instruments.
The Fund may invest, without limitation, in derivative instruments, such as options, futures
contracts or swap agreements, or in mortgage- or asset-backed securities, subject to applicable law
and any other restrictions described in the Fund’s prospectus or Statement of Additional
Information. The Fund may purchase or sell securities on a when-issued, delayed delivery or forward
commitment basis and may engage in short sales. The Fund may, without limitation, 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 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, foreign
currency appreciation, or improving credit fundamentals for a particular sector or security.
Principal Risks
It is possible to lose money on an investment in the Fund. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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 risk that high yield securities and unrated securities of similar credit
quality (commonly known as “junk bonds”) are subject to greater levels of credit and liquidity
risks. High yield securities are considered primarily speculative with respect to the issuer’s
continuing ability to make principal and interest payments
Market Risk:
the risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
Issuer Risk:
the risk that the value of a security may decline for a reason directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
E-143
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Mortgage-Related and Other Asset-Backed Securities Risk:
the risk of investing in mortgage-related
and other asset-backed securities, including interest rate risk, extension risk and prepayment risk
Foreign (Non-U.S.) Investment Risk:
the risk that investing in foreign (non-U.S.) securities may
result in the Fund experiencing more rapid and extreme changes in value than a fund that invests
exclusively in securities of U.S. companies, due to smaller markets, differing reporting,
accounting and auditing standards, and nationalization, expropriation or confiscatory taxation,
currency blockage, or political changes or diplomatic developments.
Senior Debt Risk:
the risk that investing in senior debt exposes the Fund to heightened credit
risk, liquidity risk and valuation risk. If the issuer prepays, the Fund will have to reinvest the
proceeds in other senior debt or instruments that may pay lower interest rates
Emerging Markets Risk:
the risk of investing in emerging market securities, primarily increased
foreign (non-U.S.) investment risk
Currency Risk:
the risk that foreign currencies will decline in value relative to the U.S. dollar
and affect the Fund’s investments in foreign (non-U.S.) currencies or in securities that trade in,
and receive revenues in, or in derivatives that provide exposure to, foreign (non-U.S.) currencies
Equity Risk:
the risk that the value of equity or equity-related securities may decline due to
general market conditions which are not specifically related to a particular company or to factors
affecting a particular industry or industries. Equity or equity-related securities generally have
greater price volatility than fixed income securities
Convertible Securities Risk:
as convertible securities share both fixed income and equity
characteristics, they are subject to risks to which fixed income and equity investments are
subject. These risks include equity risk, interest rate risk and credit risk
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
E-144
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PIMCO Emerging Markets Currency Fund
|
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Ticker symbol:
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PLMIX (Inst. Class)
|
Principal Investments and Strategies
|
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|
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Investment Objective
|
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Fund Focus
|
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Credit Quality
|
|
Seeks maximum total
return, consistent
with preservation
of capital and
prudent investment
management
|
|
Currencies or Fixed
Income Instruments
denominated in currencies
of non-U.S. countries
Average Portfolio Duration
<
2 years
|
|
Maximum 15% of total assets below B
Dividend Frequency
Declared daily and distributed monthly
|
The Fund seeks to achieve its investment objective by investing under normal circumstances at least
80% of its assets in currencies of, or in Fixed Income Instruments denominated in the currencies
of, emerging market countries. The Fund’s investments in currencies or Fixed Income Instruments may
be represented by forwards or derivatives such as options, futures contracts or swap agreements.
The Fund may, but is not required to, hedge its exposure to non-U.S. currencies. Assets not
invested in currencies or instruments denominated in currencies of emerging market countries may be
invested in other types of Fixed Income Instruments. “Fixed Income Instruments” include bonds, debt
securities and other similar instruments issued by various U.S. and non-U.S. public- or
private-sector entities.
The Fund may invest in the currencies and Fixed Income Instruments of emerging market countries.
Pacific Investment Management Company LLC (“PIMCO”) has broad discretion to identify countries that
it considers to qualify as emerging markets. PIMCO will select the Fund’s country and currency
composition based on its evaluation of relative interest rates, inflation rates, exchange rates,
monetary and fiscal policies, trade and current account balances, legal and political developments
and other specific factors PIMCO believes to be relevant. The Fund likely will concentrate its
investments in Asia, Africa, the Middle East, Latin America and the developing countries of Europe.
The Fund may invest in instruments whose return is based on the return of an emerging market
security or a currency of an emerging market, such as a derivative instrument, rather than
investing directly in emerging market securities or currencies.
The average portfolio duration of this Fund varies based on PIMCO’s forecast for interest rates
and, under normal market conditions, is not expected to exceed two years. Duration is a measure
used to determine the sensitivity of a security’s price to changes in interest rates. The longer a
security’s duration, the more sensitive it will be to changes in interest rates.
The Fund may invest in both investment-grade securities and high yield securities (“junk bonds”)
subject to a maximum of 15% of its total assets in securities rated below B by Moody’s Investors
Service, Inc. (“Moody’s”), or equivalently rated by Standard & Poor’s Ratings Services (“S&P”) or
Fitch, Inc. (“Fitch”), or, if unrated, determined by PIMCO to be of comparable quality. The Fund is
non-diversified, which means that it may invest its assets in a smaller number of issuers than a
diversified fund.
The Fund may invest, without limitation, in derivative instruments, such as options, futures
contracts or swap agreements, or in mortgage- or asset-backed securities, subject to applicable law
and any other restrictions described in the Fund’s prospectus or Statement of Additional
Information. The Fund may purchase or sell securities on a when-issued, delayed delivery or forward
commitment basis and may engage in short sales. The Fund may also invest directly in real estate
investment trusts (“REITs”). The Fund may, without limitation, 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 or dollar rolls). The “total
return” sought by the Fund consists of income and capital appreciation, if any, which generally
arises from decreases in interest rates, foreign currency appreciation, or improving credit
fundamentals for a particular sector or security. The Fund may also invest up to 10% of its total
assets in preferred stocks.
Principal Risks
It is possible to lose money on an investment in the Fund. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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
E-145
High Yield Risk:
the risk that high yield securities and unrated securities of similar credit
quality (commonly known as “junk bonds”) are subject to greater levels of credit and liquidity
risks. High yield securities are considered primarily speculative with respect to the issuer’s
continuing ability to make principal and interest payments
Market Risk:
the risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
Issuer Risk:
the risk that the value of a security may decline for a reason directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Equity Risk:
the risk that the value of equity securities, such as common stocks and preferred
stocks, may decline due to general market conditions which are not specifically related to a
particular company or to factors affecting a particular industry or industries. Equity securities
generally have greater price volatility than fixed income securities
Mortgage-Related and Other Asset-Backed Securities Risk:
the risk of investing in mortgage-related
and other asset-backed securities, including interest rate risk, extension risk and prepayment risk
Foreign (Non-U.S.) Investment Risk:
the risk that investing in foreign (non-U.S.) securities may
result in the Fund experiencing more rapid and extreme changes in value than a fund that invests
exclusively in securities of U.S. companies, due to smaller markets, differing reporting,
accounting and auditing standards, and nationalization, expropriation or confiscatory taxation,
currency blockage, or political changes or diplomatic developments. Foreign securities may also be
less liquid and more difficult to value than securities of U.S. issuers
Real Estate Risk:
the risk that a Fund’s investments in Real Estate Investment Trusts (“REITs”) or
real estate-linked derivative instruments will subject the Fund to risks similar to those
associated with direct ownership of real estate, including losses from casualty or condemnation,
and changes in local and general economic conditions, supply and demand, interest rates, zoning
laws, regulatory limitations on rents, property taxes and operating expenses. A Fund’s investments
in REITs or real estate-linked derivative instruments subject it to management and tax risks
Emerging Markets Risk:
the risk of investing in emerging market securities, primarily increased
foreign (non-U.S.) investment risk
Currency Risk:
the risk that foreign currencies will decline in value relative to the U.S. dollar
and affect the Fund’s investments in foreign (non-U.S.) currencies or in securities that trade in,
and receive revenues in, or in derivatives that provide exposure to, foreign (non-U.S.) currencies
Issuer Non-Diversification Risk:
the risk of focusing investments in a small number of issuers,
including being more susceptible to risks associated with a single economic, political or
regulatory occurrence than a more diversified portfolio might be. Funds that are “non-diversified”
may invest a greater percentage of their assets in the securities of a single issuer (such as bonds
issued by a particular state) than funds that are “diversified”
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
E-146
|
|
|
|
|
|
|
|
|
PIMCO Diversified Income Fund
|
|
Ticker symbol:
|
|
|
|
PDIIX (Inst. Class)
|
Principal Investments and Strategies
|
|
|
|
|
|
|
Investment Objective
|
|
Fund Focus
|
|
Credit Quality
|
|
Seeks maximum total
return, consistent
with preservation
of capital and
prudent investment
management
|
|
Investment grade
corporate, high yield and
emerging market fixed
income instruments
Average Portfolio Duration
3-8 years
|
|
Maximum 10% of total assets below B
Dividend Frequency
Declared daily and distributed monthly
|
The Fund seeks to achieve its investment objective by investing under normal circumstances at least
65% of its total assets in a diversified portfolio of Fixed Income Instruments of varying
maturities, which may be represented by forwards or derivatives such as options, futures contracts
or swap agreements. “Fixed Income Instruments” include bonds, debt securities and other similar
instruments issued by various U.S. and non-U.S. public- or private-sector entities. The average
portfolio duration of this Fund normally varies from three to eight years, based on Pacific
Investment Management Company LLC’s (“PIMCO”) forecast for interest rates. Duration is a measure
used to determine the sensitivity of a security’s price to changes in interest rates. The longer a
security’s duration, the more sensitive it will be to changes in interest rates.
The Fund may invest in a diversified pool of corporate fixed income securities of varying
maturities. The Fund may invest in both investment-grade securities and high yield securities
(“junk bonds”) subject to a maximum of 10% of its total assets in securities rated below B by
Moody’s Investors Service, Inc. (“Moody’s”), or equivalently rated by Standard & Poor’s Ratings
Services (“S&P”) or Fitch, Inc. (“Fitch”), or, if unrated, determined by PIMCO to be of comparable
quality. In addition, the Fund may invest, without limitation, in fixed income securities and
instruments that are economically tied to emerging market countries.
The Fund may invest, without limitation, in securities denominated in foreign currencies and in
U.S.-dollar-denominated securities of foreign issuers. The Fund may invest, without limitation, in
derivative instruments, such as options, futures contracts or swap agreements, or in mortgage- or
asset-backed securities, subject to applicable law and any other restrictions described in the
Fund’s prospectus or Statement of Additional Information. The Fund may purchase or sell securities
on a when-issued, delayed delivery or forward commitment basis and may engage in short sales. The
Fund may, without limitation, 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 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, foreign currency appreciation, or improving
credit fundamentals for a particular sector or security. The Fund may also invest up to 10% of its
total assets in preferred stocks.
Principal Risks
It is possible to lose money on an investment in the Fund. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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 risk that high yield securities and unrated securities of similar credit
quality (commonly known as “junk bonds”) are subject to greater levels of credit and liquidity
risks. High yield securities are considered primarily speculative with respect to the issuer’s
continuing ability to make principal and interest payments
Market Risk:
the risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
Issuer Risk:
the risk that the value of a security may decline for a reason directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
E-147
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Equity Risk:
the risk that the value of equity securities, such as common stocks and preferred
stocks, may decline due to general market conditions which are not specifically related to a
particular company or to factors affecting a particular industry or industries. Equity securities
generally have greater price volatility than fixed income securities
Mortgage-Related and Other Asset-Backed Securities Risk:
the risk of investing in mortgage-related
and other asset-backed securities, including interest rate risk, extension risk and prepayment risk
Foreign (Non-U.S.) Investment Risk:
the risk that investing in foreign (non-U.S.) securities may
result in the Fund experiencing more rapid and extreme changes in value than a fund that invests
exclusively in securities of U.S. companies, due to smaller markets, differing reporting,
accounting and auditing standards, and nationalization, expropriation or confiscatory taxation,
currency blockage, or political changes or diplomatic developments. Foreign securities may also be
less liquid and more difficult to value than securities of U.S. issuers
Emerging Markets Risk:
the risk of investing in emerging market securities, primarily increased
foreign (non-U.S.) investment risk
Currency Risk:
the risk that foreign currencies will decline in value relative to the U.S. dollar
and affect the Fund’s investments in foreign (non-U.S.) currencies or in securities that trade in,
and receive revenues in, or in derivatives that provide exposure to, foreign (non-U.S.) currencies
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
E-148
|
|
|
|
|
|
|
|
|
PIMCO Emerging Local Bond Fund
|
|
Ticker symbol:
|
|
|
|
PELBX (Inst. Class)
|
Principal Investments and Strategies
|
|
|
|
|
|
|
Investment Objective
|
|
Fund Focus
|
|
Credit Quality
|
|
Seeks maximum total
return, consistent
with preservation
of capital and
prudent investment
management
|
|
Fixed Income Instruments
denominated in currencies
of non-U.S. countries
Average Portfolio Duration
+/- 2 years of its benchmark
|
|
Maximum 15% of total assets below B
Dividend Frequency
Declared daily and distributed monthly
|
The Fund’s investment objective is maximum total return, consistent with preservation of capital
and prudent investment management. The Fund seeks to achieve its investment objective by investing
under normal circumstances at least 80% of its assets in Fixed Income Instruments denominated in
currencies of countries with emerging securities markets, which may be represented by forwards or
derivatives such as options, futures contracts or swap agreements. “Fixed Income Instruments”
include bonds, debt securities and other similar instruments issued by various U.S. and non-U.S.
public- or private-sector entities. The Fund may invest in forwards or derivatives denominated in
any currency, and forwards or derivatives denominated in any currency will be included under the
80%of assets policy noted in the prior sentence so long as the underlying asset of such forwards or
derivatives is a Fixed Income Instrument denominated in the currency of an emerging market country.
The Fund may, but is not required to, hedge its exposure to non-U.S. currencies. Assets not
invested in instruments denominated in currencies of non-U.S. countries described above may be
invested in other types of Fixed Income Instruments.
The Fund may invest without limitation in Fixed Income Instruments that are economically tied to
emerging market countries. Pacific Investment Management Company LLC (“PIMCO”) has broad discretion
to identify countries that it considers to qualify as emerging markets. PIMCO will select the
Fund’s country and currency composition based on its evaluation of relative interest rates,
inflation rates, exchange rates, monetary and fiscal policies, trade and current account balances,
legal and political developments and other specific factors PIMCO believes to be relevant. The Fund
likely will concentrate its investments in Asia, Africa, the Middle East, Latin America and the
developing countries of Europe. The Fund may invest in instruments whose return is based on the
return of an emerging market security such as a derivative instrument, rather than investing
directly in emerging market securities.
The average portfolio duration of this Fund normally varies within two years (plus or minus) of the
portfolio duration of the securities comprising the JPMorgan Government Bond Index-Emerging Markets
Global Diversified Index (Unhedged), as calculated by PIMCO, which as of June 30, 2013 was 4.85
years. Duration is a measure used to determine the sensitivity of a security’s price to changes in
interest rates. The longer a security’s duration, the more sensitive it will be to changes in
interest rates.
The Fund may invest in both investment-grade securities and high yield securities (“junk bonds”)
subject to a maximum of 15% of its total assets in securities rated below B by Moody’s Investors
Service, Inc. (“Moody’s”), or equivalently rated by Standard & Poor’s Ratings Services (“S&P”) or
Fitch, Inc. (“Fitch”), or, if unrated, determined by PIMCO to be of comparable quality. The Fund is
non-diversified, which means that it may invest its assets in a smaller number of issuers than a
diversified fund.
The Fund may invest, without limitation, in derivative instruments, such as options, futures
contracts or swap agreements, or in mortgage- or asset-backed securities, subject to applicable law
and any other restrictions described in the Fund’s prospectus or Statement of Additional
Information. The Fund may purchase or sell securities on a when-issued, delayed delivery or forward
commitment basis and may engage in short sales. The Fund may also invest directly in real estate
investment trusts (“REITs”). The Fund may, without limitation, 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 or dollar rolls). The “total
return” sought by the Fund consists of income and capital appreciation, if any, which generally
arises from decreases in interest rates, foreign currency appreciation, or improving credit
fundamentals for a particular sector or security. The Fund may also invest up to 10% of its total
assets in preferred stocks.
Principal Risks
It is possible to lose money on an investment in the Fund. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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
E-149
High Yield Risk:
the risk that high yield securities and unrated securities of similar credit
quality (commonly known as “junk bonds”) are subject to greater levels of credit and liquidity
risks. High yield securities are considered primarily speculative with respect to the issuer’s
continuing ability to make principal and interest payments
Market Risk:
the risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
Issuer Risk:
the risk that the value of a security may decline for a reason directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Equity Risk:
the risk that the value of equity securities, such as common stocks and preferred
stocks, may decline due to general market conditions which are not specifically related to a
particular company or to factors affecting a particular industry or industries. Equity securities
generally have greater price volatility than fixed income securities
Mortgage-Related and Other Asset-Backed Securities Risk:
the risk of investing in mortgage-related
and other asset-backed securities, including interest rate risk, extension risk and prepayment risk
Foreign (Non-U.S.) Investment Risk:
the risk that investing in foreign (non-U.S.) securities may
result in the Fund experiencing more rapid and extreme changes in value than a fund that invests
exclusively in securities of U.S. companies, due to smaller markets, differing reporting,
accounting and auditing standards, and nationalization, expropriation or confiscatory taxation,
currency blockage, or political changes or diplomatic developments. Foreign securities may also be
less liquid and more difficult to value than securities of U.S. issuers
Real Estate Risk:
the risk that a Fund’s investments in Real Estate Investment Trusts (“REITs”) or
real estate-linked derivative instruments will subject the Fund to risks similar to those
associated with direct ownership of real estate, including losses from casualty or condemnation,
and changes in local and general economic conditions, supply and demand, interest rates, zoning
laws, regulatory limitations on rents, property taxes and operating expenses. A Fund’s investments
in REITs or real estate-linked derivative instruments subject it to management and tax risks
Emerging Markets Risk:
the risk of investing in emerging market securities, primarily increased
foreign (non-U.S.) investment risk
Currency Risk:
the risk that foreign currencies will decline in value relative to the U.S. dollar
and affect the Fund’s investments in foreign (non-U.S.) currencies or in securities that trade in,
and receive revenues in, or in derivatives that provide exposure to, foreign (non-U.S.) currencies
Issuer Non-Diversification Risk:
the risk of focusing investments in a small number of issuers,
including being more susceptible to risks associated with a single economic, political or
regulatory occurrence than a more diversified portfolio might be. Funds that are “non-diversified”
may invest a greater percentage of their assets in the securities of a single issuer (such as bonds
issued by a particular state) than funds that are “diversified”
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
E-150
|
|
|
|
|
|
|
|
|
PIMCO Emerging Markets Bond Fund
|
|
Ticker symbol:
|
|
|
|
PEBIX (Inst. Class)
|
Principal Investments and Strategies
|
|
|
|
|
|
|
Investment Objective
|
|
Fund Focus
|
|
Credit Quality
|
|
Seeks maximum total
return, consistent
with preservation
of capital and
prudent investment
management
|
|
Emerging market Fixed
Income Instruments
Average Portfolio Duration
<
8 years
|
|
Maximum 15% of total assets below B
Dividend Frequency
Declared daily and distributed monthly
|
The Fund seeks to achieve its investment objective by investing under normal circumstances at least
80% of its assets in Fixed Income Instruments that are economically tied to emerging market
countries, which may be represented by forwards or derivatives such as options, futures contracts
or swap agreements. “Fixed Income Instruments” include bonds, debt securities and other similar
instruments issued by various U.S. and non-U.S. public- or private-sector entities. Such
instruments may be denominated in non-U.S. currencies and the U.S. dollar. The average portfolio
duration of this Fund varies based on Pacific Investment Management Company LLC’s (“PIMCO”)
forecast for interest rates and, under normal market conditions, is not expected to exceed eight
years. Duration is a measure used to determine the sensitivity of a security’s price to changes in
interest rates. The longer a security’s duration, the more sensitive it will be to changes in
interest rates.
PIMCO has broad discretion to identify countries that it considers to qualify as emerging markets.
The Fund emphasizes countries with relatively low gross national product per capita and with the
potential for rapid economic growth. PIMCO will select the Fund’s country and currency composition
based on its evaluation of relative interest rates, inflation rates, exchange rates, monetary and
fiscal policies, trade and current account balances, legal and political developments and any other
specific factors PIMCO believes to be relevant. The Fund likely will concentrate its investments in
Asia, Africa, the Middle East, Latin America and the developing countries of Europe. The Fund may
invest in instruments whose return is based on the return of an emerging market security or a
currency of an emerging market country, such as a derivative instrument, rather than investing
directly in emerging market securities or currencies.
The Fund may invest in both investment-grade securities and high yield securities (“junk bonds”)
subject to a maximum of 15% of its total assets in securities rated below B by Moody’s Investors
Service, Inc. (“Moody’s”), or equivalently rated by Standard & Poor’s Ratings Services (“S&P”) or
Fitch, Inc. (“Fitch”), or, if unrated, determined by PIMCO to be of comparable quality. The Fund is
non-diversified, which means that it may invest its assets in a smaller number of issuers than a
diversified fund.
The Fund may invest, without limitation, in derivative instruments, such as options, futures
contracts or swap agreements, or in mortgage- or asset-backed securities, subject to applicable law
and any other restrictions described in the Fund’s prospectus or Statement of Additional
Information. The Fund may purchase or sell securities on a when-issued, delayed delivery or forward
commitment basis and may engage in short sales. The Fund may also invest directly in real estate
investment trusts (“REITs”). The Fund may, without limitation, 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 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, foreign currency
appreciation, or improving credit fundamentals for a particular sector or security. The Fund may
also invest up to 10% of its total assets in preferred stocks.
Principal Risks
It is possible to lose money on an investment in the Fund. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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 risk that high yield securities and unrated securities of similar credit
quality (commonly known as “junk bonds”) are subject to greater levels of credit and liquidity
risks. High yield securities are considered primarily speculative with respect to the issuer’s
continuing ability to make principal and interest payments
E-151
Market Risk:
the risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
Issuer Risk:
the risk that the value of a security may decline for a reason directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Equity Risk:
the risk that the value of equity securities, such as common stocks and preferred
stocks, may decline due to general market conditions which are not specifically related to a
particular company or to factors affecting a particular industry or industries. Equity securities
generally have greater price volatility than fixed income securities
Mortgage-Related and Other Asset-Backed Securities Risk:
the risk of investing in mortgage-related
and other asset-backed securities, including interest rate risk, extension risk and prepayment risk
Foreign (Non-U.S.) Investment Risk:
the risk that investing in foreign (non-U.S.) securities may
result in the Fund experiencing more rapid and extreme changes in value than a fund that invests
exclusively in securities of U.S. companies, due to smaller markets, differing reporting,
accounting and auditing standards, and nationalization, expropriation or confiscatory taxation,
currency blockage, or political changes or diplomatic developments. Foreign securities may also be
less liquid and more difficult to value than securities of U.S. issuers
Real Estate Risk:
the risk that a Fund’s investments in Real Estate Investment Trusts (“REITs”) or
real estate-linked derivative instruments will subject the Fund to risks similar to those
associated with direct ownership of real estate, including losses from casualty or condemnation,
and changes in local and general economic conditions, supply and demand, interest rates, zoning
laws, regulatory limitations on rents, property taxes and operating expenses. A Fund’s investments
in REITs or real estate-linked derivative instruments subject it to management and tax risks
Emerging Markets Risk:
the risk of investing in emerging market securities, primarily increased
foreign (non-U.S.) investment risk
Currency Risk:
the risk that foreign currencies will decline in value relative to the U.S. dollar
and affect the Fund’s investments in foreign (non-U.S.) currencies or in securities that trade in,
and receive revenues in, or in derivatives that provide exposure to, foreign (non-U.S.) currencies
Issuer Non-Diversification Risk:
the risk of focusing investments in a small number of issuers,
including being more susceptible to risks associated with a single economic, political or
regulatory occurrence than a more diversified portfolio might be. Funds that are “non-diversified”
may invest a greater percentage of their assets in the securities of a single issuer (such as bonds
issued by a particular state) than funds that are “diversified”
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
E-152
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PIMCO Emerging Markets Corporate Bond Fund
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Ticker symbol:
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PEMIX (Inst. Class)
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Principal Investments and Strategies
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Investment Objective
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Fund Focus
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Credit Quality
|
|
Seeks maximum total
return, consistent
with preservation
of capital and
prudent investment
management.
|
|
Diversified portfolio of
fixed income instruments
economically tied to
emerging market countries
Average Portfolio Duration
<
10 years
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|
Maximum 20% of total assets below Ba
Dividend Frequency
Declared daily and distributed monthly
|
The Fund seeks to achieve its investment objective by investing under normal circumstances at least
80% of its assets in a diversified portfolio of corporate Fixed Income Instruments that are
economically tied to emerging market countries, which may be represented by forwards or derivatives
such as options, futures contracts or swap agreements. “Fixed Income Instruments” include bonds,
debt securities and other similar instruments issued by various U.S. and non-U.S. public- or
private-sector entities. Such instruments may be denominated in non-U.S. currencies and the U.S.
dollar. The average portfolio duration of the Fund varies based on Pacific Investment Management
Company LLC’s (“PIMCO”) forecast for interest rates and, under normal market conditions, is not
expected to exceed ten years. Duration is a measure used to determine the sensitivity of a
security’s price to changes in interest rates. The longer a security’s duration, the more sensitive
it will be to changes in interest rates.
PIMCO has broad discretion to identify countries that it considers to qualify as emerging markets.
The Fund emphasizes countries with relatively low gross national product per capita and with the
potential for rapid economic growth. PIMCO will select the Fund’s country and currency composition
based on its evaluation of relative interest rates, inflation rates, exchange rates, monetary and
fiscal policies, trade and current account balances, legal and political developments, and any
other specific factors PIMCO believes to be relevant. The Fund likely will concentrate its
investments in Asia, Africa, the Middle East, Latin America and the developing countries of Europe.
The Fund may invest in instruments whose return is based on the return of an emerging market
security or a currency of an emerging market country, such as a derivative instrument, rather than
investing directly in emerging market securities or currencies.
The Fund may invest in both investment-grade securities and high yield securities (“junk bonds”)
subject to a maximum of 20% of its total assets in securities rated below Ba by Moody’s Investors
Service, Inc. (“Moody’s”), or equivalently rated by Standard & Poor’s Ratings Services (“S&P”) or
Fitch, Inc. (“Fitch”), or, if unrated, determined by PIMCO to be of comparable quality.
The Fund may invest, without limitation, in derivative instruments, such as options, futures
contracts or swap agreements, or in mortgage- or asset-backed securities, subject to applicable law
and any other restrictions described in the Fund’s prospectus or Statement of Additional
Information. The Fund may purchase or sell securities on a when-issued, delayed delivery or forward
commitment basis and may engage in short sales. The Fund may also invest directly in real estate
investment trusts (“REITs”). The Fund may, without limitation, 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 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, foreign currency
appreciation, or improving credit fundamentals for a particular sector or security.
Principal Risks
It is possible to lose money on an investment in the Fund. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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 risk that high yield securities and unrated securities of similar credit
quality (commonly known as “junk bonds”) are subject to greater levels of credit and liquidity
risks. High yield securities are considered primarily speculative with respect to the issuer’s
continuing ability to make principal and interest payments
Market Risk:
the risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
E-153
Issuer Risk:
the risk that the value of a security may decline for a reason directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Mortgage-Related and Other Asset-Backed Securities Risk:
the risk of investing in mortgage-related
and other asset-backed securities, including interest rate risk, extension risk and prepayment risk
Foreign (Non-U.S.) Investment Risk:
the risk that investing in foreign (non-U.S.) securities may
result in the Fund experiencing more rapid and extreme changes in value than a fund that invests
exclusively in securities of U.S. companies, due to smaller markets, differing reporting,
accounting and auditing standards, and nationalization, expropriation or confiscatory taxation,
currency blockage, or political changes or diplomatic developments. Foreign securities may also be
less liquid and more difficult to value than securities of U.S. issuers
Real Estate Risk:
the risk that a Fund’s investments in Real Estate Investment Trusts (“REITs”) or
real estate-linked derivative instruments will subject the Fund to risks similar to those
associated with direct ownership of real estate, including losses from casualty or condemnation,
and changes in local and general economic conditions, supply and demand, interest rates, zoning
laws, regulatory limitations on rents, property taxes and operating expenses. A Fund’s investments
in REITs or real estate-linked derivative instruments subject it to management and tax risks
Emerging Markets Risk:
the risk of investing in emerging market securities, primarily increased
foreign (non-U.S.) investment risk
Currency Risk:
the risk that foreign currencies will decline in value relative to the U.S. dollar
and affect the Fund’s investments in foreign (non-U.S.) currencies or in securities that trade in,
and receive revenues in, or in derivatives that provide exposure to, foreign (non-U.S.) currencies
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
E-154
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PIMCO EM Fundamental IndexPLUS
TM
AR Strategy Fund
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Ticker Symbols:
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PEFIX
|
Principal Investments and Strategies
|
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Investment Objective
|
|
Fund Focus
|
|
Credit Quality
|
|
Seeks total return
which exceeds that
of its benchmarks.
|
|
Enhanced
RAFI
®
Emerging Markets
Fundamental Index
derivatives backed by a
portfolio of Fixed Income
Instruments
Average Portfolio Duration
(-3) to 8 years
|
|
B to Aaa; max 10%
of total assets
below Baa
Dividend Frequency
Quarterly
|
The Fund seeks to exceed the total return of the MSCI Emerging Markets Index (Net Dividends in USD)
(the “Benchmark”) by investing under normal circumstances in derivatives based on the Enhanced
RAFI
®
Emerging Markets Strategy Index (“Enhanced RAFI
®
EM”) backed by a diversified portfolio of
Fixed Income Instruments, which may be represented by forwards or derivatives such as options,
futures contracts, or swap agreements. The Enhanced RAFI
®
EM is constructed using the Fundamental
Index
®
methodology, which is a patented, innovative indexing approach developed by Research
Affiliates, LLC. The methodology weights companies by fundamental factors — including sales, cash
flows, dividends and book value, with additional screens for quality of earnings, financial
distress and other parameters — in an effort to enhance returns. In managing the Fund’s investments
in Fixed Income Instruments, PIMCO utilizes an absolute return approach, which is designed to have
flexibility with respect to duration, overall sector exposures, non-U.S. exposures and credit
quality, both as a function of the strategy’s investment guidelines and lack of a fixed income
index benchmark. The absolute return approach does not apply to the equity index replicating
component of the Fund. “Fixed Income Instruments” include bonds, debt securities and other similar
instruments issued by various U.S. and non-U.S. public- or private-sector entities. The Benchmark
is a market capitalization weighted index that is designed to measure equity market performance of
emerging markets. The Fund may invest in common stocks, options, futures, options on futures and
swaps. The Fund is normally expected to primarily use Enhanced RAFI
®
EM derivatives in place of
Enhanced RAFI
®
EM stocks to attempt to equal or exceed the daily performance of the Benchmark. The
values of Enhanced RAFI
®
EM derivatives closely track changes in the value of Enhanced RAFI
®
EM.
However, Enhanced RAFI
®
EM 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. Research Affiliates, LLC, the Fund’s sub-adviser, provides
investment advisory services in connection with the Fund’s use of the Enhanced RAFI
®
EM by, among
other things, providing Pacific Investment Management Company LLC (“PIMCO”), or counterparties
designated by PIMCO, with a model portfolio reflecting the composition of Enhanced RAFI
®
EM for
purposes of developing Enhanced RAFI
®
EM derivatives. PIMCO actively manages the Fixed Income
Instruments held by the Fund with a view toward enhancing the Fund’s total return, subject to an
overall portfolio duration which normally varies from (negative) 3 years to positive 8 years based
on PIMCO’s forecast for interest rates. Duration is a measure used to determine the sensitivity of
a security’s price to changes in interest rates. The longer a security’s duration, the more
sensitive it will be to changes in interest rates. The Fund seeks to remain invested in Enhanced
RAFI
®
EM derivatives or Enhanced RAFI
®
EM stocks even when Enhanced RAFI
®
EM is declining.
The Fund typically will seek to gain exposure to Enhanced RAFI
®
EM by investing in total return
swap agreements. In a typical swap agreement, the Fund will receive the price appreciation (or
depreciation) on Enhanced RAFI
®
EM from the counterparty to the swap agreement in exchange for
paying the counterparty an agreed upon fee. The Fund’s sub-adviser facilitates the Fund’s use of
Enhanced RAFI
®
EM derivatives by providing model portfolios of Enhanced RAFI
®
EM securities to the
Fund’s swap counterparties, so that the counterparties can provide total return swaps based on
Enhanced RAFI
®
EM to the Fund. Because Enhanced RAFI
®
EM is a proprietary index, there may be a
limited number of counterparties willing or able to serve as counterparties to a swap agreement. In
addition to or instead of Enhanced RAFI
®
EM swaps, the Fund may invest in other derivative
instruments, “baskets” of stocks, individual securities, and exchange-traded funds to maintain
emerging markets equity exposure.
The Fund may invest, without limitation, in derivative instruments, such as options, futures
contracts or swap agreements, or in mortgage or asset-backed securities, subject to applicable law
and any other restrictions described in the Fund’s prospectus or Statement of Additional
Information. The Fund may purchase or sell securities on a when-issued, delayed delivery or forward
commitment basis and may engage in short sales. Assets not invested in equity securities or
derivatives may be invested in Fixed Income Instruments. The Fund may invest up to 20% of its total
assets in high yield securities (“junk bonds”) rated B or higher by Moody’s Investors Service, Inc.
(“Moody’s”), or equivalently rated by Standard & Poor’s Ratings Services (“S&P”) or Fitch, Inc.
(“Fitch”), or, if unrated, determined by PIMCO to be of comparable quality (except that within such
limitation, the Fund may invest in mortgage-related securities rated below B). With respect to the
Fund’s fixed income investments, the Fund may invest up to 25% of its total assets in securities
and instruments that are economically tied to emerging market countries. With respect to the Fund’s
fixed income investments, the Fund may invest, without limitation, in securities denominated in
foreign currencies and in U.S. dollar-denominated securities of foreign issuers. With respect to
the Fund’s fixed income investments, the Fund will normally limit its foreign currency exposure
(from non-U.S. dollar-denominated securities or currencies) to 20% of its total assets. The Fund
may also invest up to 10% of its total assets in preferred stocks.
E-155
Principal Risks
It is possible to lose money on an investment in the Fund. Under certain conditions, generally in a
market where the value of both Enhanced RAFI
®
EM derivatives and Fixed Income Instruments are
declining or in periods of heightened market volatility, the Fund may experience greater losses or
lesser gains than would be the case if it invested directly in a portfolio of Enhanced RAFI
®
EM
stocks. The principal risks of investing in the Fund, which could adversely affect its net asset
value, yield and total return are:
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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 risk that high yield securities and unrated securities of similar credit
quality (commonly known as “junk bonds”) are subject to greater levels of credit and liquidity
risks. High yield securities are considered primarily speculative with respect to the issuer’s
continuing ability to make principal and interest payments
Market Risk:
the risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
Issuer Risk:
the risk that the value of a security may decline for a reason directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Equity Risk:
the risk that the value of equity securities, such as common stocks and preferred
stocks, may decline due to general market conditions which are not specifically related to a
particular company or to factors affecting a particular industry or industries. Equity securities
generally have greater price volatility than fixed income securities
Mortgage-Related and Other Asset-Backed Securities Risk:
the risk of investing in mortgage-related
and other asset-backed securities, including interest rate risk, extension risk and prepayment risk
Foreign (Non-U.S.) Investment Risk:
the risk that investing in foreign (non-U.S.) securities may
result in the Fund experiencing more rapid and extreme changes in value than a fund that invests
exclusively in securities of U.S. companies, due to smaller markets, differing reporting,
accounting and auditing standards, and nationalization, expropriation or confiscatory taxation,
currency blockage, or political changes or diplomatic developments. Foreign securities may also be
less liquid and more difficult to value than securities of U.S. issuers
Emerging Markets Risk:
the risk of investing in emerging market securities, primarily increased
foreign (non-U.S.) investment risk
Currency Risk:
the risk that foreign currencies will decline in value relative to the U.S. dollar
and affect the Fund’s investments in foreign (non-U.S.) currencies or in securities that trade in,
and receive revenues in, or in derivatives that provide exposure to, foreign (non-U.S.) currencies
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
E-156
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PIMCO Extended Duration Fund
|
|
Ticker symbol:
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|
PEDIX (Inst. Class)
|
Principal Investments and Strategies
|
|
|
|
|
|
|
Investment Objective
|
|
Fund Focus
|
|
Credit Quality
|
|
Seeks maximum total
return, consistent
with prudent
investment
management
|
|
Long-term maturity Fixed
Income Instruments
Average Portfolio Duration
+ / - 3 years of its Benchmark
|
|
B to Aaa; maximum 10% of total assets
below Baa
Dividend Frequency
Declared daily and distributed monthly
|
The Fund seeks to achieve its investment objective by investing under normal circumstances at least
65% of its total assets in a diversified portfolio of Fixed Income Instruments of varying
maturities, which may be represented by forwards or derivatives such as options, futures contracts
or swap agreements. “Fixed Income Instruments” include bonds, debt securities and other similar
instruments issued by various U.S. and non-U.S. public- or private-sector entities. The average
portfolio duration of this Fund normally varies within three years (plus or minus) of the portfolio
duration of the securities comprising the Citigroup STRIPS Index, 20+ Year Sub-Index, as calculated
by PIMCO, which as of June 30, 2013 was 27.97 years. Duration is a measure used to determine the
sensitivity of a security’s price to changes in interest rates. The longer a security’s duration,
the more sensitive it will be to changes in interest rates.
The Fund invests primarily in investment grade debt securities, but may invest up to 10% of its
total assets in high yield securities (“junk bonds”) that are rated B or higher by Moody’s
Investors Service, Inc. (“Moody’s”), or equivalently rated by Standard & Poor’s Ratings Services
(“S&P”) or Fitch, Inc. (“Fitch”), or, if unrated, determined by Pacific Investment Management
Company LLC (“PIMCO”) to be of comparable quality. The Fund may invest up to 30% of its total
assets in securities denominated in foreign currencies, and may invest beyond this limit in U.S.
dollar-denominated securities of foreign issuers. The Fund may invest up to 15% of its total assets
in securities and instruments that are economically tied to emerging market countries. The Fund
will normally limit its foreign currency exposure (from non-U.S. dollar-denominated securities or
currencies) to 20% of its total assets.
The Fund may invest, without limitation, in derivative instruments, such as options, futures
contracts or swap agreements, or in mortgage- or asset-backed securities, subject to applicable law
and any other restrictions described in the Fund’s prospectus or Statement of Additional
Information. The Fund may purchase or sell securities on a when-issued, delayed delivery or forward
commitment basis and may engage in short sales. The Fund may, without limitation, 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 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, foreign
currency appreciation, or improving credit fundamentals for a particular sector or security. The
Fund may also invest up to 10% of its total assets in preferred stocks.
Principal Risks
It is possible to lose money on an investment in the Fund. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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 risk that high yield securities and unrated securities of similar credit
quality (commonly known as “junk bonds”) are subject to greater levels of credit and liquidity
risks. High yield securities are considered primarily speculative with respect to the issuer’s
continuing ability to make principal and interest payments
Market Risk:
the risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
Issuer Risk:
the risk that the value of a security may decline for a reason directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
E-157
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Equity Risk:
the risk that the value of equity securities, such as common stocks and preferred
stocks, may decline due to general market conditions which are not specifically related to a
particular company or to factors affecting a particular industry or industries. Equity securities
generally have greater price volatility than fixed income securities
Mortgage-Related and Other Asset-Backed Securities Risk:
the risk of investing in mortgage-related
and other asset-backed securities, including interest rate risk, extension risk and prepayment risk
Foreign (Non-U.S.) Investment Risk:
the risk that investing in foreign (non-U.S.) securities may
result in the Fund experiencing more rapid and extreme changes in value than a fund that invests
exclusively in securities of U.S. companies, due to smaller markets, differing reporting,
accounting and auditing standards, and nationalization, expropriation or confiscatory taxation,
currency blockage, or political changes or diplomatic developments. Foreign securities may also be
less liquid and more difficult to value than securities of U.S. issuers
Emerging Markets Risk:
the risk of investing in emerging market securities, primarily increased
foreign (non-U.S.) investment risk
Currency Risk:
the risk that foreign currencies will decline in value relative to the U.S. dollar
and affect the Fund’s investments in foreign (non-U.S.) currencies or in securities that trade in,
and receive revenues in, or in derivatives that provide exposure to, foreign (non-U.S.) currencies
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
E-158
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PIMCO Floating Income Fund
|
|
Ticker symbol:
|
|
|
|
PFIIX (Inst. Class)
|
Principal Investments and Strategies
|
|
|
|
|
|
|
Investment Objective
|
|
Fund Focus
|
|
Credit Quality
|
|
Maximum current yield
consistent with prudent
investment management.
|
|
Variable and
floating-rate Fixed
Income Instruments and
their economic
equivalents
Average Portfolio Duration
<
1 year
|
|
Caa to Aaa; maximum 10% of total
assets below B
Dividend Frequency
Declared daily and distributed monthly
|
The Fund seeks to achieve its investment objective by investing under normal circumstances at least
80% of its assets in a diversified portfolio of investments that effectively enable the Fund to
achieve a floating rate of income, including, but not limited to, variable and floating-rate Fixed
Income Instruments, Fixed Income Instruments with durations of less than or equal to one year, and
fixed-rate Fixed Income Instruments with respect to which the Fund has entered into derivative
instruments to effectively convert the fixed-rate interest payments into floating-rate interest
payments, each of which may be represented by forwards or derivatives such as options, futures
contracts or swap agreements. “Fixed Income Instruments” include bonds, debt securities and other
similar instruments issued by various U.S. and non-U.S. public- or private-sector entities. The
average portfolio duration of this Fund will vary based on Pacific Investment Management Company
LLC’s (“PIMCO”) forecast for interest rates and will normally not exceed one year. Duration is a
measure used to determine the sensitivity of a security’s price to changes in interest rates. The
longer a security’s duration, the more sensitive it will be to changes in interest rates. The Fund
may also invest in other Fixed Income Instruments. Variable and floating-rate Fixed Income
Instruments generally pay interest at rates that adjust whenever a specified interest rate changes
and/or reset on predetermined dates (such as the last day of a month or calendar quarter).
The Fund may invest all of its assets in high yield securities (“junk bonds”) rated Caa or higher
by Moody’s Investors Service, Inc. (“Moody’s”), or equivalently rated by Standard & Poor’s Ratings
Services (“S&P”) or Fitch, Inc. (“Fitch”), or, if unrated, determined by PIMCO to be of comparable
quality, subject to a maximum of 10% of its total assets in securities rated Caa by Moody’s, or
equivalently rated by S&P or Fitch, or, if unrated, determined by PIMCO to be of comparable quality
(except such limitations shall not apply to the Fund’s investments in mortgage-related securities).
In addition, the Fund may invest, without limitation, in securities and instruments that are
economically tied to emerging market countries. The Fund may invest, without limitation, in
securities denominated in foreign currencies and in U.S.-dollar-denominated securities of foreign
issuers.
The Fund may invest, without limitation, in derivative instruments, such as options, futures
contracts or swap agreements, or in mortgage- or asset-backed securities, subject to applicable law
and any other restrictions described in the Fund’s prospectus or Statement of Additional
Information. The Fund may purchase or sell securities on a when-issued, delayed delivery or forward
commitment basis and may engage in short sales. The Fund may, without limitation, 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 or dollar
rolls). The Fund may also invest up to 10% of its total assets in preferred stocks.
Principal Risks
It is possible to lose money on an investment in the Fund. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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 risk that high yield securities and unrated securities of similar credit
quality (commonly known as “junk bonds”) are subject to greater levels of credit and liquidity
risks. High yield securities are considered primarily speculative with respect to the issuer’s
continuing ability to make principal and interest payments
Market Risk:
the risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
Issuer Risk:
the risk that the value of a security may decline for a reason directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
E-159
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Equity Risk:
the risk that the value of equity securities, such as common stocks and preferred
stocks, may decline due to general market conditions which are not specifically related to a
particular company or to factors affecting a particular industry or industries. Equity securities
generally have greater price volatility than fixed income securities
Mortgage-Related and Other Asset-Backed Securities Risk:
the risk of investing in mortgage-related
and other asset-backed securities, including interest rate risk, extension risk and prepayment risk
Foreign (Non-U.S.) Investment Risk:
the risk that investing in foreign (non-U.S.) securities may
result in the Fund experiencing more rapid and extreme changes in value than a fund that invests
exclusively in securities of U.S. companies, due to smaller markets, differing reporting,
accounting and auditing standards, and nationalization, expropriation or confiscatory taxation,
currency blockage, or political changes or diplomatic developments. Foreign securities may also be
less liquid and more difficult to value than securities of U.S. issuers
Emerging Markets Risk:
the risk of investing in emerging market securities, primarily increased
foreign (non-U.S.) investment risk
Currency Risk:
the risk that foreign currencies will decline in value relative to the U.S. dollar
and affect the Fund’s investments in foreign (non-U.S.) currencies or in securities that trade in,
and receive revenues in, or in derivatives that provide exposure to, foreign (non-U.S.) currencies
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
E-160
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PIMCO Foreign Bond Fund (U.S. Dollar-Hedged)
|
|
Ticker symbol:
|
|
|
|
PFORX (Inst. Class)
|
Principal Investments and Strategies
|
|
|
|
|
|
|
Investment Objective
|
|
Fund Focus
|
|
Credit Quality
|
|
Seeks maximum total
return, consistent
with preservation
of capital and
prudent investment
management
|
|
Intermediate maturity hedged
non-U.S. Fixed Income
Instruments
Average Portfolio Duration
+ / - 3 years of its Benchmark
|
|
B to Aaa; maximum 10% of total assets
below Baa
Dividend Frequency
Declared daily and distributed monthly
|
The Fund seeks to achieve its investment objective by investing under normal circumstances at least
80% of its assets in Fixed Income Instruments that are economically tied to foreign (non-U.S.)
countries, representing at least three foreign countries, which may be represented by forwards or
derivatives such as options, future contracts or swap agreements. “Fixed Income Instruments”
include bonds, debt securities and other similar instruments issued by various U.S. and non-U.S.
public- or private-sector entities. The Fund will normally limit its foreign currency exposure
(from non-U.S. dollar-denominated securities or currencies) to 20% of its total assets.
Pacific Investment Management Company LLC (“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 Fund may invest, without limitation, in securities and instruments that are economically tied
to emerging market countries. The average portfolio duration of this Fund normally varies within
three years (plus or minus) of the portfolio duration of the securities comprising the JPMorgan GBI
Global ex-US Index Hedged in USD, as calculated by PIMCO, which as of June 30, 2013 was 7.70 years.
Duration is a measure used to determine the sensitivity of a security’s price to changes in
interest rates. The longer a security’s duration, the more sensitive it will be to changes in
interest rates. The Fund invests primarily in investment grade debt securities, but may invest up
to 10% of its total assets in high yield securities (“junk bonds”) rated B or higher by Moody’s
Investors Service, Inc. (“Moody’s”), or equivalently rated by Standard & Poor’s Ratings Services
(“S&P”) or Fitch, Inc. (“Fitch”), or, if unrated, determined by PIMCO to be of comparable quality
(except that within such limitation, the Fund may invest in mortgage-related securities rated below
B). The Fund is non-diversified, which means that it may invest its assets in a smaller number of
issuers than a diversified fund.
The Fund may invest, without limitation, in derivative instruments, such as options, futures
contracts or swap agreements, or in mortgage- or asset-backed securities, subject to applicable law
and any other restrictions described in the Fund’s prospectus or Statement of Additional
Information. The Fund may purchase or sell securities on a when-issued, delayed delivery or forward
commitment basis and may engage in short sales. The Fund may, without limitation, 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 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, foreign
currency appreciation, or improving credit fundamentals for a particular sector or security. The
Fund may also invest up to 10% of its total assets in preferred stocks.
Principal Risks
It is possible to lose money on an investment in the Fund. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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 risk that high yield securities and unrated securities of similar credit
quality (commonly known as “junk bonds”) are subject to greater levels of credit and liquidity
risks. High yield securities are considered primarily speculative with respect to the issuer’s
continuing ability to make principal and interest payments
Market Risk:
the risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
Issuer Risk:
the risk that the value of a security may decline for a reason directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
E-161
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Equity Risk:
the risk that the value of equity securities, such as common stocks and preferred
stocks, may decline due to general market conditions which are not specifically related to a
particular company or to factors affecting a particular industry or industries. Equity securities
generally have greater price volatility than fixed income securities
Mortgage-Related and Other Asset-Backed Securities Risk:
the risk of investing in mortgage-related
and other asset-backed securities, including interest rate risk, extension risk and prepayment risk
Foreign (Non-U.S.) Investment Risk:
the risk that investing in foreign (non-U.S.) securities may
result in the Fund experiencing more rapid and extreme changes in value than a fund that invests
exclusively in securities of U.S. companies, due to smaller markets, differing reporting,
accounting and auditing standards, and nationalization, expropriation or confiscatory taxation,
currency blockage, or political changes or diplomatic developments. Foreign securities may also be
less liquid and more difficult to value than securities of U.S. issuers
Emerging Markets Risk:
the risk of investing in emerging market securities, primarily increased
foreign (non-U.S.) investment risk
Currency Risk:
the risk that foreign currencies will decline in value relative to the U.S. dollar
and affect the Fund’s investments in foreign (non-U.S.) currencies or in securities that trade in,
and receive revenues in, or in derivatives that provide exposure to, foreign (non-U.S.) currencies
Issuer Non-Diversification Risk:
the risk of focusing investments in a small number of issuers,
including being more susceptible to risks associated with a single economic, political or
regulatory occurrence than a more diversified portfolio might be. Funds that are “non-diversified”
may invest a greater percentage of their assets in the securities of a single issuer (such as bonds
issued by a particular state) than funds that are “diversified”
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
E-162
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PIMCO Foreign Bond Fund (Unhedged)
|
|
Ticker symbol:
|
|
|
|
PFUIX (Inst. Class)
|
Principal Investments and Strategies
|
|
|
|
|
|
|
Investment Objective
|
|
Fund Focus
|
|
Credit Quality
|
|
Seeks maximum total
return, consistent
with preservation
of capital and
prudent investment
management
|
|
Intermediate maturity
non-U.S. Fixed Income
Instruments
Average Portfolio Duration
+ / - 3 years of its benchmark
|
|
B to Aaa; maximum 10% of total assets
below Baa
Dividend Frequency
Declared daily and distributed monthly
|
The Fund seeks to achieve its investment objective by investing under normal circumstances at least
80% of its assets in Fixed Income Instruments that are economically tied to foreign (non-U.S.)
countries, representing at least three foreign countries, which may be represented by forwards or
derivatives such as options, futures contracts or swap agreements. “Fixed Income Instruments”
include bonds, debt securities and other similar instruments issued by various U.S. and non-U.S.
public- or private-sector entities.
Pacific Investment Management Company LLC (“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 this Fund normally varies within three years (plus or minus) of
the portfolio duration of the securities comprising the JPMorgan GBI Global ex-US FX NY Index
Unhedged in USD, as calculated by PIMCO, which as of June 30, 2013 was 7.70 years. Duration is a
measure used to determine the sensitivity of a security’s price to changes in interest rates. The
longer a security’s duration, the more sensitive it will be to changes in interest rates. The Fund
invests primarily in investment grade debt securities, but may invest up to 10% of its total assets
in high yield securities (“junk bonds”) rated B or higher by Moody’s Investors Service, Inc.
(“Moody’s”), or equivalently rated by Standard & Poor’s Ratings Services (“S&P”) or Fitch, Inc.
(“Fitch”), or, if unrated, determined by PIMCO to be of comparable quality (except that within such
limitation, the Fund may invest in mortgage-related securities rated below B). The Fund may invest,
without limitation, in securities and instruments that are economically tied to emerging market
countries. The Fund is non-diversified, which means that it may invest its assets in a smaller
number of issuers than a diversified fund.
The Fund may invest, without limitation, in derivative instruments, such as options, futures
contracts or swap agreements, or in mortgage- or asset-backed securities, subject to applicable law
and any other restrictions described in the Fund’s prospectus or Statement of Additional
Information. The Fund may purchase or sell securities on a when-issued, delayed delivery or forward
commitment basis and may engage in short sales. The Fund may, without limitation, 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 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, foreign
currency appreciation, or improving credit fundamentals for a particular sector or security. The
Fund may also invest up to 10% of its total assets in preferred stocks.
Principal Risks
It is possible to lose money on an investment in the Fund. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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 risk that high yield securities and unrated securities of similar credit
quality (commonly known as “junk bonds”) are subject to greater levels of credit and liquidity
risks. High yield securities are considered primarily speculative with respect to the issuer’s
continuing ability to make principal and interest payments
Market Risk:
the risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
Issuer Risk:
the risk that the value of a security may decline for a reason directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
E-163
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Equity Risk:
the risk that the value of equity securities, such as common stocks and preferred
stocks, may decline due to general market conditions which are not specifically related to a
particular company or to factors affecting a particular industry or industries. Equity securities
generally have greater price volatility than fixed income securities
Mortgage-Related and Other Asset-Backed Securities Risk:
the risk of investing in mortgage-related
and other asset-backed securities, including interest rate risk, extension risk and prepayment risk
Foreign (Non-U.S.) Investment Risk:
the risk that investing in foreign (non-U.S.) securities may
result in the Fund experiencing more rapid and extreme changes in value than a fund that invests
exclusively in securities of U.S. companies, due to smaller markets, differing reporting,
accounting and auditing standards, and nationalization, expropriation or confiscatory taxation,
currency blockage, or political changes or diplomatic developments. Foreign securities may also be
less liquid and more difficult to value than securities of U.S. issuers
Emerging Markets Risk:
the risk of investing in emerging market securities, primarily increased
foreign (non-U.S.) investment risk
Currency Risk:
the risk that foreign currencies will decline in value relative to the U.S. dollar
and affect the Fund’s investments in foreign (non-U.S.) currencies or in securities that trade in,
and receive revenues in, or in derivatives that provide exposure to, foreign (non-U.S.) currencies
Issuer Non-Diversification Risk:
the risk of focusing investments in a small number of issuers,
including being more susceptible to risks associated with a single economic, political or
regulatory occurrence than a more diversified portfolio might be. Funds that are “non-diversified”
may invest a greater percentage of their assets in the securities of a single issuer (such as bonds
issued by a particular state) than funds that are “diversified”
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
E-164
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PIMCO Fundamental Advantage Absolute Return Strategy Fund
|
|
Ticker symbol:
|
|
|
|
PFATX (Inst. Class)
|
Principal Investments and Strategies
|
|
|
|
|
|
|
Investment Objective
|
|
Fund Focus
|
|
Credit Quality
|
|
Seeks maximum total
return, consistent with
prudent investment
management
|
|
Long exposure to Enhanced
RAFI
®
1000 Index hedged by short
exposure to the S&P 500
index, backed by a
portfolio of Fixed Income
Instruments
|
|
B to Aaa; maximum 20% of total
assets below Baa
Dividend Frequency
Declared and distributed quarterly
|
|
|
|
Average Collateral Fixed
Income Duration
|
|
|
|
|
|
(-3) to 8 years
|
|
|
The Fund seeks to achieve its investment objective by investing under normal circumstances in
derivatives providing long exposure to Enhanced RAFI
®
US Large and short exposure to the S&P 500
Index (the “S&P 500”), backed by a diversified portfolio of Fixed Income Instruments. “Fixed Income
Instruments” include bonds, debt securities and other similar instruments issued by various U.S.
and non-U.S. public- or private-sector entities. The Enhanced RAFI
®
US Large is constructed using
the Fundamental Index
®
methodology, which is a patented, innovative indexing approach developed by
Research Affiliates, LLC. The methodology weights companies by fundamental factors — including
sales, cash flows, dividends and book value, with additional screens for quality of earnings,
financial distress and other parameters — in an effort to enhance returns. In managing the Fund’s
investments in Fixed Income Instruments, PIMCO utilizes an absolute return approach, which seeks to
generate returns without tracking traditional bond benchmarks. The absolute return approach is
designed to have flexibility with respect to duration, overall sector exposures, non-U.S. exposures
and credit quality, both as a function of the strategy’s investment guidelines and lack of a fixed
income index benchmark. The Fund’s strategy with respect to maintaining long exposure to Enhanced
RAFI
®
US Large and short exposure to the S&P 500 can be characterized as “market neutral” because
it seeks to maintain a low correlation to the fluctuation of the U.S. equity market as a whole
while returning the relative appreciation (or depreciation) of Enhanced RAFI
®
US Large over the S&P
500.
The Fund seeks to maintain long exposure to Enhanced RAFI
®
US Large and short exposure to the S&P
500 even when Enhanced RAFI
®
US Large is underperforming relative to the S&P 500.
The Fund may invest in common stocks, options, futures, options on futures and swaps to gain long
exposure to Enhanced RAFI
®
US Large and short exposure to the S&P 500. The Fund typically will seek
to simultaneously gain long exposure to Enhanced RAFI
®
US Large and short exposure to the S&P 500,
each in an amount, under normal circumstances, approximately equal to the Fund’s net assets. In a
typical swap agreement, the Fund will receive the price appreciation (or depreciation) on Enhanced
RAFI
®
US Large from the counterparty to the swap agreement in exchange for paying the price
appreciation (or depreciation) on the S&P 500 and certain transaction costs. While the Fund will,
under normal circumstances, seek to maintain approximately equal value exposure in its long
positions in Enhanced RAFI
®
US Large and short positions in the S&P 500 in an effort to offset the
effects on the Fund’s performance of general stock market movements, Pacific Investment Management
Company LLC (“PIMCO”) may increase or decrease the Fund’s long exposure to Enhanced RAFI
®
US Large
or the Fund’s short exposure to the S&P 500 when PIMCO deems it appropriate to do so. Because
Enhanced RAFI
®
US Large is a proprietary index, there may be a limited number of counterparties
willing or able to serve as counterparties to a swap agreement. If such swap agreements are not
available, or when PIMCO otherwise deems it appropriate to do so, the Fund may invest in, or take
short positions in, other derivative instruments, “baskets” of stocks, or individual securities to
replicate the performance of Enhanced RAFI
®
US Large relative to the S&P 500. The Fund also may
invest in exchange-traded funds.
The values of derivatives based on Enhanced RAFI
®
US Large and the S&P 500 should closely track
changes in the value of Enhanced RAFI
®
US Large and the S&P 500. However, these 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 Fund’s assets may be invested in Fixed Income Instruments.
Research Affiliates, LLC, the Fund’s sub-adviser, provides investment advisory services in
connection with the Fund’s use of Enhanced RAFI
®
US Large by, among other things, providing PIMCO,
or counterparties designated by PIMCO, with a model portfolio reflecting the composition of
Enhanced RAFI
®
US Large for purposes of developing Enhanced RAFI
®
US Large derivatives.
PIMCO actively manages the Fixed Income Instruments held by the Fund with a view toward enhancing
the Fund’s total return, subject to an overall portfolio duration which normally varies from
(negative) 3 years to positive 8 years based on PIMCO’s forecast for interest rates. Duration is a
measure used to determine the sensitivity of a security’s price to changes in interest rates. The
longer a security’s duration, the more sensitive it will be to changes in interest rates.
E-165
The Fund may invest, without limitation, in derivative instruments, such as options, futures
contracts or swap agreements, or in mortgage- or asset-backed securities subject to applicable law
and any other restrictions described in the Fund’s prospectus or Statement of Additional
Information. The Fund may purchase or sell securities on a when-issued, delayed delivery or forward
commitment basis and may engage in short sales. Assets not invested in equity securities or
derivatives may be invested in Fixed Income Instruments. The Fund may invest up to 20% of its total
assets in high yield securities (“junk bonds”) rated B or higher by Moody’s Investors Service, Inc.
(“Moody’s”), or equivalently rated by Standard & Poor’s Ratings Services (“S&P”) or Fitch, Inc.
(“Fitch”), or, if unrated, determined by PIMCO to be of comparable quality (except that within such
limitation, the Fund may invest in mortgage-related securities rated below B). With respect to the
Fund’s fixed income investments, the Fund may invest up to 25% of its total assets in securities
and instruments that are economically tied to emerging market countries. The Fund may also invest,
without limitation, in securities denominated in foreign currencies and in U.S. dollar-denominated
securities of foreign issuers. The Fund will normally limit its foreign currency exposure (from
non-U.S. dollar-denominated securities or currencies) to 20% of its total assets. The Fund may also
invest up to 10% of its total assets in preferred stocks.
Principal Risks
It is possible to lose money on an investment in the Fund. Although the Fund seeks to protect
against equity market risk arising from its long exposure to Enhanced RAFI
®
US Large by maintaining
short exposure to the S&P 500, under certain conditions, generally in a market where Enhanced RAFI
®
US Large underperforms relative to the S&P 500 and fixed income securities are declining or in
periods of heightened market volatility, the Fund may experience losses. The principal risks of
investing in the Fund, which could adversely affect its net asset value, yield and total return
are:
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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 risk that high yield securities and unrated securities of similar credit
quality (commonly known as “junk bonds”) are subject to greater levels of credit and liquidity
risks. High yield securities are considered primarily speculative with respect to the issuer’s
continuing ability to make principal and interest payments
Market Risk:
the risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
Issuer Risk:
the risk that the value of a security may decline for a reason directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Equity Risk:
the risk that the value of equity securities, such as common stocks and preferred
stocks, may decline due to general market conditions which are not specifically related to a
particular company or to factors affecting a particular industry or industries. Equity securities
generally have greater price volatility than fixed income securities
Mortgage-Related and Other Asset-Backed Securities Risk:
the risk of investing in mortgage-related
and other asset-backed securities, including interest rate risk, extension risk and prepayment risk
Foreign (Non-U.S.) Investment Risk:
the risk that investing in foreign (non-U.S.) securities may
result in the Fund experiencing more rapid and extreme changes in value than a fund that invests
exclusively in securities of U.S. companies, due to smaller markets, differing reporting,
accounting and auditing standards, and nationalization, expropriation or confiscatory taxation,
currency blockage, or political changes or diplomatic developments. Foreign securities may also be
less liquid and more difficult to value than securities of U.S. issuers
Emerging Markets Risk:
the risk of investing in emerging market securities, primarily increased
foreign (non-U.S.) investment risk
Currency Risk:
the risk that foreign currencies will decline in value relative to the U.S. dollar
and affect the Fund’s investments in foreign (non-U.S.) currencies or in securities that trade in,
and receive revenues in, or in derivatives that provide exposure to, foreign (non-U.S.) currencies
E-166
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
E-167
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PIMCO Fundamental IndexPLUS
®
AR Fund
|
|
Ticker symbol:
|
|
|
|
PXTIX (Inst. Class)
|
Principal Investments and Strategies
|
|
|
|
|
|
|
Investment Objective
|
|
Fund Focus
|
|
Credit Quality
|
|
Seeks total return which
exceeds that of its
benchmark
|
|
Enhanced
RAFI
®
1000 derivatives backed by
a portfolio of Fixed Income
Instruments
Average Collateral Fixed
Income Duration
(-3) to 8 years
|
|
B to Aaa; maximum 20% of total
assets below Baa
Dividend Frequency
Declared and distributed quarterly
|
The Fund seeks to exceed the total return of the S&P 500 Index (the “S&P 500”) by investing under
normal circumstances in derivatives based on Enhanced RAFI
®
US Large backed by a portfolio of Fixed
Income Instruments, which may be represented by forwards or derivatives such as options, futures
contracts, or swap agreements. “Fixed Income Instruments” include bonds, debt securities and other
similar instruments issued by various U.S. and non-U.S. public- or private-sector entities. The
Enhanced RAFI
®
US Large is constructed using the Fundamental Index
®
methodology, which is a
patented, innovative indexing approach developed by Research Affiliates, LLC. The methodology
weights companies by fundamental factors — including sales, cash flows, dividends and book value,
with additional screens for quality of earnings, financial distress and other parameters — in an
effort to enhance returns. In managing the Fund’s investments in Fixed Income Instruments, PIMCO
utilizes an absolute return approach, which seeks to generate returns without tracking traditional
bond benchmarks. The absolute return approach is designed to have flexibility with respect to
duration, overall sector exposures, non-U.S. exposures and credit quality, both as a function of
the strategy’s investment guidelines and lack of a fixed income index benchmark. The absolute
return approach does not apply to the equity index replicating component of the Fund. The S&P 500
is an unmanaged index composed of 500 selected common stocks that represent approximately
two-thirds of the total market value of all U.S. common stocks. The Fund may invest in common
stocks, options, futures, options on futures and swaps. The Fund uses Enhanced RAFI
®
US Large
derivatives in addition to or in place of Enhanced RAFI
®
US Large stocks to attempt to equal or
exceed the daily performance of the S&P 500. The values of Enhanced RAFI
®
US Large derivatives
should closely track changes in the value of Enhanced RAFI
®
US Large. However, Enhanced RAFI
®
US
Large 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. Research Affiliates, LLC, the Fund’s sub-adviser, provides investment advisory
services in connection with the Fund’s use of Enhanced RAFI
®
US Large by, among other things,
providing Pacific Investment Management Company LLC (“PIMCO”), or counterparties designated by
PIMCO, with a model portfolio reflecting the composition of Enhanced RAFI
®
US Large for purposes of
developing Enhanced RAFI
®
US Large derivatives.
PIMCO actively manages the Fixed Income Instruments held by the Fund with a view toward enhancing
the Fund’s total return, subject to an overall portfolio duration which normally varies from
(negative) 3 years to positive 8 years based on PIMCO’s forecast for interest rates. Duration is a
measure used to determine the sensitivity of a security’s price to changes in interest rates. The
longer a security’s duration, the more sensitive it will be to changes in interest rates. The Fund
seeks to remain invested in Enhanced RAFI
®
US Large derivatives or Enhanced RAFI
®
US Large stocks
even when Enhanced RAFI
®
US Large is declining.
The Fund typically will seek to gain exposure to Enhanced RAFI
®
US Large by investing in total
return swap agreements. In a typical swap agreement, the Fund will receive the price appreciation
(or depreciation) on Enhanced RAFI
®
US Large from the counterparty to the swap agreement in
exchange for paying the counterparty an agreed upon fee. The Fund’s sub-adviser facilitates the
Fund’s use of Enhanced RAFI
®
US Large derivatives by providing model portfolios of Enhanced RAFI
®
US Large securities to the Fund’s swap counterparties, so that the counterparties can provide total
return swaps based on Enhanced RAFI
®
US Large to the Fund. Because the Enhanced RAFI
®
US Large is a
proprietary index, there may be a limited number of counterparties willing or able to serve as
counterparties to a swap agreement. If such swap agreements are not available, the Fund may invest
in other derivative instruments, “baskets” of stocks, or individual securities to replicate the
performance of Enhanced RAFI
®
US Large.
Though the Fund does not normally invest directly in Enhanced RAFI
®
US Large securities, when
Enhanced RAFI
®
US Large derivatives appear to be overvalued relative to Enhanced RAFI
®
US Large,
the Fund may invest all of its assets in a “basket” of Enhanced RAFI
®
US Large stocks. The Fund
also may invest in exchange-traded funds.
The Fund may invest, without limitation, in derivative instruments, such as options, futures
contracts or swap agreements, or in mortgage- or asset-backed securities, subject to applicable law
and any other restrictions described in the Fund’s prospectus or Statement of Additional
Information. The Fund may purchase or sell securities on a when-issued, delayed delivery or forward
commitment basis and may engage in short sales. Assets not invested in equity securities or
derivatives may be invested in Fixed Income Instruments. The Fund may invest up to 20% of its total
assets in high yield securities (“junk bonds”) rated B or higher by Moody’s Investors Service, Inc.
(“Moody’s”), or equivalently rated by Standard & Poor’s Ratings Services (“S&P”) or Fitch, Inc.
(“Fitch”), or, if unrated, determined by PIMCO to be of comparable quality (except that within such
limitation, the Fund may invest in mortgage-related securities rated below B). The Fund may invest,
without limitation, in securities denominated in foreign currencies and in U.S. dollar-denominated
securities of foreign issuers. The Fund may invest up to 25% of its total assets in securities and
instruments that are economically tied to emerging market countries. The Fund will normally limit
its foreign currency exposure (from non-U.S. dollar-denominated securities or currencies) to 20% of
its total assets. The Fund may also invest up to 10% of its total assets in preferred stocks.
E-168
Principal Risks
It is possible to lose money on an investment in the Fund. Under certain conditions, generally in a
market where the value of both Enhanced RAFI
®
US Large derivatives and fixed income securities are
declining or in periods of heightened market volatility, the Fund may experience greater losses or
lesser gains than would be the case if it invested directly in a portfolio of Enhanced RAFI
®
US
Large stocks. The principal risks of investing in the Fund, which could adversely affect its net
asset value, yield and total return are:
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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 risk that high yield securities and unrated securities of similar credit
quality (commonly known as “junk bonds”) are subject to greater levels of credit and liquidity
risks. High yield securities are considered primarily speculative with respect to the issuer’s
continuing ability to make principal and interest payments
Market Risk:
the risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
Issuer Risk:
the risk that the value of a security may decline for a reason directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Equity Risk:
the risk that the value of equity securities, such as common stocks and preferred
stocks, may decline due to general market conditions which are not specifically related to a
particular company or to factors affecting a particular industry or industries. Equity securities
generally have greater price volatility than fixed income securities
Mortgage-Related and Other Asset-Backed Securities Risk:
the risk of investing in mortgage-related
and other asset-backed securities, including interest rate risk, extension risk and prepayment risk
Foreign (Non-U.S.) Investment Risk:
the risk that investing in foreign (non-U.S.) securities may
result in the Fund experiencing more rapid and extreme changes in value than a fund that invests
exclusively in securities of U.S. companies, due to smaller markets, differing reporting,
accounting and auditing standards, and nationalization, expropriation or confiscatory taxation,
currency blockage, or political changes or diplomatic developments. Foreign securities may also be
less liquid and more difficult to value than securities of U.S. issuers
Emerging Markets Risk:
the risk of investing in emerging market securities, primarily increased
foreign (non-U.S.) investment risk
Currency Risk:
the risk that foreign currencies will decline in value relative to the U.S. dollar
and affect the Fund’s investments in foreign (non-U.S.) currencies or in securities that trade in,
and receive revenues in, or in derivatives that provide exposure to, foreign (non-U.S.) currencies
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
E-169
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PIMCO Global Advantage
®
Strategy Bond Fund
|
|
Ticker symbol:
|
|
|
|
PSAIX (Inst. Class)
|
Principal Investments and Strategies
|
|
|
|
|
|
|
Investment Objective
|
|
Fund Focus
|
|
Credit Quality
|
|
Seeks total return which
exceeds that of its
benchmarks, consistent
with prudent investment
management.
|
|
U.S. and non-U.S. Fixed Income Instruments
Average Portfolio Duration
<
8 years
|
|
Maximum of 15% of total assets below B
Dividend Frequency
Declared daily and distributed monthly
|
The Fund seeks to achieve its investment objective by investing under normal circumstances at least
80% of its assets in Fixed Income Instruments that are economically tied to at least three
countries (one of which may be the United States), which may be represented by forwards or
derivatives such as options, futures contracts, or swap agreements. “Fixed Income Instruments”
include bonds, debt securities and other similar instruments issued by various U.S. and non-U.S.
public- or private-sector entities.
Pacific Investment Management Company LLC (“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, and trade and current account
balances. The Fund may invest without limitation in securities denominated in foreign currencies
and in U.S. dollar-denominated securities of foreign issuers. The Fund may invest, without
limitation, in securities and instruments that are economically tied to emerging market countries.
The Fund may also invest up to 10% of its total assets in preferred stocks. In addition, the Fund
may invest in both investment-grade securities and high yield securities (“junk bonds”) subject to
a maximum of 15% its total assets in securities rated below B by Moody’s Investors Service, Inc.
(“Moody’s”), or equivalently rated by Standard & Poor’s Ratings Services (“S&P”) or Fitch, Inc.
(“Fitch”), or, if unrated, determined by PIMCO to be of comparable quality. The average portfolio
duration of this Fund varies based on PIMCO’s forecast for interest rates and, under normal market
conditions, is not expected to exceed eight years. Duration is a measure used to determine the
sensitivity of a security’s price to changes in interest rates. The longer a security’s duration,
the more sensitive it will be to changes in interest rates. The Fund is non-diversified, which
means that it may invest its assets in a smaller number of issuers than a diversified fund.
The Fund may invest, without limitation, in derivative instruments, such as options, futures
contracts or swap agreements, or in mortgage- or asset-backed securities, subject to applicable law
and any other restrictions described in the Fund’s prospectus or Statement of Additional
Information. The Fund may purchase or sell securities on a when-issued, delayed delivery or forward
commitment basis and may engage in short sales. The Fund may, without limitation, 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 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, foreign
currency appreciation or improving credit fundamentals for a particular sector or security.
Principal Risks
It is possible to lose money on an investment in the Fund. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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 risk that high yield securities and unrated securities of similar credit
quality (commonly known as “junk bonds”) are subject to greater levels of credit and liquidity
risks. High yield securities are considered primarily speculative with respect to the issuer’s
continuing ability to make principal and interest payments
Market Risk:
the risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
Issuer Risk:
the risk that the value of a security may decline for a reason directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
E-170
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Equity Risk:
the risk that the value of equity securities, such as common stocks and preferred
stocks, may decline due to general market conditions which are not specifically related to a
particular company or to factors affecting a particular industry or industries. Equity securities
generally have greater price volatility than fixed income securities
Mortgage-Related and Other Asset-Backed Securities Risk:
the risk of investing in mortgage-related
and other asset-backed securities, including interest rate risk, extension risk and prepayment risk
Foreign (Non-U.S.) Investment Risk:
the risk that investing in foreign (non-U.S.) securities may
result in the Fund experiencing more rapid and extreme changes in value than a fund that invests
exclusively in securities of U.S. companies, due to smaller markets, differing reporting,
accounting and auditing standards, and nationalization, expropriation or confiscatory taxation,
currency blockage, or political changes or diplomatic developments. Foreign securities may also be
less liquid and more difficult to value than securities of U.S. issuers
Emerging Markets Risk:
the risk of investing in emerging market securities, primarily increased
foreign (non-U.S.) investment risk
Issuer Non-Diversification Risk:
the risk of focusing investments in a small number of issuers,
including being more susceptible to risks associated with a single economic, political or
regulatory occurrence than a more diversified portfolio might be. Funds that are “non-diversified”
may invest a greater percentage of their assets in the securities of a single issuer (such as bonds
issued by a particular state) than funds that are “diversified”
Currency Risk:
the risk that foreign currencies will decline in value relative to the U.S. dollar
and affect the Fund’s investments in foreign (non-U.S.) currencies or in securities that trade in,
and receive revenues in, or in derivatives that provide exposure to, foreign (non-U.S.) currencies
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
E-171
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|
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|
|
|
|
PIMCO Global Bond Fund (U.S. Dollar-Hedged)
|
|
Ticker symbol:
|
|
|
|
PGBIX (Inst. Class)
|
Principal Investments and Strategies
|
|
|
|
|
|
|
Investment Objective
|
|
Fund Focus
|
|
Credit Quality
|
|
Seeks maximum total return, consistent
with preservation of capital.
|
|
U.S. and hedged non-U.S. intermediate
maturity Fixed Income Instruments
|
|
B to Aaa; maximum 10% of total assets
below Baa
|
|
|
|
Average Portfolio Duration
|
|
Dividend Frequency
|
|
|
|
+/- 3 years of its benchmark
|
|
Declared daily and distributed monthly
|
The Fund seeks to achieve its investment objective by investing under normal circumstances at least
80% of its assets in Fixed Income Instruments that are economically tied to at least three
countries (one of which may be the United States), which may be represented by forwards or
derivatives such as options, futures contracts or swap agreements. Securities may be denominated in
major foreign currencies or the U.S. dollar. “Fixed Income Instruments” include bonds, debt
securities and other similar instruments issued by various U.S. and non-U.S. public- or
private-sector entities. The Fund will normally limit its foreign currency exposure (from non-U.S.
dollar-denominated securities or currencies) to 20% of its total assets.
Pacific Investment Management Company LLC (“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 Fund may invest, without limitation, in securities and instruments that are economically tied
to emerging market countries. The Fund normally invests at least 25% of its net assets in
instruments that are economically tied to foreign (non-U.S.) countries. The average portfolio
duration of this Fund normally varies within three years (plus or minus) of the portfolio duration
of the securities comprising the JPMorgan GBI Global Index Hedged in USD, as calculated by PIMCO,
which as of June 30, 2013 was 7.02 years. Duration is a measure used to determine the sensitivity
of a security’s price to changes in interest rates. The longer a security’s duration, the more
sensitive it will be to changes in interest rates. The Fund invests primarily in investment grade
securities, but may invest up to 10% of its total assets in high yield securities (“junk bonds”)
rated B or higher by Moody’s Investors Service, Inc. (“Moody’s”), or equivalently rated by Standard
& Poor’s Ratings Services (“S&P”) or Fitch, Inc. (“Fitch”), or, if unrated, determined by PIMCO to
be of comparable quality (except that within such limitation, the Fund may invest in
mortgage-related securities rated below B). The Fund is non-diversified, which means that it may
invest its assets in a smaller number of issuers than a diversified fund.
The Fund may invest, without limitation, in derivative instruments, such as options, futures
contracts or swap agreements, or in mortgage- or asset-backed securities, subject to applicable law
and any other restrictions described in the Fund’s prospectus or Statement of Additional
Information. The Fund may purchase or sell securities on a when-issued, delayed delivery or forward
commitment basis and may engage in short sales. The Fund may, without limitation, 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 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, foreign
currency appreciation, or improving credit fundamentals for a particular sector or security. The
Fund may also invest up to 10% of its total assets in preferred stocks.
Principal Risks
It is possible to lose money on an investment in the Fund. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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 risk that high yield securities and unrated securities of similar credit
quality (commonly known as “junk bonds”) are subject to greater levels of credit and liquidity
risks. High yield securities are considered primarily speculative with respect to the issuer’s
continuing ability to make principal and interest payments
Market Risk:
the risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
E-172
Issuer Risk:
the risk that the value of a security may decline for a reason directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Equity Risk:
the risk that the value of equity securities, such as common stocks and preferred
stocks, may decline due to general market conditions which are not specifically related to a
particular company or to factors affecting a particular industry or industries. Equity securities
generally have greater price volatility than fixed income securities
Mortgage-Related and Other Asset-Backed Securities Risk:
the risk of investing in mortgage-related
and other asset-backed securities, including interest rate risk, extension risk and prepayment risk
Foreign (Non-U.S.) Investment Risk:
the risk that investing in foreign (non-U.S.) securities may
result in the Fund experiencing more rapid and extreme changes in value than a fund that invests
exclusively in securities of U.S. companies, due to smaller markets, differing reporting,
accounting and auditing standards, and nationalization, expropriation or confiscatory taxation,
currency blockage, or political changes or diplomatic developments. Foreign securities may also be
less liquid and more difficult to value than securities of U.S. issuers
Emerging Markets Risk:
the risk of investing in emerging market securities, primarily increased
foreign (non-U.S.) investment risk
Currency Risk:
the risk that foreign currencies will decline in value relative to the U.S. dollar
and affect the Fund’s investments in foreign (non-U.S.) currencies or in securities that trade in,
and receive revenues in, or in derivatives that provide exposure to, foreign (non-U.S.) currencies
Issuer Non-Diversification Risk:
the risk of focusing investments in a small number of issuers,
including being more susceptible to risks associated with a single economic, political or
regulatory occurrence than a more diversified portfolio might be. Funds that are “non-diversified”
may invest a greater percentage of their assets in the securities of a single issuer (such as bonds
issued by a particular state) than funds that are “diversified”
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
E-173
|
|
|
|
|
|
|
|
|
PIMCO Global Bond Fund (Unhedged)
|
|
Ticker symbol:
|
|
|
|
PIGLX (Inst. Class)
|
Principal Investments and Strategies
|
|
|
|
|
|
|
Investment Objective
|
|
Fund Focus
|
|
Credit Quality
|
|
Seeks maximum total return, consistent
with preservation of capital and
prudent investment management.
|
|
U.S. and non-U.S. intermediate
maturity Fixed Income Instruments
Average Portfolio Duration
|
|
B to Aaa; maximum 10% of total assets
below Baa
Dividend Frequency
|
|
|
|
+/- 3 years of its benchmark
|
|
Declared daily and distributed monthly
|
The Fund seeks to achieve its investment objective by investing under normal circumstances at least
80% of its assets in Fixed Income Instruments that are economically tied to at least three
countries (one of which may be the United States), which may be represented by forwards or
derivatives such as options, future contracts or swap agreements. “Fixed Income Instruments”
include bonds, debt securities and other similar instruments issued by various U.S. and non-U.S.
public- or private-sector entities. Securities may be denominated in major foreign currencies or
the U.S. dollar.
Pacific Investment Management Company LLC (“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 Fund may invest, without limitation, in securities and instruments that are economically tied
to emerging market countries. The Fund normally invests at least 25% of its net assets in
instruments that are economically tied to foreign (non-U.S.) countries. The average portfolio
duration of this Fund normally varies within three years (plus or minus) of the portfolio duration
of the securities comprising the JPMorgan GBI Global FX New York Unhedged in USD, as calculated by
PIMCO, which as of June 30, 2013 was 7.02 years. Duration is a measure used to determine the
sensitivity of a security’s price to changes in interest rates. The longer a security’s duration,
the more sensitive it will be to changes in interest rates. The Fund invests primarily in
investment grade debt securities, but may invest up to 10% of its total assets in high yield
securities (“junk bonds”) rated B or higher by Moody’s Investors Service, Inc. (“Moody’s”), or
equivalently rated by Standard & Poor’s Ratings Services (“S&P”) or Fitch, Inc. (“Fitch”), or, if
unrated, determined by PIMCO to be of comparable quality (except that within such limitations, the
Fund may invest in mortgage-backed securities rated below B). The Fund is non-diversified, which
means that it may invest its assets in a smaller number of issuers than a diversified fund.
The Fund may invest, without limitation, in derivative instruments, such as options, futures
contracts or swap agreements, or in mortgage- or asset-backed securities, subject to applicable law
and any other restrictions described in the Fund’s prospectus or Statement of Additional
Information. The Fund may purchase or sell securities on a when-issued, delayed delivery or forward
commitment basis and may engage in short sales. The Fund may, without limitation, 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 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, foreign
currency appreciation, or improving credit fundamentals for a particular sector or security. The
Fund may also invest up to 10% of its total assets in preferred stocks.
Principal Risks
It is possible to lose money on an investment in the Fund. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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 risk that high yield securities and unrated securities of similar credit
quality (commonly known as “junk bonds”) are subject to greater levels of credit and liquidity
risks. High yield securities are considered primarily speculative with respect to the issuer’s
continuing ability to make principal and interest payments
Market Risk:
the risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
Issuer Risk:
the risk that the value of a security may decline for a reason directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
E-174
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Equity Risk:
the risk that the value of equity securities, such as common stocks and preferred
stocks, may decline due to general market conditions which are not specifically related to a
particular company or to factors affecting a particular industry or industries. Equity securities
generally have greater price volatility than fixed income securities
Mortgage-Related and Other Asset-Backed Securities Risk:
the risk of investing in mortgage-related
and other asset-backed securities, including interest rate risk, extension risk and prepayment risk
Foreign (Non-U.S.) Investment Risk:
the risk that investing in foreign (non-U.S.) securities may
result in the Fund experiencing more rapid and extreme changes in value than a fund that invests
exclusively in securities of U.S. companies, due to smaller markets, differing reporting,
accounting and auditing standards, and nationalization, expropriation or confiscatory taxation,
currency blockage, or political changes or diplomatic developments. Foreign securities may also be
less liquid and more difficult to value than securities of U.S. issuers
Emerging Markets Risk:
the risk of investing in emerging market securities, primarily increased
foreign (non-U.S.) investment risk
Currency Risk:
the risk that foreign currencies will decline in value relative to the U.S. dollar
and affect the Fund’s investments in foreign (non-U.S.) currencies or in securities that trade in,
and receive revenues in, or in derivatives that provide exposure to, foreign (non-U.S.) currencies
Issuer Non-Diversification Risk:
the risk of focusing investments in a small number of issuers,
including being more susceptible to risks associated with a single economic, political or
regulatory occurrence than a more diversified portfolio might be. Funds that are “non-diversified”
may invest a greater percentage of their assets in the securities of a single issuer (such as bonds
issued by a particular state) than funds that are “diversified”
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
E-175
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PIMCO GNMA Fund
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Ticker symbol:
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PDMIX (Inst. Class)
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Principal Investments and Strategies
|
|
|
|
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|
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Investment Objective
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Fund Focus
|
|
Credit Quality
|
|
Seeks maximum total return, consistent
with preservation of capital and prudent
investment management.
|
|
Short and intermediate maturity
mortgage-related fixed income
securities issued by the
Government National Mortgage
Association
Average Portfolio Duration
1-7 years
|
|
Baa to Aaa; maximum 10% of total
assets
below Aaa
Dividend Frequency
Declared daily and distributed monthly
|
The Fund seeks to achieve its investment objective by investing under normal circumstances at least
80% of its assets in a diversified portfolio of securities of varying maturities issued by the
Government National Mortgage Association (“GNMA”), which may be represented by forwards or
derivatives such as options, futures contracts or swap agreements. The Fund is neither sponsored by
nor affiliated with GNMA. The average portfolio duration of this Fund normally varies from one to
seven years based on Pacific Investment Management Company LLC’s (“PIMCO”) forecast for interest
rates. Duration is a measure used to determine the sensitivity of a security’s price to changes in
interest rates. The longer a security’s duration, the more sensitive it will be to changes in
interest rates. The Fund may invest without limit in securities issued or guaranteed by the U.S.
Government, its agencies or government-sponsored enterprises. In addition, the Fund may invest up
to 10% of its total assets in investment grade securities rated below Aaa by Moody’s Investors
Service, Inc. (“Moody’s”), or equivalently rated by Standard & Poor’s Ratings Services (“S&P”) or
Fitch, Inc. (“Fitch”), subject to a minimum rating of Baa by Moody’s, or equivalently rated by S&P
or Fitch, or, if unrated, determined by PIMCO to be of comparable quality. The Fund may not invest
in securities denominated in foreign currencies, but may invest without limit in U.S.
dollar-denominated securities of foreign issuers. The Fund may invest up to 10% of its total assets
in U.S. dollar-denominated securities and instruments that are economically tied to emerging market
countries.
The Fund may invest, without limitation, in derivative instruments, such as options, futures
contracts or swap agreements, or in mortgage- or asset-backed securities, subject to applicable law
and any other restrictions described in the Fund’s prospectus or Statement of Additional
Information. The Fund may purchase or sell securities on a when-issued, delayed delivery or forward
commitment basis and may engage in short sales. The Fund may, without limitation, 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 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.
GNMA, a wholly-owned U.S. Government corporation, is authorized to guarantee, with the full faith
and credit of the U.S. Government, the timely payment of principal and interest on securities
issued by institutions approved by GNMA and backed by pools of mortgages insured by the Federal
Housing Administration, or guaranteed by the Department of Veterans Affairs. The Fund may also
invest up to 10% of its total assets in preferred stocks.
Principal Risks
It is possible to lose money on an investment in the Fund. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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 risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
Issuer Risk:
the risk that the value of a security may decline for a reason directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
E-176
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Equity Risk:
the risk that the value of equity securities, such as common stocks and preferred
stocks, may decline due to general market conditions which are not specifically related to a
particular company or to factors affecting a particular industry or industries. Equity securities
generally have greater price volatility than fixed income securities
Mortgage-Related and Other Asset-Backed Securities Risk:
the risk of investing in mortgage-related
and other asset-backed securities, including interest rate risk, extension risk and prepayment risk
Foreign (Non-U.S.) Investment Risk:
the risk that investing in foreign (non-U.S.) securities may
result in the Fund experiencing more rapid and extreme changes in value than a fund that invests
exclusively in securities of U.S. companies, due to smaller markets, differing reporting,
accounting and auditing standards, and nationalization, expropriation or confiscatory taxation,
currency blockage, or political changes or diplomatic developments. Foreign securities may also be
less liquid and more difficult to value than securities of U.S. issuers
Emerging Markets Risk:
the risk of investing in emerging market securities, primarily increased
foreign (non-U.S.) investment risk
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
E-177
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PIMCO Government Money Market Fund
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Ticker Symbols:
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PGMXX (Admin. Class)
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|
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PGFXX (Class M)
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Principal Investments and Strategies
|
|
|
|
|
|
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Investment Objective
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Fund Focus
|
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Credit Quality
|
|
Seeks maximum current income,
consistent
with preservation of capital and daily
liquidity.
|
|
U.S. government securities
Average Portfolio Maturity
<
60 days dollar-weighted
average maturity
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Min 97% of total assets Prime 1;
<
3% of
total assets Prime 2
Dividend Frequency
Declared daily and distributed monthly
|
The Fund seeks to achieve its investment objective by investing under normal circumstances at least
80% of its assets in a portfolio of U.S. government securities. The Fund may invest in the
following: U.S. Treasury bills, notes, and other obligations issued by, or guaranteed as to
principal and interest by, the U.S. government (including its agencies and instrumentalities) and
repurchase agreements secured by such obligations. The Fund may only invest in U.S.
dollar-denominated securities that mature in 397 days or fewer from the date of purchase. The
dollar-weighted average portfolio maturity of the Fund may not exceed 60 days and the
dollar-weighted average life to maturity of the Fund may not exceed 120 days. The Fund attempts to
maintain a stable net asset value of $1.00 per share, although there is no assurance that it will
be successful in doing so.
The Fund’s investments will comply with applicable rules governing the quality, maturity and
diversification of securities held by money market funds.
Principal Risks
Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible
to lose money on an investment in the Fund. The principal risks of investing in the Fund, which
could adversely affect its net asset value, yield and total return are:
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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 risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
E-178
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PIMCO High Yield Fund
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|
Ticker symbol:
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PHIYX (Inst. Class)
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Principal Investments and Strategies
|
|
|
|
|
|
|
Investment Objective
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|
Fund Focus
|
|
Credit Quality
|
|
Seeks maximum total return, consistent
with preservation of capital and
prudent
investment management.
|
|
Higher yielding fixed income securities
Average Portfolio Duration
+/- 1 year of its benchmark
|
|
minimum 80% of assets below Baa;
maximum 20% of total assets Caa or
below
Dividend Frequency
Declared daily and distributed monthly
|
The Fund seeks to achieve its investment objective by investing under normal circumstances at least
80% of its assets in a diversified portfolio of high yield securities (“junk bonds”), which may be
represented by forwards or derivatives such as options, futures contracts or swap agreements, rated
below investment grade by Moody’s Investors Services, Inc. (“Moody’s”), or equivalently rated by
Standard & Poor’s Ratings Services (“S&P”) or Fitch, Inc. (“Fitch”) or, if unrated, determined by
Pacific Investment Management Company LLC (“PIMCO”) to be of comparable quality. The Fund may
invest up to 20% of its total assets in securities rated Caa or below by Moody’s, or equivalently
rated by S&P or Fitch, 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. “Fixed
Income Instruments” include bonds, debt securities and other similar instruments issued by various
U.S. and non-U.S. public- or private-sector entities. The average portfolio duration of this Fund
normally varies within one year (plus or minus) of the portfolio duration of the securities
comprising the BofA Merrill Lynch U.S. High Yield BB-B Rated Constrained Index, as calculated by
PIMCO, which as of June 30, 2013 was 4.11 years. Duration is a measure used to determine the
sensitivity of a security’s price to changes in interest rates. The longer a security’s duration,
the more sensitive it will be to changes in interest rates. The Fund may invest up to 20% of its
total assets in securities denominated in foreign currencies and may invest without limit in U.S.
dollar-denominated securities of foreign issuers. The Fund will normally limit its foreign currency
exposure (from non-U.S. dollar-denominated securities or currencies) to 20% of its total assets.
The Fund may invest up to 15% of its total assets in securities and instruments that are
economically tied to emerging market countries.
The Fund may invest, without limitation, in derivative instruments, such as options, futures
contracts or swap agreements, or in mortgage- or asset-backed securities, subject to applicable law
and any other restrictions described in the Fund’s prospectus or Statement of Additional
Information. The Fund may purchase or sell securities on a when-issued, delayed delivery or forward
commitment basis and may engage in short sales. The Fund may, without limitation, 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 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, foreign
currency appreciation, or improving credit fundamentals for a particular sector or security. The
Fund may also invest up to 10% of its total assets in preferred stocks.
Principal Risks
It is possible to lose money on an investment in the Fund. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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 risk that high yield securities and unrated securities of similar credit
quality (commonly known as “junk bonds”) are subject to greater levels of credit and liquidity
risks. High yield securities are considered primarily speculative with respect to the issuer’s
continuing ability to make principal and interest payments
Market Risk:
the risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
Issuer Risk:
the risk that the value of a security may decline for a reason directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
E-179
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Equity Risk:
the risk that the value of equity securities, such as common stocks and preferred
stocks, may decline due to general market conditions which are not specifically related to a
particular company or to factors affecting a particular industry or industries. Equity securities
generally have greater price volatility than fixed income securities
Mortgage-Related and Other Asset-Backed Securities Risk:
the risk of investing in mortgage-related
and other asset-backed securities, including interest rate risk, extension risk and prepayment risk
Foreign (Non-U.S.) Investment Risk:
the risk that investing in foreign (non-U.S.) securities may
result in the Fund experiencing more rapid and extreme changes in value than a fund that invests
exclusively in securities of U.S. companies, due to smaller markets, differing reporting,
accounting and auditing standards, and nationalization, expropriation or confiscatory taxation,
currency blockage, or political changes or diplomatic developments. Foreign securities may also be
less liquid and more difficult to value than securities of U.S. issuers
Emerging Markets Risk:
the risk of investing in emerging market securities, primarily increased
foreign (non-U.S.) investment risk
Currency Risk:
the risk that foreign currencies will decline in value relative to the U.S. dollar
and affect the Fund’s investments in foreign (non-U.S.) currencies or in securities that trade in,
and receive revenues in, or in derivatives that provide exposure to, foreign (non-U.S.) currencies
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
E-180
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PIMCO High Yield Municipal Bond Fund
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Ticker symbol:
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PHMIX (Inst. Class)
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Principal Investments and Strategies
|
|
|
|
|
|
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Investment Objective
|
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Fund Focus
|
|
Credit Quality
|
|
Seeks high current income exempt from
federal income tax. Total return is a
secondary objective.
|
|
Intermediate to long-term maturity high
yield municipal securities (exempt from
federal income tax)
Average Portfolio Duration
4-11 years
|
|
No Limitation
Dividend Frequency
Declared daily and distributed monthly
|
The Fund seeks to achieve its investment objective by investing under normal circumstances at least
80% of its 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 intends to invest a portion of its assets in high yield Municipal Bonds and “private
activity” bonds that are rated (at the time of purchase) below investment grade by Moody’s
Investors Service, Inc. (“Moody’s”), or equivalently rated by Standard & Poor’s Ratings Services
(“S&P”) or Fitch, Inc. (“Fitch”), or, if unrated, determined by Pacific Investment Management
Company LLC (“PIMCO”) to be of comparable quality (commonly known as “junk bonds”). The Fund may
also invest, without limitation, in higher rated Municipal Bonds. The Fund may invest up to 30% of
its assets in “private activity” bonds whose interest is a tax-preference item for purposes of the
federal alternative minimum tax (“AMT”). For shareholders subject to the 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 may invest more than 25% of
its total assets in bonds of issuers in California and New York. To the extent that the Fund
concentrates its investments in California or New York, it will be subject to California or New
York State-Specific Risk. The Fund may also invest 25% or more of its total assets in Municipal
Bonds that finance education, health care, housing, transportation, utilities and other similar
projects, and 25% or more of its total assets in industrial development bonds.
The average portfolio duration of this Fund normally varies from four to eleven years, based on
PIMCO’s forecast for interest rates. Duration is a measure used to determine the sensitivity of a
security’s price to changes in interest rates. The longer a security’s duration, the more sensitive
it will be to changes in interest rates. The portfolio manager focuses on Municipal Bonds with the
potential to offer high current income, typically looking for Municipal Bonds that can provide
consistently attractive current yields or that are trading at competitive market prices. The “total
return” sought by the Fund consists of both income earned on its investments and capital
appreciation, if any, generally arising from decreases in interest rates or improving credit
fundamentals for a particular state, municipality or issuer. The Fund is non-diversified, which
means that it may invest its assets in a smaller number of issuers than a diversified fund.
The Fund may invest in other types of Fixed Income Instruments. “Fixed Income Instruments” include
bonds, debt securities and other similar instruments issued by various U.S. and non-U.S. public- or
private-sector entities. The Fund may also invest in derivative instruments, such as options,
futures contracts or swap agreements, and invest in mortgage- or asset-backed securities. The Fund
may purchase or sell securities on a when-issued, delayed delivery or forward commitment basis and
may engage in short sales. In addition, the Fund may also invest in securities issued by entities,
such as trusts, whose underlying assets are Municipal Bonds, including, without limitation,
residual interest bonds. The Fund may, without limitation, 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 or dollar rolls). The Fund may also
invest up to 10% of its total assets in preferred stocks.
Principal Risks
It is possible to lose money on an investment in the Fund. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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
E-181
High Yield Risk:
the risk that high yield securities and unrated securities of similar credit
quality (commonly known as “junk bonds”) are subject to greater levels of credit and liquidity
risks. High yield securities are considered primarily speculative with respect to the issuer’s
continuing ability to make principal and interest payments
Market Risk:
the risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
Issuer Risk:
the risk that the value of a security may decline for a reason directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Equity Risk:
the risk that the value of equity securities, such as common stocks and preferred
stocks, may decline due to general market conditions which are not specifically related to a
particular company or to factors affecting a particular industry or industries. Equity securities
generally have greater price volatility than fixed income securities
Mortgage-Related and Other Asset-Backed Securities Risk:
the risk of investing in mortgage-related
and other asset-backed securities, including interest rate risk, extension risk and prepayment risk
Issuer Non-Diversification Risk:
the risk of focusing investments in a small number of issuers,
including being more susceptible to risks associated with a single economic, political or
regulatory occurrence than a more diversified portfolio might be. Funds that are “non-diversified”
may invest a greater percentage of their assets in the securities of a single issuer (such as bonds
issued by a particular state) than funds that are “diversified”
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
California State-Specific Risk:
the risk that by concentrating its investments in California
Municipal Bonds, the Fund may be affected significantly by economic, regulatory or political
developments affecting the ability of California issuers to pay interest or repay principal
New York State-Specific Risk:
the risk that by concentrating its investments in New York Municipal
Bonds, the Fund may be affected significantly by economic, regulatory or political developments
affecting the ability of New York issuers to pay interest or repay principal
Municipal Project-Specific Risk:
the risk that the Fund may be more sensitive to adverse economic,
business or political developments if it invests a substantial portion of its assets in the bonds
of similar projects (such as those relating to education, health care, housing, transportation, and
utilities), industrial development bonds, or in bonds from issuers in a single state
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
E-182
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PIMCO High Yield Spectrum Fund
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Ticker symbol:
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PHSIX (Inst. Class)
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Principal Investments and Strategies
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Investment Objective
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Fund Focus
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Credit Quality
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Seeks maximum total return, consistent
with prudent investment management.
|
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High yielding fixed income securities
Average Portfolio Duration
+ / - 1 year of its benchmark
|
|
Minimum of 80% of assets below Baa
Dividend Frequency
Declared daily and distributed monthly
|
The Fund seeks to achieve its investment objective by investing under normal circumstances at least
80% of its assets in a diversified portfolio of high yield securities (“junk bonds”), which may be
represented by convertibles, warrants, forwards or derivatives such as swap agreements, rated below
investment grade by Moody’s Investors Service, Inc. (“Moody’s”), or equivalently rated by Standard
& Poor’s Ratings Services (“S&P”) or Fitch, Inc. (“Fitch”), or, if unrated, determined by Pacific
Investment Management Company LLC (“PIMCO”) to be of comparable quality. The Fund may invest,
without limitation, in Fixed Income Instruments and other securities of any rating below investment
grade as rated by Moody’s, or equivalently rated by S&P or Fitch, or, if unrated, determined by
PIMCO to be of comparable quality. “Fixed Income Instruments” include bonds, debt securities and
other similar instruments issued by various U.S. and non-U.S. public- or private-sector entities.
The average portfolio duration of the Fund normally varies within one year (plus or minus) of the
portfolio duration of the securities comprising the BofA/Merrill Lynch Global High Yield,
Constrained (USD Hedged) Index (the “Benchmark”), as calculated by PIMCO, which as of June 30, 2013
was 3.75 years. Duration is a measure used to determine the sensitivity of a security’s price to
changes in interest rates. The longer a security’s duration, the more sensitive it will be to
changes in interest rates. The Fund may invest without limit in securities of foreign issuers or
securities denominated in foreign currencies. The Fund may invest without limit in securities and
instruments of corporate issuers economically tied to emerging market countries and may invest up
to 10% of its total assets in sovereign debt issued by governments, their agencies or
instrumentalities, or other government-related entities, that are economically tied to emerging
market countries. The Fund will normally limit its foreign currency exposure (from non-U.S.
dollar-denominated securities or currencies) to within 10% (plus or minus) of the Benchmark’s
foreign currency exposure, which as of June 30, 2013 was 0%.
The Fund may invest, without limitation, in derivative instruments, such as credit default swap
agreements and total return swap agreements. The Fund may purchase or sell securities on a when
issued, delayed delivery or forward commitment basis and may engage in short sales. The Fund may,
without limitation, 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 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, foreign currency appreciation, or improving credit fundamentals for a
particular sector or security. The Fund may also invest up to 15% of its total assets in preferred
stocks.
Principal Risks
It is possible to lose money on an investment in the Fund. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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 risk that high yield securities and unrated securities of similar credit
quality (commonly known as “junk bonds”) are subject to greater levels of credit and liquidity
risks. High yield securities are considered primarily speculative with respect to the issuer’s
continuing ability to make principal and interest payments
Market Risk:
the risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
Issuer Risk:
the risk that the value of a security may decline for a reason directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
E-183
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Equity Risk:
the risk that the value of equity securities, such as common stocks and preferred
stocks, may decline due to general market conditions which are not specifically related to a
particular company or to factors affecting a particular industry or industries. Equity securities
generally have greater price volatility than fixed income securities
Foreign (Non-U.S.) Investment Risk:
the risk that investing in foreign (non-U.S.) securities may
result in the Fund experiencing more rapid and extreme changes in value than a fund that invests
exclusively in securities of U.S. companies, due to smaller markets, differing reporting,
accounting and auditing standards, and nationalization, expropriation or confiscatory taxation,
currency blockage, or political changes or diplomatic developments. Foreign securities may also be
less liquid and more difficult to value than securities of U.S. issuers
Emerging Markets Risk:
the risk of investing in emerging market securities, primarily increased
foreign (non-U.S.) investment risk
Currency Risk:
the risk that foreign currencies will decline in value relative to the U.S. dollar
and affect the Fund’s investments in foreign (non-U.S.) currencies or in securities that trade in,
and receive revenues in, or in derivatives that provide exposure to, foreign (non-U.S.) currencies
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
E-184
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PIMCO Income Fund
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Ticker symbol:
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PIMIX (Inst. Class)
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Principal Investments and Strategies
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Investment Objectives
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Fund Focus
|
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Credit Quality
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|
Seeks to maximize current
income. Long-term capital
appreciation is a
secondary objective.
|
|
Broad range of Fixed
Income Instruments
Average Portfolio Duration
0-8 years
|
|
Caa to Aaa; maximum 50% of total
assets below Baa
Dividend Frequency
Declared daily and distributed monthly
|
The Fund seeks to achieve its investment objectives by investing under normal circumstances at
least 65% of its total assets in a multi-sector portfolio of Fixed Income Instruments of varying
maturities, which may be represented by forwards or derivatives such as options, futures contracts
or swap agreements. “Fixed Income Instruments” include bonds, debt securities and other similar
instruments issued by various U.S. and non-U.S. public- or private-sector entities. The Fund will
seek to maintain a high and consistent level of dividend income by investing in a broad array of
fixed income sectors and utilizing income efficient implementation strategies. The capital
appreciation sought by the Fund generally arises from decreases in interest rates or improving
credit fundamentals for a particular sector or security.
The Fund will generally allocate its assets among several investment sectors, without limitation,
which may include: (i) high yield securities (“junk bonds”) and investment grade corporate bonds of
issuers located in the United States and non-U.S. countries, including emerging market countries;
(ii) fixed income securities issued by U.S. and non-U.S. governments (including emerging market
governments), their agencies and instrumentalities; (iii) mortgage-related and other asset backed
securities; and (iv) foreign currencies, including those of emerging market countries. However, the
Fund is not required to gain exposure to any one investment sector, and the Fund’s exposure to any
one investment sector will vary over time. The average portfolio duration of this Fund normally
varies from zero to eight years based on Pacific Investment Management Company LLC’s (“PIMCO”)
forecast for interest rates. Duration is a measure used to determine the sensitivity of a
security’s price to changes in interest rates. The longer a security’s duration, the more sensitive
it will be to changes in interest rates.
The Fund may invest up to 50% of its total assets in high yield securities rated below investment
grade but rated at least Caa by Moody’s Investors Service, Inc. (“Moody’s”), or equivalently rated
by Standard & Poor’s Ratings Services (“S&P”) or Fitch, Inc. (“Fitch”), or if unrated, determined
by PIMCO to be of comparable quality (except such limitation shall not apply to the Fund’s
investments in mortgage- and asset-backed securities). In addition, the Fund may invest, without
limitation, in securities denominated in foreign currencies. The Fund may invest up to 20% of its
total assets in securities and instruments that are economically tied to emerging market countries.
The Fund will normally limit its foreign currency exposure (from non-U.S. dollar-denominated
securities or currencies) to 10% of its total assets. The Fund is non-diversified, which means that
it may invest its assets in a smaller number of issuers than a diversified fund.
The Fund may invest, without limitation, in derivative instruments, such as options, futures
contracts or swap agreements, or in mortgage- or asset-backed securities, subject to applicable law
and any other restrictions described in the Fund’s prospectus or Statement of Additional
Information. The Fund may purchase or sell securities on a when-issued, delayed delivery or forward
commitment basis and may engage in short sales. The Fund may, without limitation, 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 or dollar
rolls). The Fund may also invest up to 10% of its total assets in preferred stocks.
Principal Risks
It is possible to lose money on an investment in the Fund. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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 risk that high yield securities and unrated securities of similar credit
quality (commonly known as “junk bonds”) are subject to greater levels of credit and liquidity
risks. High yield securities are considered primarily speculative with respect to the issuer’s
continuing ability to make principal and interest payments
E-185
Market Risk:
the risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
Issuer Risk:
the risk that the value of a security may decline for a reason directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Equity Risk:
the risk that the value of equity securities, such as common stocks and preferred
stocks, may decline due to general market conditions which are not specifically related to a
particular company or to factors affecting a particular industry or industries. Equity securities
generally have greater price volatility than fixed income securities
Mortgage-Related and Other Asset-Backed Securities Risk:
the risk of investing in mortgage-related
and other asset-backed securities, including interest rate risk, extension risk and prepayment risk
Foreign (Non-U.S.) Investment Risk:
the risk that investing in foreign (non-U.S.) securities may
result in the Fund experiencing more rapid and extreme changes in value than a fund that invests
exclusively in securities of U.S. companies, due to smaller markets, differing reporting,
accounting and auditing standards, and nationalization, expropriation or confiscatory taxation,
currency blockage, or political changes or diplomatic developments. Foreign securities may also be
less liquid and more difficult to value than securities of U.S. issuers
Emerging Markets Risk:
the risk of investing in emerging market securities, primarily increased
foreign (non-U.S.) investment risk
Currency Risk:
the risk that foreign currencies will decline in value relative to the U.S. dollar
and affect the Fund’s investments in foreign (non-U.S.) currencies or in securities that trade in,
and receive revenues in, or in derivatives that provide exposure to, foreign (non-U.S.) currencies
Issuer Non-Diversification Risk:
the risk of focusing investments in a small number of issuers,
including being more susceptible to risks associated with a single economic, political or
regulatory occurrence than a more diversified portfolio might be. Funds that are “non-diversified”
may invest a greater percentage of their assets in the securities of a single issuer (such as bonds
issued by a particular state) than funds that are “diversified”
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
E-186
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PIMCO International Fundamental IndexPLUS
®
AR Strategy Fund
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Ticker symbol:
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PTSIX (Inst. Class)
|
Principal Investments and Strategies
|
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Investment Objective
|
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Fund Focus
|
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Credit Quality
|
|
Seeks total return
which exceeds that
of its
Benchmark.
|
|
Enhanced RAFI
®
Developed ex-U.S.
Fundamental Index derivatives backed by a
portfolio of fixed income instruments
Average Portfolio Duration
(-3) to 8 years
|
|
Maximum of 20% of total assets below Baa
Dividend Frequency
Quarterly
|
The Fund seeks total return which exceeds that of the MSCI EAFE Net Dividend Index (USD Unhedged)
(the “Benchmark Index”), by investing under normal circumstances in derivatives based on the
Enhanced RAFI
®
International Large, backed by a diversified portfolio of Fixed Income Instruments,
which may be represented by forwards or derivatives such as options, futures contracts or swap
agreements. The Enhanced RAFI
®
International Large is constructed using the Fundamental Index
®
methodology, which is a patented, innovative indexing approach developed by Research Affiliates,
LLC. The methodology weights companies by fundamental factors — including sales, cash flows,
dividends and book value, with additional screens for quality of earnings, financial distress and
other parameters — in an effort to enhance returns. In managing the Fund’s investments in Fixed
Income Instruments, PIMCO utilizes an absolute return approach, which is designed to have
flexibility with respect to duration, overall sector exposures, non-U.S. exposures and credit
quality, both as a function of the strategy’s investment guidelines and lack of a fixed income
index benchmark. The absolute return approach does not apply to the equity index replicating
component of the Fund. “Fixed Income Instruments” include bonds, debt securities and other similar
instruments issued by various U.S. and non-U.S. public or private-sector entities. The Fund uses
the Enhanced RAFI
®
International Large derivatives to attempt to equal or exceed the daily
performance of the Benchmark Index. The values of the Enhanced RAFI
®
International Large
derivatives should closely track changes in the value of Enhanced RAFI
®
International Large.
However, Enhanced RAFI
®
International Large 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. As of June 30, 2013, the Enhanced RAFI
®
International Large is comprised of stocks with a market capitalization ranging from $67.6 million
to $211.15 billion.
Research Affiliates, LLC, the Fund’s sub-adviser, provides investment advisory services in
connection with the Fund’s use of the Enhanced RAFI
®
International Large by, among other things,
providing Pacific Investment Management Company LLC (“PIMCO”), or counterparties designated by
PIMCO, with a model portfolio reflecting the composition of the Enhanced RAFI
®
International Large
for purposes of developing Enhanced RAFI
®
International Large derivatives. PIMCO actively manages
the Fixed Income Instruments held by the Fund with a view toward enhancing the Fund’s total return,
subject to an overall portfolio duration which normally varies from (negative) 3 years to positive
8 years based on PIMCO’s forecast for interest rates. Duration is a measure used to determine the
sensitivity of a security’s price to changes in interest rates. The longer a security’s duration,
the more sensitive it will be to changes in interest rates.
The Fund typically will seek to gain exposure to the Enhanced RAFI
®
International Large by
investing in total return swap agreements. In a typical swap agreement, the Fund will receive the
price appreciation (or depreciation) on the Enhanced RAFI
®
International Large from the
counterparty to the swap agreement in exchange for paying the counterparty an agreed upon fee. The
Fund’s sub-adviser facilitates the Fund’s use of the Enhanced RAFI
®
International Large derivatives
by providing model portfolios of the Enhanced RAFI
®
International Large securities to the Fund’s
swap counterparties, so that the counterparties can provide total return swaps based on the
Enhanced RAFI
®
International Large to the Fund. Because the Enhanced RAFI
®
International Large is a
proprietary index, there may be a limited number of counterparties willing or able to serve as
counterparties to a swap agreement. If such swap agreements are not available, the Fund may invest
in other derivative instruments, “baskets” of stocks, or individual securities to replicate the
performance of the Enhanced RAFI
®
International Large.
The Fund seeks to remain invested in the Enhanced RAFI
®
International Large derivatives even when
the Enhanced RAFI
®
International Large is declining. Though the Fund does not normally invest
directly in the Enhanced RAFI
®
International Large securities, when the Enhanced RAFI
®
International Large derivatives appear to be overvalued relative to the Enhanced RAFI
®
International Large, the Fund may invest all of its assets in a “basket” of Enhanced RAFI
®
International Large stocks.
The Fund may invest, without limitation, in derivative instruments, such as options, futures
contracts or swap agreements, or in mortgage- or asset-backed securities, subject to applicable law
and any other restrictions described in the Fund’s prospectus or Statement of Additional
Information. The Fund may purchase or sell securities on a when-issued, delayed delivery or forward
commitment basis and may engage in short sales. Assets not invested in equity securities or
derivatives may be invested in Fixed Income Instruments. The Fund may invest up to 20% of its total
assets in high yield securities (“junk bonds”) rated B or higher by Moody’s Investors Service, Inc.
(“Moody’s”), or equivalently rated by Standard & Poor’s Ratings Services (“S&P”) or Fitch, Inc.
E-187
(“Fitch”), or, if unrated, determined by PIMCO to be of comparable quality (except that within such
limitation, the Fund may invest in mortgage-related securities rated below B). The Fund may invest,
without limitation, in securities denominated in foreign (non-U.S.) currencies and in U.S.
dollar-denominated securities of foreign (non-U.S.) issuers. With respect to the Fund’s fixed
income investments, the Fund may invest up to 25% of its total assets in securities and instruments
that are economically tied to emerging market countries. With respect to the Fund’s fixed income
investments, the Fund will normally limit its foreign currency exposure (from non-U.S.
dollar-denominated securities or currencies) to 20% of its total assets. The Fund may also invest
up to 10% of its total assets in preferred stocks.
Principal Risks
It is possible to lose money on an investment in the Fund. Under certain conditions, generally in a
market where the value of both Enhanced RAFI
®
International Large derivatives and fixed income
securities are declining or in periods of heightened market volatility, the Fund may experience
greater losses or lesser gains than would be the case if it invested directly in a portfolio of
Enhanced RAFI
®
International Large stocks. The principal risks of investing in the Fund, which
could adversely affect its net asset value, yield and total return are:
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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 risk that high yield securities and unrated securities of similar credit
quality (commonly known as “junk bonds”) are subject to greater levels of credit and liquidity
risks. High yield securities are considered primarily speculative with respect to the issuer’s
continuing ability to make principal and interest payments
Market Risk:
the risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
Issuer Risk:
the risk that the value of a security may decline for a reason directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Equity Risk:
the risk that the value of equity securities, such as common stocks and preferred
stocks, may decline due to general market conditions which are not specifically related to a
particular company or to factors affecting a particular industry or industries. Equity securities
generally have greater price volatility than fixed income securities
Mortgage-Related and Other Asset-Backed Securities Risk:
the risk of investing in mortgage-related
and other asset-backed securities, including interest rate risk, extension risk and prepayment risk
Foreign (Non-U.S.) Investment Risk:
the risk that investing in foreign (non-U.S.) securities may
result in the Fund experiencing more rapid and extreme changes in value than a fund that invests
exclusively in securities of U.S. companies, due to smaller markets, differing reporting,
accounting and auditing standards, and nationalization, expropriation or confiscatory taxation,
currency blockage, or political changes or diplomatic developments. Foreign securities may also be
less liquid and more difficult to value than securities of U.S. issuers
Emerging Markets Risk:
the risk of investing in emerging market securities, primarily increased
foreign (non-U.S.) investment risk
Currency Risk:
the risk that foreign currencies will decline in value relative to the U.S. dollar
and affect the Fund’s investments in foreign (non-U.S.) currencies or in securities that trade in,
and receive revenues in, or in derivatives that provide exposure to, foreign (non-U.S.) currencies
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
E-188
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
E-189
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PIMCO International StocksPLUS
®
AR Strategy Fund (U.S. Dollar-Hedged)
|
|
Ticker Symbol:
|
|
|
|
PISIX (Inst. Class)
|
Principal Investments and Strategies
|
|
|
|
|
|
|
Investment Objective
|
|
Fund Focus
|
|
Credit Quality
|
|
Seeks total return which exceeds that of its
benchmark index consistent with prudent
investment management.
|
|
Non-U.S. equity derivatives (hedged to U.S.
Dollars) backed by a portfolio of Fixed
Income Instruments
Average Collateral Fixed Income Duration
(-3) to 8 years
|
|
B to Aaa; maximum 20% of total assets
below Baa
Dividend Frequency
Declared and distributed quarterly
|
The Fund seeks to exceed the total return of its benchmark index by investing under normal
circumstances in non-U.S. equity derivatives, backed by a portfolio of Fixed Income Instruments. In
managing the Fund’s investments in Fixed Income Instruments, PIMCO utilizes an absolute return
approach, which is designed to have flexibility with respect to duration, overall sector exposures,
non-U.S. exposures and credit quality, both as a function of the strategy’s investment guidelines
and lack of a fixed income index benchmark. The absolute return approach does not apply to the
equity index replicating component of the Fund. “Fixed Income Instruments” include bonds, debt
securities and other similar instruments issued by various U.S. and non-U.S. public- or
private-sector entities. The Fund will normally limit its foreign currency exposure (from non-U.S.
dollar-denominated securities or currencies) to 20% of its total assets. The Fund may invest in
common stocks, options, futures, options on futures and swaps. The Fund’s benchmark index is the
Morgan Stanley Capital International Europe, Australasia and Far East (“EAFE”) Net Dividend Index,
hedged to U.S. dollars (the “Index”). The Fund normally uses equity derivatives instead of stocks
to attempt to equal or exceed the daily performance of the Index. The Fund typically will seek to
gain long exposure to its benchmark index in an amount, under normal circumstances, approximately
equal to the Fund’s net assets. The value of equity derivatives should closely track changes in the
value of underlying securities or indices. However, derivatives may be purchased with a small
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. Pacific Investment Management
Company LLC (“PIMCO”) actively manages the Fixed Income Instruments held by the Fund with a view
toward enhancing the Fund’s total return, subject to an overall portfolio duration which normally
varies from (negative) 3 years to positive 8 years based on PIMCO’s forecast for interest rates.
Duration is a measure used to determine the sensitivity of a security’s price to changes in
interest rates. The longer a security’s duration, the more sensitive it will be to changes in
interest rates.
The Index is an unmanaged index of issuers in countries of Europe, Australia and the Far East
represented in U.S. dollars on a hedged basis. The Fund seeks to remain invested in equity
derivatives and/or stocks even when the Index is declining. The Fund may invest in non-U.S.
equities or non-U.S. equity derivatives that do not comprise the Index.
The Fund does not normally invest directly in stocks. However, when equity derivatives appear to be
overvalued, the Fund may invest some or all of its assets in stocks. The Fund also may invest in
exchange-traded funds. The Fund is non-diversified, which means that it may invest its assets in a
smaller number of issuers than a diversified fund.
The Fund may invest, without limitation, in derivative instruments, such as options, futures
contracts or swap agreements, or in mortgage- or asset-backed securities, subject to applicable law
and any other restrictions described in the Fund’s prospectus or Statement of Additional
Information. The Fund may purchase or sell securities on a when-issued, delayed delivery or forward
commitment basis and may engage in short sales. Assets not invested in equity securities or
derivatives may be invested in Fixed Income Instruments. The Fund may invest up to 20% of its total
assets in high yield securities (“junk bonds”) rated B or higher by Moody’s Investors Service, Inc.
(“Moody’s”), or equivalently rated by Standard & Poor’s Ratings Services (“S&P”) or Fitch, Inc.
(“Fitch”), or, if unrated, determined by PIMCO to be of comparable quality (except that within such
limitation, the Fund may invest in mortgage-related securities rated below B). With respect to the
Fund’s fixed income investments, the Fund may invest, without limitation, in securities denominated
in foreign currencies and in U.S. dollar-denominated securities of foreign issuers. With respect to
the Fund’s fixed income investments, the Fund may invest up to 25% of its total assets in
securities and instruments that are economically tied to emerging market countries. With respect to
the Fund’s fixed income investments, the Fund will normally limit its foreign currency exposure
(from non-U.S. dollar-denominated securities or currencies) to 20% of its total assets. The Fund
may also invest up to 10% of its total assets in preferred stocks.
Principal Risks
It is possible to lose money on an investment in the Fund. Under certain conditions, generally in a
market where the value of both Index derivatives and fixed income securities are declining or in
periods of heightened market volatility, the Fund may experience greater losses or lesser gains
than would be the case if it invested directly in a portfolio of stocks comprising the Index. The
principal risks of investing in the Fund, which could adversely affect its net asset value, yield
and total return are:
E-190
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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 risk that high yield securities and unrated securities of similar credit
quality (commonly known as “junk bonds”) are subject to greater levels of credit and liquidity
risks. High yield securities are considered primarily speculative with respect to the issuer’s
continuing ability to make principal and interest payments
Market Risk:
the risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
Issuer Risk:
the risk that the value of a security may decline for a reason directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Equity Risk:
the risk that the value of equity securities, such as common stocks and preferred
stocks, may decline due to general market conditions which are not specifically related to a
particular company or to factors affecting a particular industry or industries. Equity securities
generally have greater price volatility than fixed income securities
Mortgage-Related and Other Asset-Backed Securities Risk:
the risk of investing in mortgage-related
and other asset-backed securities, including interest rate risk, extension risk and prepayment risk
Foreign (Non-U.S.) Investment Risk:
the risk that investing in foreign (non-U.S.) securities may
result in the Fund experiencing more rapid and extreme changes in value than a fund that invests
exclusively in securities of U.S. companies, due to smaller markets, differing reporting,
accounting and auditing standards, and nationalization, expropriation or confiscatory taxation,
currency blockage, or political changes or diplomatic developments. Foreign securities may also be
less liquid and more difficult to value than securities of U.S. issuers
Emerging Markets Risk:
the risk of investing in emerging market securities, primarily increased
foreign (non-U.S.) investment risk
Currency Risk:
the risk that foreign currencies will decline in value relative to the U.S. dollar
and affect the Fund’s investments in foreign (non-U.S.) currencies or in securities that trade in,
and receive revenues in, or in derivatives that provide exposure to, foreign (non-U.S.) currencies
Issuer Non-Diversification Risk:
the risk of focusing investments in a small number of issuers,
including being more susceptible to risks associated with a single economic, political or
regulatory occurrence than a more diversified portfolio might be. Funds that are “non-diversified”
may invest a greater percentage of their assets in the securities of a single issuer (such as bonds
issued by a particular state) than funds that are “diversified”
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
E-191
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PIMCO International StocksPLUS
®
AR Strategy Fund (Unhedged)
|
|
Ticker symbol:
|
|
|
|
PSKIX (Inst. Class)
|
Principal Investments and Strategies
|
|
|
|
|
|
|
Investment Objective
|
|
Fund Focus
|
|
Credit Quality
|
|
Seeks total return which exceeds that
of its
benchmark index consistent with prudent
investment management.
|
|
Non-U.S. equity derivatives backed
by a
portfolio of Fixed Income Instruments
Average Collateral Fixed Income
Duration
(-3) to 8 years
|
|
B to Aaa; maximum 20% of total assets
below Baa
Dividend Frequency
Declared and distributed quarterly
|
The Fund seeks to exceed the total return of its benchmark index by investing under normal
circumstances in non-U.S. equity derivatives, backed by a portfolio of Fixed Income Instruments. In
managing the Fund’s investments in Fixed Income Instruments, PIMCO utilizes an absolute return
approach, which is designed to have flexibility with respect to duration, overall sector exposures,
non-U.S. exposures and credit quality, both as a function of the strategy’s investment guidelines
and lack of a fixed income index benchmark. The absolute return approach does not apply to the
equity index replicating component of the Fund. “Fixed Income Instruments” include bonds, debt
securities and other similar instruments issued by various U.S. and non-U.S. public- or
private-sector entities. The Fund may invest in common stocks, options, futures, options on futures
and swaps. The Fund’s benchmark index is the Morgan Stanley Capital International Europe
Australasia Far East (“EAFE”) Net Dividend Index (the “Index”). The Fund normally uses equity
derivatives instead of stocks to attempt to equal or exceed the daily performance of the Index. The
Fund typically will seek to gain long exposure to its benchmark index in an amount, under normal
circumstances, approximately equal to the Fund’s net assets. The value of equity derivatives should
closely track changes in the value of underlying securities or indices. However, derivatives may be
purchased with a small 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. Pacific Investment Management Company LLC (“PIMCO”) actively manages the Fixed Income
Instruments held by the Fund with a view toward enhancing the Fund’s total return, subject to an
overall portfolio duration which normally varies from (negative) 3 years to positive 8 years based
on PIMCO’s forecast for interest rates. Duration is a measure used to determine the sensitivity of
a security’s price to changes in interest rates. The longer a security’s duration, the more
sensitive it will be to changes in interest rates.
The Index is an unmanaged index of issuers in countries of Europe, Australia and the Far East
represented in U.S. dollars on an unhedged basis. The Fund seeks to remain invested in equity
derivatives and/or stocks even when the Index is declining. The Fund may invest in non-U.S.
equities or non-U.S. equity derivatives that do not comprise the Index.
The Fund does not normally invest directly in stocks. However, when equity derivatives appear to be
overvalued, the Fund may invest some or all of its assets in stocks. The Fund also may invest in
exchange-traded funds. The Fund’s equity exposure will not be hedged into U.S. dollars. The Fund is
non-diversified, which means that it may invest its assets in a smaller number of issuers than a
diversified fund.
The Fund may invest, without limitation, in derivative instruments, such as options, futures
contracts or swap agreements, or in mortgage- or asset-backed securities, subject to applicable law
and any other restrictions described in the Fund’s prospectus or Statement of Additional
Information. The Fund may purchase or sell securities on a when-issued, delayed delivery or forward
commitment basis and may engage in short sales. Assets not invested in equity securities or
derivatives may be invested in Fixed Income Instruments. The Fund may invest up to 20% of its total
assets in high yield securities (“junk bonds”) rated B or higher by Moody’s Investors Service, Inc.
(“Moody’s”), or equivalently rated by Standard & Poor’s Ratings Services (“S&P”) or Fitch, Inc.
(“Fitch”), or, if unrated, determined by PIMCO to be of comparable quality (except that within such
limitation, the Fund may invest in mortgage-related securities rated below B). With respect to the
Fund’s fixed income investments, the Fund may invest, without limitation, in securities denominated
in foreign currencies and in U.S. dollar-denominated securities of foreign issuers. With respect to
the Fund’s fixed income investments, the Fund may invest up to 25% of its total assets in
securities and instruments that are economically tied to emerging market countries. With respect to
the Fund’s fixed income investments, the Fund will normally limit its foreign currency exposure
(from non-U.S. dollar-denominated securities or currencies) to 20% of its total assets. The Fund
may also invest up to 10% of its total assets in preferred stocks.
Principal Risks
It is possible to lose money on an investment in the Fund. Under certain conditions, generally in a
market where the value of both Index derivatives and fixed income securities are declining or in
periods of heightened market volatility, the Fund may experience greater losses or lesser gains
than would be the case if it invested directly in a portfolio of stocks comprising the Index. The
principal risks of investing in the Fund, which could adversely affect its net asset value, yield
and total return are:
E-192
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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 risk that high yield securities and unrated securities of similar credit
quality (commonly known as “junk bonds”) are subject to greater levels of credit and liquidity
risks. High yield securities are considered primarily speculative with respect to the issuer’s
continuing ability to make principal and interest payments
Market Risk:
the risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
Issuer Risk:
the risk that the value of a security may decline for a reason directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Equity Risk:
the risk that the value of equity securities, such as common stocks and preferred
stocks, may decline due to general market conditions which are not specifically related to a
particular company or to factors affecting a particular industry or industries. Equity securities
generally have greater price volatility than fixed income securities
Mortgage-Related and Other Asset-Backed Securities Risk:
the risk of investing in mortgage-related
and other asset-backed securities, including interest rate risk, extension risk and prepayment risk
Foreign (Non-U.S.) Investment Risk:
the risk that investing in foreign (non-U.S.) securities may
result in the Fund experiencing more rapid and extreme changes in value than a fund that invests
exclusively in securities of U.S. companies, due to smaller markets, differing reporting,
accounting and auditing standards, and nationalization, expropriation or confiscatory taxation,
currency blockage, or political changes or diplomatic developments. Foreign securities may also be
less liquid and more difficult to value than securities of U.S. issuers
Emerging Markets Risk:
the risk of investing in emerging market securities, primarily increased
foreign (non-U.S.) investment risk
Currency Risk:
the risk that foreign currencies will decline in value relative to the U.S. dollar
and affect the Fund’s investments in foreign (non-U.S.) currencies or in securities that trade in,
and receive revenues in, or in derivatives that provide exposure to, foreign (non-U.S.) currencies
Issuer Non-Diversification Risk:
the risk of focusing investments in a small number of issuers,
including being more susceptible to risks associated with a single economic, political or
regulatory occurrence than a more diversified portfolio might be. Funds that are “non-diversified”
may invest a greater percentage of their assets in the securities of a single issuer (such as bonds
issued by a particular state) than funds that are “diversified”
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
E-193
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PIMCO Investment Grade Corporate Bond Fund
|
|
Ticker symbol:
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|
PIGIX (Inst. Class)
|
Principal Investments and Strategies
|
|
|
|
|
|
|
Investment Objective
|
|
Fund Focus
|
|
Credit Quality
|
|
Seeks maximum total return, consistent
with preservation of capital and prudent
investment management.
|
|
Corporate fixed income securities
Average Portfolio Duration
+/- 2 years of its benchmark
|
|
B to Aaa; maximum 15% of total assets
below Baa
Dividend Frequency
Declared daily and distributed monthly
|
The Fund seeks to achieve its investment objective by investing under normal circumstances at least
80% of its assets in a diversified portfolio of investment grade corporate fixed income securities
of varying maturities, which may be represented by forwards or derivatives such as options, futures
contracts or swap agreements. Assets not invested in investment grade corporate fixed income
securities may be invested in other types of Fixed Income Instruments. “Fixed Income Instruments”
include bonds, debt securities and other similar instruments issued by various U.S. and non-U.S.
public- or private-sector entities. The average portfolio duration of this Fund normally varies
within two years (plus or minus) of the portfolio duration of the securities comprising the
Barclays U.S. Credit Index, as calculated by PIMCO, which as of June 30, 2013 was 6.45 years.
Duration is a measure used to determine the sensitivity of a security’s price to changes in
interest rates. The longer a security’s duration, the more sensitive it will be to changes in
interest rates.
The Fund invests primarily in investment grade debt securities, but may invest up to 15% of its
total assets in high yield securities (“junk bonds”) rated B or higher by Moody’s Investors
Service, Inc. (“Moody’s”), or equivalently rated by Standard & Poor’s Ratings Services (“S&P”) or
Fitch, Inc. (“Fitch”), or, if unrated, determined by Pacific Investment Management Company LLC
(“PIMCO”) to be of comparable quality (except that within such limitation, the Fund may invest in
mortgage-related securities rated below B). Investment grade debt securities are rated Baa or
higher by Moody’s, or equivalently rated by S&P or Fitch, or, if unrated, determined by PIMCO to be
of comparable quality. The Fund may invest up to 30% of its total assets in securities denominated
in foreign currencies, and may invest beyond this limit in U.S. dollar-denominated securities of
foreign issuers. The Fund may invest up to 25% of its total assets in securities and instruments
that are economically tied to emerging market countries. The Fund will normally limit its foreign
currency exposure (from non-U.S. dollar-denominated securities or currencies) to 20% of its total
assets.
The Fund may invest, without limitation, in derivative instruments, such as options, futures
contracts or swap agreements, or in mortgage- or asset-backed securities, subject to applicable law
and any other restrictions described in the Fund’s prospectus or Statement of Additional
Information. The Fund may purchase or sell securities on a when-issued, delayed delivery or forward
commitment basis and may engage in short sales. The Fund may, without limitation, 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 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, foreign
currency appreciation, or improving credit fundamentals for a particular sector or security. The
Fund may also invest up to 10% of its total assets in preferred stocks.
Principal Risks
It is possible to lose money on an investment in the Fund. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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 risk that high yield securities and unrated securities of similar credit
quality (commonly known as “junk bonds”) are subject to greater levels of credit and liquidity
risks. High yield securities are considered primarily speculative with respect to the issuer’s
continuing ability to make principal and interest payments
Market Risk:
the risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
Issuer Risk:
the risk that the value of a security may decline for a reason directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
E-194
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Equity Risk:
the risk that the value of equity securities, such as common stocks and preferred
stocks, may decline due to general market conditions which are not specifically related to a
particular company or to factors affecting a particular industry or industries. Equity securities
generally have greater price volatility than fixed income securities
Mortgage-Related and Other Asset-Backed Securities Risk:
the risk of investing in mortgage-related
and other asset-backed securities, including interest rate risk, extension risk and prepayment risk
Foreign (Non-U.S.) Investment Risk:
the risk that investing in foreign (non-U.S.) securities may
result in the Fund experiencing more rapid and extreme changes in value than a fund that invests
exclusively in securities of U.S. companies, due to smaller markets, differing reporting,
accounting and auditing standards, and nationalization, expropriation or confiscatory taxation,
currency blockage, or political changes or diplomatic developments. Foreign securities may also be
less liquid and more difficult to value than securities of U.S. issuers
Emerging Markets Risk:
the risk of investing in emerging market securities, primarily increased
foreign (non-U.S.) investment risk
Currency Risk:
the risk that foreign currencies will decline in value relative to the U.S. dollar
and affect the Fund’s investments in foreign (non-U.S.) currencies or in securities that trade in,
and receive revenues in, or in derivatives that provide exposure to, foreign (non-U.S.) currencies
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
E-195
|
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PIMCO Long-Term Credit Fund
|
|
Ticker symbol:
|
|
|
|
PTCIX (Inst. Class)
|
Principal Investments and Strategies
|
|
|
|
|
|
|
Investment Objective
|
|
Fund Focus
|
|
Credit Quality
|
|
Seeks total return which
exceeds that of its
benchmark, consistent
with preservation of
capital and prudent
investment management
|
|
Long-term maturity Fixed Income Instruments
Average Portfolio Duration
+/- 2 years of its Benchmark
|
|
B to Aaa; maximum 20% of total assets
below Baa
Dividend Frequency
Declared daily and distributed monthly
|
The Fund seeks to achieve its investment objective by investing under normal circumstances at least
80% of its assets in a diversified portfolio of Fixed Income Instruments of varying maturities,
which may be represented by forwards or derivatives such as options, futures contracts or swap
agreements. “Fixed Income Instruments” include bonds, debt securities and other similar instruments
issued by various U.S. and non-U.S. public- or private-sector entities. The average portfolio
duration of this Fund normally varies within two years (plus or minus) of the portfolio duration of
the securities comprising the Fund’s benchmark, the Barclays U.S. Long Credit Index, as calculated
by PIMCO, which as of June 30, 2013 was 12.02 years. Duration is a measure used to determine the
sensitivity of a security’s price to changes in interest rates. The longer a security’s duration,
the more sensitive it will be to changes in interest rates. In addition, the dollar-weighted
average portfolio maturity of the Fund, under normal circumstances, is expected to be more than ten
years.
The Fund invests primarily in investment grade debt securities, but may invest up to 20% of its
total assets in high yield securities (“junk bonds”) that are rated B or higher by Moody’s
Investors Service, Inc. (“Moody’s”), or equivalently rated by Standard & Poor’s Ratings Services
(“S&P”) or Fitch, Inc. (“Fitch”), or, if unrated, determined by Pacific Investment Management
Company LLC (“PIMCO”) to be of comparable quality. The Fund may invest up to 30% of its total
assets in securities denominated in foreign currencies, and may invest beyond this limit in U.S.
dollar-denominated securities of foreign issuers. The Fund may invest up to 25% of its total assets
in securities and instruments that are economically tied to emerging market countries. The Fund
will normally limit its foreign currency exposure (from non-U.S. dollar-denominated securities or
currencies) to 20% of its total assets.
The Fund may invest, without limitation, in derivative instruments, such as options, futures
contracts or swap agreements, or in mortgage- or asset-backed securities, subject to applicable law
and any other restrictions described in the Fund’s prospectus or Statement of Additional
Information. The Fund may purchase or sell securities on a when-issued, delayed delivery or forward
commitment basis and may engage in short sales. The Fund may, without limitation, 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 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, foreign
currency appreciation, or improving credit fundamentals for a particular sector or security.
Consistent with other investment limitations, the Fund may invest, without limitation, in preferred
stocks.
Principal Risks
It is possible to lose money on an investment in the Fund. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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 risk that high yield securities and unrated securities of similar credit
quality (commonly known as “junk bonds”) are subject to greater levels of credit and liquidity
risks. High yield securities are considered primarily speculative with respect to the issuer’s
continuing ability to make principal and interest payments
Market Risk:
the risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
Issuer Risk:
the risk that the value of a security may decline for a reason directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
E-196
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Equity Risk:
the risk that the value of equity securities, such as common stocks and preferred
stocks, may decline due to general market conditions which are not specifically related to a
particular company or to factors affecting a particular industry or industries. Equity securities
generally have greater price volatility than fixed income securities
Mortgage-Related and Other Asset-Backed Securities Risk:
the risk of investing in mortgage-related
and other asset-backed securities, including interest rate risk, extension risk and prepayment risk
Foreign (Non-U.S.) Investment Risk:
the risk that investing in foreign (non-U.S.) securities may
result in the Fund experiencing more rapid and extreme changes in value than a fund that invests
exclusively in securities of U.S. companies, due to smaller markets, differing reporting,
accounting and auditing standards, and nationalization, expropriation or confiscatory taxation,
currency blockage, or political changes or diplomatic developments. Foreign securities may also be
less liquid and more difficult to value than securities of U.S. issuers
Emerging Markets Risk:
the risk of investing in emerging market securities, primarily increased
foreign (non-U.S.) investment risk
Currency Risk:
the risk that foreign currencies will decline in value relative to the U.S. dollar
and affect the Fund’s investments in foreign (non-U.S.) currencies or in securities that trade in,
and receive revenues in, or in derivatives that provide exposure to, foreign (non-U.S.) currencies
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
E-197
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PIMCO Long Duration Total Return Fund
|
|
Ticker symbol:
|
|
|
|
PLRIX (Inst. Class)
|
Principal Investments and Strategies
|
|
|
|
|
|
|
Investment Objective
|
|
Fund Focus
|
|
Credit Quality
|
|
Seeks maximum total return, consistent
with prudent investment management.
|
|
Long-term maturity Fixed Income
Instruments
Average Portfolio Duration
+/- 2 years of its benchmark
|
|
B to Aaa; maximum 10% of total assets
below Baa
Dividend Frequency
Declared daily and distributed monthly
|
The Fund seeks to achieve its investment objective by investing under normal circumstances at least
65% of its total assets in a diversified portfolio of Fixed Income Instruments of varying
maturities, which may be represented by forwards or derivatives such as options, futures contracts
or swap agreements. “Fixed Income Instruments” include bonds, debt securities and other similar
instruments issued by various U.S. and non-U.S. public- or private-sector entities. The average
portfolio duration of this Fund normally varies within two years (plus or minus) of the portfolio
duration of the securities comprising the Barclays Long Term Government/Credit Index, as calculated
by PIMCO, which as of June 30, 2013 was 13.54 years. Duration is a measure used to determine the
sensitivity of a security’s price to changes in interest rates. The longer a security’s duration,
the more sensitive it will be to changes in interest rates.
The Fund invests primarily in investment grade debt securities, but may invest up to 10% of its
total assets in high yield securities (“junk bonds”) that are rated B or higher by Moody’s
Investors Service, Inc. (“Moody’s”), or equivalently rated by Standard & Poor’s Ratings Services
(“S&P”) or Fitch, Inc. (“Fitch”), or, if unrated, determined by Pacific Investment Management
Company LLC (“PIMCO”) to be of comparable quality. The Fund may invest up to 30% of its total
assets in securities denominated in foreign currencies, and may invest beyond this limit in U.S.
dollar-denominated securities of foreign issuers. The Fund may invest up to 15% of its total assets
in securities and instruments that are economically tied to emerging market countries. The Fund
will normally limit its foreign currency exposure (from non-U.S. dollar-denominated securities or
currencies) to 20% of its total assets.
The Fund may invest, without limitation, in derivative instruments, such as options, futures
contracts or swap agreements, or in mortgage- or asset-backed securities, subject to applicable law
and any other restrictions described in the Fund’s prospectus or Statement of Additional
Information. The Fund may purchase or sell securities on a when-issued, delayed delivery or forward
commitment basis and may engage in short sales. The Fund may, without limitation, 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 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, foreign
currency appreciation, or improving credit fundamentals for a particular sector or security. The
Fund may also invest up to 10% of its total assets in preferred stocks.
Principal Risks
It is possible to lose money on an investment in the Fund. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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 risk that high yield securities and unrated securities of similar credit
quality (commonly known as “junk bonds”) are subject to greater levels of credit and liquidity
risks. High yield securities are considered primarily speculative with respect to the issuer’s
continuing ability to make principal and interest payments
Market Risk:
the risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
Issuer Risk:
the risk that the value of a security may decline for a reason directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
E-198
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Equity Risk:
the risk that the value of equity securities, such as common stocks and preferred
stocks, may decline due to general market conditions which are not specifically related to a
particular company or to factors affecting a particular industry or industries. Equity securities
generally have greater price volatility than fixed income securities
Mortgage-Related and Other Asset-Backed Securities Risk:
the risk of investing in mortgage-related
and other asset-backed securities, including interest rate risk, extension risk and prepayment risk
Foreign (Non-U.S.) Investment Risk:
the risk that investing in foreign (non-U.S.) securities may
result in the Fund experiencing more rapid and extreme changes in value than a fund that invests
exclusively in securities of U.S. companies, due to smaller markets, differing reporting,
accounting and auditing standards, and nationalization, expropriation or confiscatory taxation,
currency blockage, or political changes or diplomatic developments. Foreign securities may also be
less liquid and more difficult to value than securities of U.S. issuers
Emerging Markets Risk:
the risk of investing in emerging market securities, primarily increased
foreign (non-U.S.) investment risk
Currency Risk:
the risk that foreign currencies will decline in value relative to the U.S. dollar
and affect the Fund’s investments in foreign (non-U.S.) currencies or in securities that trade in,
and receive revenues in, or in derivatives that provide exposure to, foreign (non-U.S.) currencies
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
E-199
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|
PIMCO Long-Term U.S. Government Fund
|
|
Ticker symbol:
|
|
|
|
PGOVX (Inst. Class)
|
Principal Investments and Strategies
|
|
|
|
|
|
|
Investment Objective
|
|
Fund Focus
|
|
Credit Quality
|
|
Seeks maximum total
return, consistent with
preservation of capital
and prudent investment
management.
|
|
Long-term maturity fixed
income securities
Average Portfolio Duration
>
8 years
|
|
A to Aaa; max 25% Aa; max 10% A
Dividend Frequency
Declared daily and distributed monthly
|
The Fund seeks to achieve its investment objective by investing under normal circumstances at least
80% of its assets in a diversified portfolio of fixed income securities that are issued or
guaranteed by the U.S. Government, its agencies or government-sponsored enterprises (“U.S.
Government Securities”), which may be represented by forwards or derivatives such as options,
futures contracts or swap agreements. Assets not invested in U.S. Government Securities may be
invested in other types of Fixed Income Instruments. “Fixed Income Instruments” include bonds, debt
securities and other similar instruments issued by various U.S. and non-U.S. public- or
private-sector entities. While Pacific Investment Management Company LLC (“PIMCO”) may invest in
derivatives at any time it deems appropriate, it will generally do so when it believes that U.S.
Government Securities are overvalued relative to derivative instruments. This Fund will normally
have a minimum average portfolio duration of eight years. Duration is a measure used to determine
the sensitivity of a security’s price to changes in interest rates. The longer a security’s
duration, the more sensitive it will be to changes in interest rates. In addition, the
dollar-weighted average portfolio maturity of the Fund, under normal circumstances, is expected to
be more than ten years.
The Fund’s investments in Fixed Income Instruments are limited to those of investment grade U.S.
dollar-denominated securities of U.S. issuers that are rated at least A by Moody’s Investors
Service, Inc. (“Moody’s”), or equivalently rated by Standard & Poor’s Ratings Services (“S&P”) or
Fitch, Inc. (“Fitch”), or, if unrated, determined by PIMCO to be of comparable quality. In
addition, the Fund may only invest up to 10% of its total assets in securities rated A by Moody’s,
or equivalently rated by S&P or Fitch, or, if unrated, determined by PIMCO to be of comparable
quality and may only invest up to 25% of its total assets in securities rated Aa by Moody’s, or
equivalently rated by S&P or Fitch or, if unrated, determined by PIMCO to be of comparable quality.
The Fund may invest, without limitation, in derivative instruments, such as options, futures
contracts or swap agreements, or in mortgage- or asset-backed securities, subject to applicable law
and any other restrictions described in the Fund’s prospectus or Statement of Additional
Information. The Fund may purchase or sell securities on a when-issued, delayed delivery or forward
commitment basis and may engage in short sales. The Fund may, without limitation, 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 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. The Fund may also invest up to
10% of its total assets in preferred stocks.
Principal Risks
It is possible to lose money on an investment in the Fund. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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 risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
Issuer Risk:
the risk that the value of a security may decline for a reason directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
E-200
Equity Risk:
the risk that the value of equity securities, such as common stocks and preferred
stocks, may decline due to general market conditions which are not specifically related to a
particular company or to factors affecting a particular industry or industries. Equity securities
generally have greater price volatility than fixed income securities
Mortgage-Related and Other Asset-Backed Securities Risk:
the risk of investing in mortgage-related
and other asset-backed securities, including interest rate risk, extension risk and prepayment risk
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
E-201
|
|
|
|
|
|
|
|
|
PIMCO Low Duration Fund
|
|
Ticker symbol:
|
|
|
|
PTLDX (Inst. Class)
|
Principal Investments and Strategies
|
|
|
|
|
|
|
Investment Objective
|
|
Fund Focus
|
|
Credit Quality
|
|
Seeks maximum total
return, consistent with
preservation of capital
and prudent investment
management.
|
|
Short maturity Fixed Income Instruments
Average Portfolio Duration
1-3 years
|
|
B to Aaa; maximum 10% of total assets
below Baa
Dividend Frequency
Declared daily and distributed monthly
|
The Fund seeks to achieve its investment objective by investing under normal circumstances at least
65% of its total assets in a diversified portfolio of Fixed Income Instruments of varying
maturities, which may be represented by forwards or derivatives such as options, futures contracts,
or swap agreements. “Fixed Income Instruments” include bonds, debt securities and other similar
instruments issued by various U.S. and non-U.S. public- or private-sector entities. The average
portfolio duration of this Fund normally varies from one to three years based on Pacific Investment
Management Company LLC’s (“PIMCO”) forecast for interest rates. Duration is a measure used to
determine the sensitivity of a security’s price to changes in interest rates. The longer a
security’s duration, the more sensitive it will be to changes in interest rates.
The Fund invests primarily in investment grade debt securities, but may invest up to 10% of its
total assets in high yield securities (“junk bonds”) rated B or higher by Moody’s Investors
Service, Inc. (“Moody’s”), or equivalently rated by Standard & Poor’s Ratings Services (“S&P”) or
Fitch, Inc. (“Fitch”), or, if unrated, determined by PIMCO to be of comparable quality. The Fund
may invest up to 30% of its total 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 limit its foreign currency exposure (from non-U.S. dollar-denominated securities or
currencies) to 20% of its total assets. The Fund may invest up to 10% of its total assets in
securities and instruments that are economically tied to emerging market countries.
The Fund may invest, without limitation, in derivative instruments, such as options, futures
contracts or swap agreements, or in mortgage- or asset-backed securities, subject to applicable law
and any other restrictions described in the Fund’s prospectus or Statement of Additional
Information. The Fund may purchase or sell securities on a when-issued, delayed delivery or forward
commitment basis and may engage in short sales. The Fund may, without limitation, 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 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, foreign
currency appreciation, or improving credit fundamentals for a particular sector or security. The
Fund may also invest up to 10% of its total assets in preferred stocks.
Principal Risks
It is possible to lose money on an investment in the Fund. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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 risk that high yield securities and unrated securities of similar credit
quality (commonly known as “junk bonds”) are subject to greater levels of credit and liquidity
risks. High yield securities are considered primarily speculative with respect to the issuer’s
continuing ability to make principal and interest payments
Market Risk:
the risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
Issuer Risk:
the risk that the value of a security may decline for a reason directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
E-202
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Equity Risk:
the risk that the value of equity securities, such as common stocks and preferred
stocks, may decline due to general market conditions which are not specifically related to a
particular company or to factors affecting a particular industry or industries. Equity securities
generally have greater price volatility than fixed income securities
Mortgage-Related and Other Asset-Backed Securities Risk:
the risk of investing in mortgage-related
and other asset-backed securities, including interest rate risk, extension risk and prepayment risk
Foreign (Non-U.S.) Investment Risk:
the risk that investing in foreign (non-U.S.) securities may
result in the Fund experiencing more rapid and extreme changes in value than a fund that invests
exclusively in securities of U.S. companies, due to smaller markets, differing reporting,
accounting and auditing standards, and nationalization, expropriation or confiscatory taxation,
currency blockage, or political changes or diplomatic developments. Foreign securities may also be
less liquid and more difficult to value than securities of U.S. issuers
Emerging Markets Risk:
the risk of investing in emerging market securities, primarily increased
foreign (non-U.S.) investment risk
Currency Risk:
the risk that foreign currencies will decline in value relative to the U.S. dollar
and affect the Fund’s investments in foreign (non-U.S.) currencies or in securities that trade in,
and receive revenues in, or in derivatives that provide exposure to, foreign (non-U.S.) currencies
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
E-203
|
|
|
|
|
|
|
|
|
PIMCO Low Duration Fund II
|
|
Ticker symbol:
|
|
|
|
PLDTX (Inst. Class)
|
Principal Investments and Strategies
|
|
|
|
|
|
|
Investment Objective
|
|
Fund Focus
|
|
Credit Quality
|
|
Seeks maximum total
return, consistent with
preservation of capital
and prudent investment
management.
|
|
Short maturity Fixed
Income Instruments with
quality and Non-U.S.
Issuer Restrictions
Average Portfolio Duration
1-3 years
|
|
A to Aaa
Dividend Frequency
Declared daily and
distributed monthly
|
The Fund seeks to achieve its investment objective by investing under normal circumstances at least
65% of its total assets in a diversified portfolio of Fixed Income Instruments of varying
maturities, which may be represented by forwards or derivatives such as options, futures contracts,
or swap agreements. “Fixed Income Instruments” include bonds, debt securities and other similar
instruments issued by various U.S. and non-U.S. public- or private-sector entities. The average
portfolio duration of this Fund normally varies from one to three years based on Pacific Investment
Management Company LLC’s (“PIMCO”) forecast for interest rates. Duration is a measure used to
determine the sensitivity of a security’s price to changes in interest rates. The longer a
security’s duration, the more sensitive it will be to changes in interest rates. The Fund may
invest only in investment grade U.S. dollar denominated securities of U.S. issuers that are rated A
or higher by Moody’s Investors Service, Inc. (“Moody’s”), or equivalently rated by Standard &
Poor’s Ratings Services (“S&P”) or Fitch, Inc. (“Fitch”), or, if unrated, determined by PIMCO to be
of comparable quality.
The Fund may invest, without limitation, in derivative instruments, such as options, futures
contracts or swap agreements, or in mortgage- or asset-backed securities, subject to applicable law
and any other restrictions described in the Fund’s prospectus or Statement of Additional
Information. The Fund may purchase or sell securities on a when-issued, delayed delivery or forward
commitment basis and may engage in short sales. The Fund may, without limitation, 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 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. The Fund may also invest up to
10% of its total assets in preferred stocks.
Principal Risks
It is possible to lose money on an investment in the Fund. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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 risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
Issuer Risk:
the risk that the value of a security may decline for a reason directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Equity Risk:
the risk that the value of equity securities, such as common stocks and preferred
stocks, may decline due to general market conditions which are not specifically related to a
particular company or to factors affecting a particular industry or industries. Equity securities
generally have greater price volatility than fixed income securities
E-204
Mortgage-Related and Other Asset-Backed Securities Risk:
the risk of investing in mortgage-related
and other asset-backed securities, including interest rate risk, extension risk and prepayment risk
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
E-205
|
|
|
|
|
PIMCO Low Duration Fund III
|
|
Ticker symbol:
|
|
|
|
PLDIX (Inst. Class)
|
Principal Investments and Strategies
|
|
|
|
|
|
|
Investment Objective
|
|
Fund Focus
|
|
Credit Quality
|
|
Seeks maximum total
return, consistent with
preservation of capital
and prudent investment
management.
|
|
Short maturity Fixed
Income Instruments with
prohibitions on firms
engaged in socially
sensitive practices
Average Portfolio Duration
1-3 years
|
|
B to Aaa; maximum
10% of total assets
below Baa
Dividend Frequency
Declared daily and
distributed monthly
|
The Fund seeks to achieve its investment objective by investing under normal circumstances at least
65% of its total assets in a diversified portfolio of Fixed Income Instruments of varying
maturities, which may be represented by forwards or derivatives such as options, futures contracts,
or swap agreements. “Fixed Income Instruments” include bonds, debt securities and other similar
instruments issued by various U.S. and non-U.S. public- or private-sector entities. The average
portfolio duration of this Fund normally varies from one to three years based on Pacific Investment
Management Company LLC’s (“PIMCO”) forecast for interest rates. Duration is a measure used to
determine the sensitivity of a security’s price to changes in interest rates. The longer a
security’s duration, the more sensitive it will be to changes in interest rates. The Fund will not
invest in the securities of any issuer determined by PIMCO to be engaged principally in the
provision of healthcare services, the manufacture of alcoholic beverages, tobacco products,
pharmaceuticals or military equipment, the operation of gambling casinos or in the production or
trade of pornographic materials. To the extent possible on the basis of information available to
PIMCO, an issuer will be deemed to be principally engaged in an activity if it derives more than
10% of its gross revenues from such activities. In addition, the Fund will not invest directly in
securities of issuers that are engaged in certain business activities in or with the Republic of
the Sudan (a “Sudan-Related Issuer”). In analyzing whether an issuer is a Sudan- Related Issuer,
PIMCO may rely upon, among other things, information from a list provided by an independent third
party.
The Fund invests primarily in investment grade securities, but may invest up to 10% of its total
assets in high yield securities (“junk bonds”) rated B or higher by Moody’s Investors Service, Inc.
(“Moody’s”), or equivalently rated by Standard & Poor’s Ratings Services (“S&P”) or Fitch, Inc.
(“Fitch”), or, if unrated, determined by PIMCO to be of comparable quality. The Fund may invest up
to 30% of its total 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 limit
its foreign currency exposure (from non-U.S. dollar-denominated securities or currencies) to 20% of
its total assets. The Fund may invest up to 10% of its total assets in securities and instruments
that are economically tied to emerging market countries.
The Fund may invest, without limitation, in derivative instruments, such as options, futures
contracts or swap agreements, or in mortgage- or asset-backed securities, subject to applicable law
and any other restrictions described in the Fund’s prospectus or Statement of Additional
Information. The Fund may purchase or sell securities on a when-issued, delayed delivery or forward
commitment basis and may engage in short sales. The Fund may, without limitation, 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 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, foreign
currency appreciation, or improving credit fundamentals for a particular sector or security. The
Fund may also invest up to 10% of its total assets in preferred stocks.
Principal Risks
It is possible to lose money on an investment in the Fund. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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 risk that high yield securities and unrated securities of similar credit
quality (commonly known as “junk bonds”) are subject to greater levels of credit and liquidity
risks. High yield securities are considered primarily speculative with respect to the issuer’s
continuing ability to make principal and interest payments
E-206
Market Risk:
the risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
Issuer Risk:
the risk that the value of a security may decline for a reason directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Equity Risk:
the risk that the value of equity securities, such as common stocks and preferred
stocks, may decline due to general market conditions which are not specifically related to a
particular company or to factors affecting a particular industry or industries. Equity securities
generally have greater price volatility than fixed income securities
Mortgage-Related and Other Asset-Backed Securities Risk:
the risk of investing in mortgage-related
and other asset-backed securities, including interest rate risk, extension risk and prepayment risk
Foreign (Non-U.S.) Investment Risk:
the risk that investing in foreign (non-U.S.) securities may
result in the Fund experiencing more rapid and extreme changes in value than a fund that invests
exclusively in securities of U.S. companies, due to smaller markets, differing reporting,
accounting and auditing standards, and nationalization, expropriation or confiscatory taxation,
currency blockage, or political changes or diplomatic developments. Foreign securities may also be
less liquid and more difficult to value than securities of U.S. issuers
Emerging Markets Risk:
the risk of investing in emerging market securities, primarily increased
foreign (non-U.S.) investment risk
Currency Risk:
the risk that foreign currencies will decline in value relative to the U.S. dollar
and affect the Fund’s investments in foreign (non-U.S.) currencies or in securities that trade in,
and receive revenues in, or in derivatives that provide exposure to, foreign (non-U.S.) currencies
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
E-207
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PIMCO Moderate Duration Fund
|
|
Ticker symbol:
|
|
|
|
PMDRX (Inst. Class)
|
Principal Investments and Strategies
|
|
|
|
|
|
|
Investment Objective
|
|
Fund Focus
|
|
Credit Quality
|
|
Seeks maximum total
return, consistent with
preservation of capital
and prudent investment
management.
|
|
Short and intermediate
maturity fixed income
securities
Average Portfolio Duration
+ /- 2 years of its benchmark
|
|
B to Aaa; maximum
10% of total assets
below Baa
Dividend Frequency
Declared daily and
distributed monthly
|
The Fund seeks to achieve its investment objective by investing under normal circumstances at least
65% of its total assets in a diversified portfolio of Fixed Income Instruments of varying
maturities, which may be represented by forwards or derivatives such as options, futures contracts,
or swap agreements. “Fixed Income Instruments” include bonds, debt securities and other similar
instruments issued by various U.S. and non-U.S. public- or private-sector entities. The average
portfolio duration of this Fund normally varies within two years (plus or minus) of the portfolio
duration of the securities comprising the Barclays Intermediate Government/Credit Index, as
calculated by PIMCO, which as of June 30, 2013 was 3.87 years. Duration is a measure used to
determine the sensitivity of a security’s price to changes in interest rates. The longer a
security’s duration, the more sensitive it will be to changes in interest rates.
The Fund invests primarily in investment grade debt securities, but may invest up to 10% of its
total assets in high yield securities (“junk bonds”) rated B or higher by Moody’s Investors
Service, Inc. (“Moody’s”), or equivalently rated by Standard & Poor’s Ratings Services (“S&P”) or
Fitch, Inc. (“Fitch”), or, if unrated, determined by Pacific Investment Management Company LLC
(“PIMCO”) to be of comparable quality (except that within such limitation, the Fund may invest in
mortgage-backed securities rated below B). The Fund may invest up to 30% of its total assets in
securities denominated in foreign currencies, and may invest beyond this limit in U.S.
dollar-denominated securities of foreign issuers. The Fund may invest up to 15% of its total assets
in securities and instruments that are economically tied to emerging market countries. The Fund
will normally limit its foreign currency exposure (from non-U.S. dollar-denominated securities or
currencies) to 20% of its total assets.
The Fund may invest, without limitation, in derivative instruments, such as options, futures
contracts or swap agreements, or in mortgage- or asset-backed securities, subject to applicable law
and any other restrictions described in the Fund’s prospectus or Statement of Additional
Information. The Fund may purchase or sell securities on a when-issued, delayed delivery or forward
commitment basis and may engage in short sales. The Fund may, without limitation, 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 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, foreign
currency appreciation, or improving credit fundamentals for a particular sector or security. The
Fund may also invest up to 10% of its total assets in preferred stocks.
Principal Risks
It is possible to lose money on an investment in the Fund. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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 risk that high yield securities and unrated securities of similar credit
quality (commonly known as “junk bonds”) are subject to greater levels of credit and liquidity
risks. High yield securities are considered primarily speculative with respect to the issuer’s
continuing ability to make principal and interest payments
Market Risk:
the risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
Issuer Risk:
the risk that the value of a security may decline for a reason directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
E-208
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Equity Risk:
the risk that the value of equity securities, such as common stocks and preferred
stocks, may decline due to general market conditions which are not specifically related to a
particular company or to factors affecting a particular industry or industries. Equity securities
generally have greater price volatility than fixed income securities
Mortgage-Related and Other Asset-Backed Securities Risk:
the risk of investing in mortgage-related
and other asset-backed securities, including interest rate risk, extension risk and prepayment risk
Foreign (Non-U.S.) Investment Risk:
the risk that investing in foreign (non-U.S.) securities may
result in the Fund experiencing more rapid and extreme changes in value than a fund that invests
exclusively in securities of U.S. companies, due to smaller markets, differing reporting,
accounting and auditing standards, and nationalization, expropriation or confiscatory taxation,
currency blockage, or political changes or diplomatic developments. Foreign securities may also be
less liquid and more difficult to value than securities of U.S. issuers
Emerging Markets Risk:
the risk of investing in emerging market securities, primarily increased
foreign (non-U.S.) investment risk
Currency Risk:
the risk that foreign currencies will decline in value relative to the U.S. dollar
and affect the Fund’s investments in foreign (non-U.S.) currencies or in securities that trade in,
and receive revenues in, or in derivatives that provide exposure to, foreign (non-U.S.) currencies
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
E-209
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|
PIMCO Money Market Fund
|
|
Ticker symbol:
|
|
|
|
PMIXX (Inst. Class)
|
Principal Investments and Strategies
|
|
|
|
|
|
|
Investment Objective
|
|
Fund Focus
|
|
Credit Quality
|
|
Seeks maximum current
income, consistent with
preservation of capital
and daily liquidity.
|
|
Money market instruments
Average Portfolio Maturity
<
60 days
dollar-weighted average
maturity
|
|
Minimum 97% of total assets rated
Prime 1; < 3% of total assets
rated Prime 2
Dividend Frequency
Declared daily and distributed monthly
|
The Fund seeks to achieve its investment objective by complying with the quality, maturity and
diversification of securities requirements applicable to money market funds. The Fund attempts to
maintain a stable net asset value of $1.00 per share, although there is no assurance that it will
be successful in doing so. The Fund may invest in the following U.S. dollar-denominated
instruments: obligations of the U.S. Government (including its agencies and instrumentalities);
short-term corporate debt securities of domestic and foreign corporations; obligations of domestic
and foreign commercial banks, savings banks, and savings and loan associations; and commercial
paper. The Fund may invest more than 25% of its total assets in or obligations issued by U.S.
banks.
Principal Risks
Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible
to lose money on an investment in the Fund. The principal risks of investing in the Fund, which
could adversely affect its net asset value, yield and total return are:
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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 risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
Issuer Risk:
the risk that the value of a security may decline for a reason directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Foreign (Non-U.S.) Investment Risk:
the risk that investing in foreign (non-U.S.) securities may
result in the Fund experiencing more rapid and extreme changes in value than a fund that invests
exclusively in securities of U.S. companies, due to smaller markets, differing reporting,
accounting and auditing standards, and nationalization, expropriation or confiscatory taxation,
currency blockage, or political changes or diplomatic developments. Foreign securities may also be
less liquid and more difficult to value than securities of U.S. issuers
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
E-210
|
|
|
|
|
PIMCO Mortgage-Backed Securities Fund
|
|
Ticker symbol:
|
|
|
|
PTRIX (Inst. Class)
|
Principal Investments and Strategies
|
|
|
|
|
|
|
Investment Objective
|
|
Fund Focus
|
|
Credit Quality
|
|
Seeks maximum total
return, consistent with
preservation of capital
and prudent investment
management.
|
|
Short and intermediate
maturity mortgage-related
Fixed Income Instruments
Average Portfolio Duration
1-7 years
|
|
Baa to Aaa; maximum 10% of total
assets below Aaa
Dividend Frequency
Declared daily and distributed monthly
|
The Fund seeks to achieve its investment objective by investing under normal circumstances at least
80% of its assets in a diversified portfolio of mortgage-related Fixed Income Instruments of
varying maturities (such as mortgage pass-through securities, collateralized mortgage obligations,
commercial mortgage-backed securities and mortgage dollar rolls), which may be represented by
forwards or derivatives such as options, futures contracts or swap agreements. “Fixed Income
Instruments” include bonds, debt securities and other similar instruments issued by various U.S.
and non-U.S. public- or private-sector entities. The average portfolio duration of this Fund
normally varies from one to seven years based on Pacific Investment Management Company LLC’s
(“PIMCO”) forecast for interest rates. Duration is a measure used to determine the sensitivity of a
security’s price to changes in interest rates. The longer a security’s duration, the more sensitive
it will be to changes in interest rates. The Fund may invest without limit in securities issued or
guaranteed by the U.S. Government, its agencies or government-sponsored enterprises. In addition,
the Fund may invest up to 10% of its total assets in investment grade securities rated below Aaa by
Moody’s Investors Service, Inc. (“Moody’s”), or equivalently rated by Standard & Poor’s Ratings
Services (“S&P”) or Fitch, Inc. (“Fitch”), or, if unrated, determined by PIMCO to be of comparable
quality, subject to a minimum rating of Baa by Moody’s, or equivalently rated by S&P or Fitch, or,
if unrated, determined by PIMCO to be of comparable quality. The Fund may also invest up to an
additional 5% of its total assets in mortgage-related high yield instruments (“junk bonds”) rated
below Baa by Moody’s, or equivalently rated by S&P or Fitch, or, if unrated, determined by PIMCO to
be of comparable quality. The Fund may not invest in securities denominated in foreign currencies,
but may invest without limit in U.S. dollar-denominated securities of foreign issuers. The Fund may
invest up to 10% of its total assets in U.S. dollar-denominated securities and instruments that are
economically tied to emerging market countries.
The Fund may invest, without limitation, in derivative instruments, such as options, futures
contracts or swap agreements, or in mortgage- or asset-backed securities, subject to applicable law
and any other restrictions described in the Fund’s prospectus or Statement of Additional
Information. The Fund may purchase or sell securities on a when-issued, delayed delivery or forward
commitment basis and may engage in short sales. The Fund may,without limitation, 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 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. The Fund may also invest up to
10% of its total assets in preferred stocks.
Principal Risks
It is possible to lose money on an investment in the Fund. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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 risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
Issuer Risk:
the risk that the value of a security may decline for a reason directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
E-211
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Equity Risk:
the risk that the value of equity securities, such as common stocks and preferred
stocks, may decline due to general market conditions which are not specifically related to a
particular company or to factors affecting a particular industry or industries. Equity securities
generally have greater price volatility than fixed income securities
Mortgage-Related and Other Asset-Backed Securities Risk:
the risk of investing in mortgage-related
and other asset-backed securities, including interest rate risk, extension risk and prepayment risk
Foreign (Non-U.S.) Investment Risk:
the risk that investing in foreign (non-U.S.) securities may
result in the Fund experiencing more rapid and extreme changes in value than a fund that invests
exclusively in securities of U.S. companies, due to smaller markets, differing reporting,
accounting and auditing standards, and nationalization, expropriation or confiscatory taxation,
currency blockage, or political changes or diplomatic developments. Foreign securities may also be
less liquid and more difficult to value than securities of U.S. issuers
Emerging Markets Risk:
the risk of investing in emerging market securities, primarily increased
foreign (non-U.S.) investment risk
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
E-212
|
|
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|
|
PIMCO Mortgage Opportunities Fund
|
|
Ticker symbol:
|
|
|
|
PMZIX (Inst. Class)
|
Principal Investments and Strategies
|
|
|
|
|
|
|
Investment Objective
|
|
Fund Focus
|
|
Credit Quality
|
|
Seeks maximum long-term
return, consistent with
prudent investment
management.
|
|
Mortgage-related assets
Average Portfolio Duration
(-1) to 8 years
|
|
Maximum of 50% of total assets Caa or
higher
Dividend Frequency
Declared daily and distributed monthly
|
The Fund seeks to achieve its investment objective by investing under normal circumstances at least
80% of its assets in a portfolio of mortgage-related assets, including, but not limited to Agency
residential and commercial mortgage-backed securities (“MBS”) and private label residential and
commercial MBS, which may be represented by forwards or derivatives such as options, futures
contracts or swap agreements. Agency MBS refers to MBS issued by government-sponsored enterprises,
such as the Government National Mortgage Association (“GNMA” or “Ginnie Mae”), the Federal National
Mortgage Association (“FNMA” or “Fannie Mae”) or the Federal Home Loan Mortgage Corporation
(“FHLMC” or “Freddie Mac”). The Fund will invest in a broad array of mortgage-related securities in
seeking to generate consistent, absolute returns across full market cycles. The remainder of the
Fund’s assets may be invested in other types of “Fixed Income Instruments,” which include bonds,
debt securities and other similar instruments issued by various U.S. and non-U.S. public- or
private sector entities. The average portfolio duration of this Fund normally varies from
(negative) 1 year to positive 8 years based on PIMCO’s forecast for interest rates. Duration is a
measure used to determine the sensitivity of a security’s price to changes in interest rates. The
longer a security’s duration, the more sensitive it will be to changes in interest rates.
The Fund may invest up to 50% of its total assets in high yield securities (“junk bonds”) that are
rated Caa or higher by Moody’s Investors Service, Inc. (“Moody’s”), or equivalently rated by
Standard & Poor’s Rating Services (“S&P”) or Fitch, Inc. (“Fitch”), or, if unrated, determined by
Pacific Investment Management Company LLC (“PIMCO”) to be of comparable quality (except such
limitation shall not apply to the Fund’s investments in mortgage-related securities). The Fund is
non-diversified, which means that it may invest its assets in a smaller number of issuers than a
diversified fund.
The Fund may invest, without limitation, in derivative instruments, such as options, futures
contracts, options on futures, fixed income swap agreements, credit default swap agreements and
other synthetic mortgage-related swap indices, or in mortgage- or asset-backed securities, subject
to applicable law and any other restrictions described in the Fund’s prospectus or Statement of
Additional Information. The Fund may invest up to 10% of its total assets in any combination of
mortgage-related or other asset-backed interest-only (“IO”), principal-only (“PO”), or inverse
floating rate debt (“inverse floater”) securities. The Fund may purchase or sell securities on a
when-issued, delayed delivery or forward commitment basis and may engage in short sales. The Fund
may, without limitation, 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 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.
Principal Risks
It is possible to lose money on an investment in the Fund. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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 risk that high yield securities and unrated securities of similar credit
quality (commonly known as “junk bonds”) are subject to greater levels of credit and liquidity
risks. High yield securities are considered primarily speculative with respect to the issuer’s
continuing ability to make principal and interest payments
Market Risk:
the risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
E-213
Issuer Risk:
the risk that the value of a security may decline for a reason directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Mortgage-Related and Other Asset-Backed Securities Risk:
the risk of investing in mortgage-related
and other asset-backed securities, including interest rate risk, extension risk and prepayment risk
Extension Risk:
the risk that, in periods of rising interest rates, issuers of mortgage-related and
other asset-backed securities may pay principal later than expected, which may reduce the value of
the Fund’s investment in such securities and may prevent the Fund from receiving higher interest
rates on proceeds reinvested
Prepayment Risk:
the risk that, in periods of declining interest rates, issuers of mortgage-related
and other asset-backed securities may pay principal more quickly than expected, which results in
the Fund foregoing future interest income on the portion of the principal repaid early and may
result in the Fund being forced to reinvest investment proceeds at lower interest rates
Privately Issued Mortgage-Related Securities Risk:
the risk of non-payment because there are no
direct or indirect government or agency guarantees of payments in the pools created by
non-governmental issuers
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
Issuer Non-Diversification Risk:
the risk of focusing investments in a small number of issuers,
including being more susceptible to risks associated with a single economic, political or
regulatory occurrence than a more diversified portfolio might be. Funds that are “non-diversified”
may invest a greater percentage of their assets in the securities of a single issuer (such as bonds
issued by a particular foreign government) than funds that are “diversified”
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
E-214
|
|
|
|
|
PIMCO Municipal Bond Fund
|
|
Ticker symbol:
|
|
|
|
PFMIX (Inst. Class)
|
Principal Investments and Strategies
|
|
|
|
|
|
|
Investment Objective
|
|
Fund Focus
|
|
Credit Quality
|
|
Seeks high current
income exempt from
federal income tax,
consistent with
preservation of capital.
Capital appreciation is
a secondary objective.
|
|
Intermediate to long-term
maturity municipal
securities (exempt from
federal income tax)
Average Portfolio Duration
3-12 years
|
|
Ba to Aaa; maximum
10% of total assets
below Baa
Dividend Frequency
Declared daily and
distributed monthly
|
The Fund seeks to achieve its investment objective by investing under normal circumstances at least
80% of its 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 total assets in Municipal Bonds or “private activity” bonds which are high yield securities
(“junk bonds”) rated at least Ba by Moody’s Investors Service, Inc. (“Moody’s”), or equivalently
rated by Standard & Poor’s Ratings Services (“S&P”) or Fitch, Inc. (“Fitch”), or, if unrated,
determined by Pacific Investment Management Company LLC (“PIMCO”) to be of comparable quality. The
Fund may invest more than 25% of its total assets in bonds of issuers in California and New York.
To the extent that the Fund concentrates its investments in California or New York, it will be
subject to California or New York State-Specific Risk. The Fund may also invest 25% or more of its
total assets in Municipal Bonds that finance education, health care, housing, transportation,
utilities and other similar projects, and 25% or more of its total assets in industrial development
bonds. The average portfolio duration of this Fund normally varies from three to twelve years,
based on PIMCO’s forecast for interest rates. Duration is a measure used to determine the
sensitivity of a security’s price to changes in interest rates. The longer a security’s duration,
the more sensitive it will be to changes in interest rates. The portfolio manager focuses on bonds
with the potential to offer attractive current income, typically looking for bonds that can provide
consistently attractive current yields or that are trading at competitive market prices. Capital
appreciation, if any, generally arises from decreases in interest rates or improving credit
fundamentals for a particular state, municipality or issuer.
The Fund may invest in derivative instruments, such as options, futures contracts or swap
agreements, and invest in mortgage- or asset-backed securities. The Fund may purchase or sell
securities on a when-issued, delayed delivery or forward commitment basis and may engage in short
sales. The Fund may also invest in securities issued by entities, such as trusts, whose underlying
assets are Municipal Bonds, including, without limitation, residual interest bonds. The Fund may,
without limitation, 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 or dollar rolls). The Fund may also invest up to 10% of its total assets in
preferred stocks.
Principal Risks
It is possible to lose money on an investment in the Fund. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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 risk that high yield securities and unrated securities of similar credit
quality (commonly known as “junk bonds”) are subject to greater levels of credit and liquidity
risks. High yield securities are considered primarily speculative with respect to the issuer’s
continuing ability to make principal and interest payments
Market Risk:
the risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
E-215
Issuer Risk:
the risk that the value of a security may decline for a reason directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Equity Risk:
the risk that the value of equity securities, such as common stocks and preferred
stocks, may decline due to general market conditions which are not specifically related to a
particular company or to factors affecting a particular industry or industries. Equity securities
generally have greater price volatility than fixed income securities
Mortgage-Related and Other Asset-Backed Securities Risk:
the risk of investing in mortgage-related
and other asset-backed securities, including interest rate risk, extension risk and prepayment risk
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
California State-Specific Risk:
the risk that by concentrating its investments in California
Municipal Bonds, the Fund may be affected significantly by economic, regulatory or political
developments affecting the ability of California issuers to pay interest or repay principal
New York State-Specific Risk:
the risk that by concentrating its investments in New York Municipal
Bonds, the Fund may be affected significantly by economic, regulatory or political developments
affecting the ability of New York issuers to pay interest or repay principal
Municipal Project-Specific Risk:
the risk that the Fund may be more sensitive to adverse economic,
business or political developments if it invests a substantial portion of its assets in the bonds
of similar projects (such as those relating to education, health care, housing, transportation, and
utilities), industrial development bonds, or in bonds from issuers in a single state
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
E-216
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PIMCO National Intermediate Municipal Bond Fund
|
|
Ticker symbol:
|
|
|
|
PMNIX (Inst. Class)
|
Principal Investments and Strategies
|
|
|
|
|
|
|
Investment Objective
|
|
Fund Focus
|
|
Credit Quality
|
|
Seeks maximum tax exempt income
|
|
Municipal securities
(exempt from federal
income tax)
Average Portfolio Duration
3 to 9 years
|
|
Ba to Aaa; maximum
of 10% of total
assets below Baa
Dividend Frequency
Declared daily and
distributed monthly
|
The Fund seeks to achieve its investment objective by investing under normal circumstances at least
80% of its 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 in Fixed Income Instruments which include bonds, debt securities and other
similar instruments issued by various U.S. and non-U.S. public- or private-sector entities. The
Fund may invest without limitation in “private activity” bonds whose interest is a tax-preference
item for purposes of the federal alternative minimum tax (“AMT”). For shareholders subject to the
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 is non-diversified, which means that it may invest its assets in a smaller number of
issuers than a diversified fund. The Fund may invest more than 25% of its total assets in bonds of
issuers in California and New York. To the extent that the Fund concentrates its investments in
California or New York, it will be subject to California or New York State-Specific Risk. The Fund
may also invest 25% or more of its total assets in Municipal Bonds that finance education, health
care, housing, transportation, utilities and other similar projects, and 25% or more of its total
assets in industrial development bonds. The Fund may invest the remainder of its net assets in
other types of Fixed Income Instruments. “Fixed Income Instruments” include bonds, debt securities
and other similar instruments issued by various U.S. and non-U.S. public- or private-sector
entities. The average portfolio duration of this Fund normally varies from three to nine years,
based on Pacific Investment Management Company LLC’s (“PIMCO”) forecast for interest rates.
Duration is a measure used to determine the sensitivity of a security’s price to changes in
interest rates. The longer a security’s duration, the more sensitive it will be to changes in
interest rates. The portfolio manager focuses on bonds with the potential to offer attractive
current income, typically looking for bonds that can provide consistently attractive current yields
or that are trading at competitive market prices. Capital appreciation, if any, generally arises
from decreases in interest rates or improving credit fundamentals for a particular state,
municipality or issuer.
The Fund invests primarily in investment grade debt securities, but may invest up to 10% of its
total assets in Municipal Bonds or “private activity” bonds which are high yield securities (“junk
bonds”) rated at least Ba by Moody’s Investors Service, Inc. (“Moody’s”), or equivalently rated by
Standard & Poor’s Ratings Services (“S&P”) or Fitch, Inc. (“Fitch”), or, if unrated, determined by
PIMCO to be of comparable quality.
The Fund may invest in derivative instruments, such as options, futures contracts or swap
agreements, and invest in mortgage- or asset-backed securities. The Fund may purchase or sell
securities on a when-issued, delayed delivery or forward commitment basis and may engage in short
sales. The Fund may also invest in securities issued by entities, such as trusts, whose underlying
assets are Municipal Bonds, including, without limitation, residual interest bonds. The Fund may,
without limitation, 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 or dollar rolls). The Fund may also invest up to 10% of its total assets in
preferred stocks.
Principal Risks
It is possible to lose money on an investment in the Fund. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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
E-217
High Yield Risk:
the risk that high yield securities and unrated securities of similar credit
quality (commonly known as “junk bonds”) are subject to greater levels of credit and liquidity
risks. High yield securities are considered primarily speculative with respect to the issuer’s
continuing ability to make principal and interest payments
Market Risk:
the risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
Issuer Risk:
the risk that the value of a security may decline for a reason directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Equity Risk:
the risk that the value of equity securities, such as common stocks and preferred
stocks, may decline due to general market conditions which are not specifically related to a
particular company or to factors affecting a particular industry or industries. Equity securities
generally have greater price volatility than fixed income securities
Mortgage-Related and Other Asset-Backed Securities Risk:
the risk of investing in mortgage-related
and other asset-backed securities, including interest rate risk, extension risk and prepayment risk
Issuer Non-Diversification Risk:
the risk of focusing investments in a small number of issuers,
including being more susceptible to risks associated with a single economic, political or
regulatory occurrence than a more diversified portfolio might be. Funds that are “non-diversified”
may invest a greater percentage of their assets in the securities of a single issuer (such as bonds
issued by a particular state) than funds that are “diversified”
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
California State-Specific Risk:
the risk that by concentrating its investments in California
Municipal Bonds, the Fund may be affected significantly by economic, regulatory or political
developments affecting the ability of California issuers to pay interest or repay principal
New York State-Specific Risk:
the risk that by concentrating its investments in New York Municipal
Bonds, the Fund may be affected significantly by economic, regulatory or political developments
affecting the ability of New York issuers to pay interest or repay principal
Municipal Project-Specific Risk:
the risk that the Fund may be more sensitive to adverse economic,
business or political developments if it invests a substantial portion of its assets in the bonds
of similar projects (such as those relating to education, health care, housing, transportation, and
utilities), industrial development bonds, or in bonds from issuers in a single state
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
E-218
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|
|
PIMCO New York Municipal Bond Fund
|
|
Ticker symbol:
|
|
|
|
PNYIX (Inst. Class)
|
Principal Investments and Strategies
|
|
|
|
|
|
|
Investment Objective
|
|
Fund Focus
|
|
Credit Quality
|
|
Seeks high current
income exempt from
federal and New York
income tax. Capital
appreciation is a
secondary objective.
|
|
Intermediate to long-term
maturity municipal
securities (exempt from
federal and New York
income tax)
Average Portfolio Duration
3-12 years
|
|
B to Aaa; maximum 10% of total assets
below Baa
Dividend Frequency
Declared daily and distributed monthly
|
The Fund seeks to achieve its investment objective by investing under normal circumstances at least
80% of its assets in debt securities whose interest is, in the opinion of bond counsel for the
issuer at the time of issuance, exempt from regular federal income tax and New York income tax
(“New York Municipal Bonds”). New York Municipal Bonds generally are issued by or on behalf of the
State of New York and its political subdivisions, financing authorities and their agencies. The
Fund may invest in debt securities of an issuer located outside of New York whose interest is, in
the opinion of bond counsel for the issuer at the time of issuance, exempt from regular federal
income tax and New York income tax. By concentrating its investments in New York, the Fund will be
subject to New York State-Specific Risk.
The Fund may invest without limitation in “private activity” bonds whose interest is a
tax-preference item for purposes of the federal alternative minimum tax (“AMT”). For shareholders
subject to the AMT, a substantial portion of the Fund’s distributions may not be exempt from
federal income tax. The Fund may invest 25% or more of its total 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”) that finance education, health care, housing,
transportation, utilities and other similar projects, and 25% or more of its total assets in
industrial development bonds. The Fund may invest the remainder of its net assets in other types of
Fixed Income Instruments. “Fixed Income Instruments” include bonds, debt securities and other
similar instruments issued by various U.S. and non-U.S. public- or private-sector entities. The
average portfolio duration of this Fund normally varies from three to twelve years based on Pacific
Investment Management Company LLC’s (“PIMCO”) forecast for interest rates. Duration is a measure
used to determine the sensitivity of a security’s price to changes in interest rates. The longer a
security’s duration, the more sensitive it will be to changes in interest rates. The portfolio
manager focuses on bonds with the potential to offer attractive current income, typically looking
for bonds that can provide consistently attractive current yields or that are trading at
competitive market prices. Capital appreciation, if any, generally arises from decreases in
interest rates or improving credit fundamentals for a particular state, municipality or issuer.
The Fund invests primarily in investment grade debt securities, but may invest up to 10% of its
total assets in high yield securities (“junk bonds”) rated B or higher by Moody’s Investors
Service, Inc. (“Moody’s”), or equivalently rated by Standard & Poor’s Ratings Services (“S&P”) or
Fitch, Inc. (“Fitch”), or, if unrated, determined by PIMCO to be of comparable quality. The Fund is
non-diversified, which means that it may invest its assets in a smaller number of issuers than a
diversified fund.
The Fund may invest in derivative instruments, such as options, futures contracts or swap
agreements, or in mortgage- or asset-backed securities. The Fund may purchase or sell securities on
a when-issued, delayed delivery or forward commitment basis and may engage in short sales. The Fund
may also invest in securities issued by entities, such as trusts,whose underlying assets are
Municipal Bonds, including, without limitation, residual interest bonds. The Fund may, without
limitation, 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 or dollar rolls). The Fund may also invest up to 10% of its total assets in preferred
stocks.
Principal Risks
It is possible to lose money on an investment in the Fund. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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
E-219
High Yield Risk:
the risk that high yield securities and unrated securities of similar credit
quality (commonly known as “junk bonds”) are subject to greater levels of credit and liquidity
risks. High yield securities are considered primarily speculative with respect to the issuer’s
continuing ability to make principal and interest payments
Market Risk:
the risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
Issuer Risk:
the risk that the value of a security may decline for a reason directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Equity Risk:
the risk that the value of equity securities, such as common stocks and preferred
stocks, may decline due to general market conditions which are not specifically related to a
particular company or to factors affecting a particular industry or industries. Equity securities
generally have greater price volatility than fixed income securities
Mortgage-Related and Other Asset-Backed Securities Risk:
the risk of investing in mortgage-related
and other asset-backed securities, including interest rate risk, extension risk and prepayment risk
Issuer Non-Diversification Risk:
the risk of focusing investments in a small number of issuers,
including being more susceptible to risks associated with a single economic, political or
regulatory occurrence than a more diversified portfolio might be. Funds that are “non-diversified”
may invest a greater percentage of their assets in the securities of a single issuer (such as bonds
issued by a particular state) than funds that are “diversified”
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
New York State-Specific Risk:
the risk that by concentrating its investments in New York Municipal
Bonds, the Fund may be affected significantly by economic, regulatory or political developments
affecting the ability of New York issuers to pay interest or repay principal
Municipal Project-Specific Risk:
the risk that the Fund may be more sensitive to adverse economic,
business or political developments if it invests a substantial portion of its assets in the bonds
of similar projects (such as those relating to education, health care, housing, transportation, and
utilities), industrial development bonds, or in bonds from issuers in a single state
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
E-220
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|
PIMCO Real Return Fund
|
|
Ticker symbol:
|
|
|
|
PRRIX (Inst. Class)
|
Principal Investments and Strategies
|
|
|
|
|
|
|
Investment Objective
|
|
Fund Focus
|
|
Credit Quality
|
|
Seeks maximum real
return, consistent with
preservation of capital
and prudent investment
management.
|
|
Inflation-indexed Fixed
Income Instruments
Average Portfolio Duration
+/-3 years of its benchmark
|
|
B to Aaa; maximum 10% of total assets
below Baa
Dividend Frequency
Declared daily and distributed monthly
|
The Fund seeks its investment objective by investing under normal circumstances at least 80% of its
net assets in inflation-indexed bonds of varying maturities issued by the U.S. and non-U.S.
governments, their agencies or instrumentalities, and corporations, which may be represented by
forwards or derivatives such as options, futures contracts or swap agreements. Assets not invested
in inflation-indexed bonds may be invested in other types of Fixed Income Instruments. “Fixed
Income Instruments” include bonds, debt securities and other similar instruments issued by various
U.S. and non-U.S. public- or private-sector entities. 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 used to determine the sensitivity of a security’s price to changes in
interest rates. The longer a security’s duration, the more sensitive it will be to changes in
interest rates. Effective duration takes into account that for certain bonds expected cash flows
will fluctuate as interest rates change and is defined in nominal yield terms, which is market
convention for most bond investors and managers. Because market convention for bonds is to use
nominal yields to measure duration, duration for real return bonds, which are based on real yields,
are converted to nominal durations through a conversion factor. The resulting nominal duration
typically can range from 20% and 90% of the respective real duration. All security holdings will be
measured in effective (nominal) duration terms. Similarly, the effective duration of the Barclays
U.S. TIPS Index will be calculated using the same conversion factors. The effective duration of
this Fund normally varies within three years (plus or minus) of the effective portfolio duration of
the securities comprising the Barclays U.S. TIPS Index, as calculated by PIMCO, which as of June
30, 2013 was 5.88 years.
The Fund invests primarily in investment grade securities, but may invest up to 10% of its total
assets in high yield securities (“junk bonds”) rated B or higher by Moody’s Investors Service, Inc.
(“Moody’s”), or equivalently rated by Standard & Poor’s Ratings Services (“S&P”) or Fitch, Inc.
(“Fitch”), or, if unrated, determined by Pacific Investment Management Company LLC (“PIMCO”) to be
of comparable quality.
The Fund also may invest up to 30% of its total assets in securities denominated in foreign
currencies, and may invest beyond this limit in U.S. dollar denominated securities of foreign
issuers. The Fund may invest up to 10% of its total assets in securities and instruments that are
economically tied to emerging market countries. The Fund will normally limit its foreign currency
exposure (from non-U.S. dollar-denominated securities or currencies) to 20% of its total assets.
The Fund is non-diversified, which means that it may invest its assets in a smaller number of
issuers than a diversified fund.
The Fund may invest, without limitation, in derivative instruments, such as options, futures
contracts or swap agreements, or in mortgage- or asset-backed securities, subject to applicable law
and any other restrictions described in the Fund’s prospectus or Statement of Additional
Information. The Fund may purchase or sell securities on a when-issued, delayed delivery or forward
commitment basis and may engage in short sales. The Fund may, without limitation, 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 or dollar
rolls). The Fund may also invest up to 10% of its total assets in preferred stocks.
Principal Risks
It is possible to lose money on an investment in the Fund. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
E-221
Credit Risk:
the risk that 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 risk that high yield securities and unrated securities of similar credit
quality (commonly known as “junk bonds”) are subject to greater levels of credit and liquidity
risks. High yield securities are considered primarily speculative with respect to the issuer’s
continuing ability to make principal and interest payments
Market Risk:
the risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
Issuer Risk:
the risk that the value of a security may decline for a reason directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Equity Risk:
the risk that the value of equity securities, such as common stocks and preferred
stocks, may decline due to general market conditions which are not specifically related to a
particular company or to factors affecting a particular industry or industries. Equity securities
generally have greater price volatility than fixed income securities
Mortgage-Related and Other Asset-Backed Securities Risk:
the risk of investing in mortgage-related
and other asset-backed securities, including interest rate risk, extension risk and prepayment risk
Foreign (Non-U.S.) Investment Risk:
the risk that investing in foreign (non-U.S.) securities may
result in the Fund experiencing more rapid and extreme changes in value than a fund that invests
exclusively in securities of U.S. companies, due to smaller markets, differing reporting,
accounting and auditing standards, and nationalization, expropriation or confiscatory taxation,
currency blockage, or political changes or diplomatic developments. Foreign securities may also be
less liquid and more difficult to value than securities of U.S. issuers
Emerging Markets Risk:
the risk of investing in emerging market securities, primarily increased
foreign (non-U.S.) investment risk
Currency Risk:
the risk that foreign currencies will decline in value relative to the U.S. dollar
and affect the Fund’s investments in foreign (non-U.S.) currencies or in securities that trade in,
and receive revenues in, or in derivatives that provide exposure to, foreign (non-U.S.) currencies
Issuer Non-Diversification Risk:
the risk of focusing investments in a small number of issuers,
including being more susceptible to risks associated with a single economic, political or
regulatory occurrence than a more diversified portfolio might be. Funds that are “non-diversified”
may invest a greater percentage of their assets in the securities of a single issuer (such as bonds
issued by a particular state) than funds that are “diversified”
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
E-222
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PIMCO Real Return Asset Fund
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Ticker symbol:
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PRAIX (Inst. Class)
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Principal Investments and Strategies
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Investment Objective
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Fund Focus
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Credit Quality
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Seeks maximum real
return, consistent with
prudent investment
management.
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Inflation-indexed fixed
income securities
Average Portfolio Duration
+/- 4 years of the benchmark
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B to Aaa; maximum 20% of total assets
below Baa
Dividend Frequency
Declared daily and distributed monthly
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The Fund seeks its investment objective by investing under normal circumstances at least 80% of its
net assets in inflation-indexed bonds of varying maturities issued by the U.S. and non-U.S.
governments, their agencies or instrumentalities, and corporations. Assets not invested in
inflation-indexed bonds may be invested in other types of Fixed Income Instruments. “Fixed Income
Instruments” include bonds, debt securities and other similar instruments issued by various U.S.
and non-U.S. public- or private-sector entities. 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 used to determine the sensitivity of a security’s
price to changes in interest rates. The longer a security’s duration, the more sensitive it will be
to changes in interest rates. Effective duration takes into account that for certain bonds expected
cash flows will fluctuate as interest rates change and is defined in nominal yield terms, which is
market convention for most bond investors and managers. Durations for real return bonds, which are
based on real yields, are converted to nominal durations through a conversion factor, typically
between 20% and 90% of the respective real duration. All security holdings will be measured in
effective (nominal) duration terms. Similarly, the effective duration of the Barclays U.S. Treasury
Inflation Notes 10+ Years Index will be calculated using the same conversion factors. The effective
duration of this Fund normally varies within four years (plus or minus) of the effective portfolio
duration of the securities comprising the Barclays U.S. Treasury Inflation Notes 10+ Years Index,
as calculated by Pacific Investment Management Company LLC (“PIMCO”), which as of June 30, 2013, as
converted, was 11.21 years.
The Fund invests primarily in investment grade securities, but may invest up to 20% of its total
assets in high yield securities (“junk bonds”) rated B or higher by Moody’s Investors Service, Inc.
(“Moody’s”), or equivalently rated by Standard & Poor’s Ratings Services (“S&P”) or Fitch, Inc.
(“Fitch”), or, if unrated, determined by PIMCO to be of comparable quality. The Fund also may
invest up to 30% of its total assets in securities denominated in foreign currencies, and may
invest beyond this limit in U.S. dollar denominated securities of foreign issuers. The Fund may
invest up to 10% of its total assets in securities and instruments that are economically tied to
emerging market countries. The Fund will normally limit its foreign currency exposure (from
non-U.S. dollar-denominated securities or currencies) to 20% of its total assets. The Fund is
non-diversified, which means that it may invest its assets in a smaller number of issuers than a
diversified fund.
The Fund may invest, without limitation, in derivative instruments, such as options, futures
contracts or swap agreements, or in mortgage- or asset-backed securities, subject to applicable law
and any other restrictions described in the Fund’s prospectus or Statement of Additional
Information. The Fund may purchase and sell securities on a when-issued, delayed delivery or
forward commitment basis and may engage in short sales. The Fund may gain exposure to the commodity
markets by investing in commodity-linked derivatives. The Fund may, without limitation, 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 or dollar
rolls). The Fund may also invest up to 10% of its total assets in preferred stocks.
Principal Risks
It is possible to lose money on an investment in the Fund. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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
E-223
High Yield Risk:
the risk that high yield securities and unrated securities of similar credit
quality (commonly known as “junk bonds”) are subject to greater levels of credit and liquidity
risks. High yield securities are considered primarily speculative with respect to the issuer’s
continuing ability to make principal and interest payments
Market Risk:
the risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
Issuer Risk:
the risk that the value of a security may decline for a reason directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Commodity Risk:
the risk that investing in commodity-linked derivative instruments may subject the
Fund to greater volatility than investments in traditional securities. The value of
commodity-linked derivative instruments may be affected by changes in overall market movements,
commodity index volatility, changes in interest rates, or factors affecting a particular industry
or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs and
international economic, political and regulatory developments
Equity Risk:
the risk that the value of equity securities, such as common stocks and preferred
stocks, may decline due to general market conditions which are not specifically related to a
particular company or to factors affecting a particular industry or industries. Equity securities
generally have greater price volatility than fixed income securities
Mortgage-Related and Other Asset-Backed Securities Risk:
the risk of investing in mortgage-related
and other asset-backed securities, including interest rate risk, extension risk and prepayment risk
Foreign (Non-U.S.) Investment Risk:
the risk that investing in foreign (non-U.S.) securities may
result in the Fund experiencing more rapid and extreme changes in value than a fund that invests
exclusively in securities of U.S. companies, due to smaller markets, differing reporting,
accounting and auditing standards, and nationalization, expropriation or confiscatory taxation,
currency blockage, or political changes or diplomatic developments. Foreign securities may also be
less liquid and more difficult to value than securities of U.S. issuers
Emerging Markets Risk:
the risk of investing in emerging market securities, primarily increased
foreign (non-U.S.) investment risk
Currency Risk:
the risk that foreign currencies will decline in value relative to the U.S. dollar
and affect the Fund’s investments in foreign (non-U.S.) currencies or in securities that trade in,
and receive revenues in, or in derivatives that provide exposure to, foreign (non-U.S.) currencies
Issuer Non-Diversification Risk:
the risk of focusing investments in a small number of issuers,
including being more susceptible to risks associated with a single economic, political or
regulatory occurrence than a more diversified portfolio might be. Funds that are “non-diversified”
may invest a greater percentage of their assets in the securities of a single issuer (such as bonds
issued by a particular state) than funds that are “diversified”
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
Inflation-Indexed Security Risk:
the risk that inflation-indexed debt securities are subject to the
effects of changes in market interest rates caused by factors other than inflation (real interest
rates). In general, the value of an inflation-indexed security, including TIPS, tends to decrease
when real interest rates increase and can increase when real interest rates decrease. Interest
payments on inflation-indexed securities are unpredictable and will fluctuate as the principal and
interest are adjusted for inflation. There can be no assurance that the inflation index used will
accurately measure the real rate of inflation in the prices of goods and services. Any increase in
the principal amount of an inflation-indexed debt security will be considered taxable ordinary
income, even though the Fund will not receive the principal until maturity
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
E-224
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PIMCO RealEstateRealReturn Strategy Fund
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Ticker symbol:
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PRRSX (Inst. Class)
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Principal Investments and Strategies
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Investment Objective
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Fund Focus
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Credit Quality
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Seeks maximum real
return consistent with
prudent investment
management.
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Real estate-linked
derivatives backed
by a portfolio of inflation-indexed
and other Fixed
Income Instruments
Average Collateral
Fixed Income
Duration
<
10 years
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B to Aaa; maximum 10% of total
assets below Baa
Dividend Frequency
Declared and distributed quarterly
|
The Fund seeks to achieve its investment objective by investing under normal circumstances in real
estate-linked derivative instruments backed by a portfolio of inflation-indexed securities and
other Fixed Income Instruments. “Fixed Income Instruments” include bonds, debt securities and other
similar instruments issued by various U.S. and non-U.S. public- or private-sector entities. The
Fund may invest in real estate-linked derivative instruments, including swap agreements, options,
futures, options on futures and structured notes. The value of real estate-linked derivative
instruments may be affected by risks similar to those associated with direct ownership of real
estate. Real estate values can fluctuate due to losses from casualty or condemnation, and changes
in local and general economic conditions, supply and demand, interest rates, property tax rates,
regulatory limitations on rents, zoning laws and operating expenses. The Fund may also invest
directly in real estate investment trusts (“REIT”) and in common and preferred stocks as well as
convertible securities of issuers in real estate-related industries. The Fund may also invest in
exchange-traded funds.
The Fund typically will seek to gain exposure to the real estate market by investing in REIT total
return swap agreements. In a typical REIT swap agreement, the Fund will receive the price
appreciation (or depreciation) of a REIT index or portion of an index, from the counterparty to the
swap agreement in exchange for paying the counterparty an agreed-upon fee. Investments in REIT swap
agreements may be susceptible to additional risks, similar to those associated with direct
investment in REITs, including changes in the value of underlying properties, defaults by borrowers
or tenants, revisions to the Internal Revenue Code of 1986, as amended (the “Code”), changes in
interest rates and poor performance by those managing the REITs. Assets not invested in real
estate-linked derivative instruments may be invested in inflation-indexed securities and other
Fixed Income Instruments, including derivative Fixed Income Instruments. In addition, Index
derivatives may be purchased with a fraction of the assets that would be needed to purchase the
securities directly, so that the remainder of the assets may be invested in Fixed Income
Instruments. The Fund is non-diversified, which means that it may invest its assets in a smaller
number of issuers than a diversified fund.
The average portfolio duration of the fixed income portion of this Fund will vary based on Pacific
Investment Management Company LLC’s (“PIMCO”) forecast for interest rates and under normal market
conditions is not expected to exceed ten years. Duration is a measure used to determine the
sensitivity of a security’s price to changes in interest rates. The longer a security’s duration,
the more sensitive it will be to changes in interest rates. The Fund may invest up to 10% of its
total assets in high yield securities (“junk bonds”) rated B or higher by Moody’s Investors
Service, Inc. (“Moody’s”), or equivalently rated by Standard & Poor’s Ratings Services (“S&P”) or
Fitch, Inc. (“Fitch”), or, if unrated, determined by PIMCO to be of comparable quality. The Fund
may invest up to 10% of its total assets in securities and instruments that are economically tied
to emerging market countries. The Fund may invest up to 30% of its total 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 limit its foreign currency exposure (from
non-U.S. dollar-denominated securities or currencies) to 20% of its total assets. The Fund may,
without limitation, 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 Fund may also invest up to 10% of its total assets in
preferred stocks. The Fund may invest, without limitation, in derivative instruments, such as
options, futures contracts or swap agreements, or in mortgage- or asset-backed securities, subject
to applicable law and any other restrictions described in the Fund’s prospectus or Statement of
Additional Information. The Fund may purchase or sell securities on a when-issued, delayed delivery
or forward commitment basis and may engage in short sales.
Principal Risks
It is possible to lose money on an investment in the Fund. Under certain conditions, generally in a
market where the value of both real estate derivatives and fixed income securities are declining,
the Fund may experience substantial losses. The principal risks of investing in the Fund, which
could adversely affect its net asset value, yield and total return are:
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
E-225
Credit Risk:
the risk that 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 risk that high yield securities and unrated securities of similar credit
quality (commonly known as “junk bonds”) are subject to greater levels of credit and liquidity
risks. High yield securities are considered primarily speculative with respect to the issuer’s
continuing ability to make principal and interest payments
Market Risk:
the risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
Issuer Risk:
the risk that the value of a security may decline for a reason directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Equity Risk:
the risk that the value of equity securities, such as common stocks and preferred
stocks, may decline due to general market conditions which are not specifically related to a
particular company or to factors affecting a particular industry or industries. Equity securities
generally have greater price volatility than fixed income securities
Mortgage-Related and Other Asset-Backed Securities Risk:
the risk of investing in mortgage-related
and other asset-backed securities, including interest rate risk, extension risk and prepayment risk
Foreign (Non-U.S.) Investment Risk:
the risk that investing in foreign (non-U.S.) securities may
result in the Fund experiencing more rapid and extreme changes in value than a fund that invests
exclusively in securities of U.S. companies, due to smaller markets, differing reporting,
accounting and auditing standards, and nationalization, expropriation or confiscatory taxation,
currency blockage, or political changes or diplomatic developments. Foreign securities may also be
less liquid and more difficult to value than securities of U.S. issuers
Real Estate Risk:
the risk that a Fund’s investments in Real Estate Investment Trusts (“REITs”) or
real estate-linked derivative instruments will subject the Fund to risks similar to those
associated with direct ownership of real estate, including losses from casualty or condemnation,
and changes in local and general economic conditions, supply and demand, interest rates, zoning
laws, regulatory limitations on rents, property taxes and operating expenses. A Fund’s investments
in REITs or real estate-linked derivative instruments subject it to management and tax risks
Emerging Markets Risk:
the risk of investing in emerging market securities, primarily increased
foreign (non-U.S.) investment risk
Currency Risk:
the risk that foreign currencies will decline in value relative to the U.S. dollar
and affect the Fund’s investments in foreign (non-U.S.) currencies or in securities that trade in,
and receive revenues in, or in derivatives that provide exposure to, foreign (non-U.S.) currencies
Issuer Non-Diversification Risk:
the risk of focusing investments in a small number of issuers,
including being more susceptible to risks associated with a single economic, political or
regulatory occurrence than a more diversified portfolio might be. Funds that are “non-diversified”
may invest a greater percentage of their assets in the securities of a single issuer (such as bonds
issued by a particular state) than funds that are “diversified”
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
E-226
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PIMCO Senior Floating Rate Fund
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Ticker symbol:
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PSRIX (Inst. Class)
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Principal Investments and Strategies
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Investment Objective
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Fund Focus
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Credit Quality
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Seeks a high level of
current income,
consistent with prudent
investment management.
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Portfolio of senior
secured loans, senior
corporate debt and other
senior fixed income
instruments
Average Portfolio Duration
+/- 1 year of its benchmark
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Maximum of 5% of total assets below
Caa
Dividend Frequency
Declared daily and distributed monthly
|
The Fund seeks to achieve its investment objective by investing under normal circumstances at least
80% of its assets in a diversified portfolio of floating or adjustable rate senior secured loans,
senior corporate debt and other senior Fixed Income Instruments that effectively enable the Fund to
achieve a floating rate of income. “Fixed Income Instruments” include bank loans, bonds, debt
securities and other similar instruments issued by various U.S. and non-U.S. entities.
A senior secured debt security holds a senior position in the issuer’s capital structure and is
typically secured by collateral such that, under normal circumstances, holders (such as the Fund)
enjoy a priority claim to some or all of the issuer’s assets in the event of default as compared to
other creditors of the issuer. Variable and floating-rate Fixed Income Instruments generally pay
interest at rates that adjust whenever a specified interest rate changes and/or reset on
predetermined dates (such as the last day of a month or calendar quarter). The Fund may also invest
in fixed-rate Fixed Income Instruments, including those with respect to which the Fund has entered
into derivative instruments to effectively convert the fixed-rate interest payments into
floating-rate interest payments.
The Fund may invest in both investment grade securities and high yield securities (“junk bonds”)
and may primarily invest its assets in below investment grade securities subject to a maximum of 5%
of its total assets in securities rated below Caa by Moody’s Investors Service, Inc. (“Moody’s”),
or equivalently rated by Standard & Poor’s Ratings Services (“S&P”) or Fitch, Inc. (“Fitch”), or,
if unrated, determined by Pacific Investment Management Company LLC (“PIMCO”) to be of comparable
quality. The Fund may invest up to 10% of its total assets in securities and instruments of issuers
economically tied to emerging market countries. The Fund may also invest up to 20% of its total
assets in securities denominated in foreign currencies and in U.S. dollar-denominated securities of
foreign issuers. The Fund will normally limit its foreign currency exposure (from non-U.S.
dollar-denominated securities or currencies) to 5% of its total assets.
The Fund may invest in derivative instruments, such as credit default swap and total return swap
agreements, interest rate swaps, futures and options, subject to applicable law and any other
restrictions described in the prospectus or Statement of Additional Information. The Fund may
purchase or sell securities on a when-issued, delayed delivery or forward commitment basis,
including currency forwards, and may engage in short sales.
The average portfolio duration of the Fund will normally vary within one year (plus or minus) of
the portfolio duration of the securities comprising the Credit Suisse Institutional Leveraged Loan
Index, as calculated by PIMCO, which was less than 1 year as of the date of the prospectus.
Duration is a measure used to determine the sensitivity of a security’s price to changes in
interest rates. The longer a security’s duration, the more sensitive it will be to changes in
interest rates.
Principal Risks
It is possible to lose money on an investment in the Fund. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
Senior Debt Risk:
the risk that investing in senior debt exposes the Fund to heightened credit
risk, liquidity risk and valuation risk. If the issuer prepays, the Fund will have to reinvest the
proceeds in other senior debt or instruments that may pay lower interest rates
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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 risk that high yield securities and unrated securities of similar credit
quality (commonly known as “junk bonds”) are subject to greater levels of credit and liquidity
risks, including the risk that a court will subordinate high yield senior debt to other debt of the
issuer or take other actions detrimental to holders of the senior debt. High yield securities are
considered primarily speculative with respect to the issuer’s continuing ability to make principal
and interest payments
E-227
Market Risk:
the risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
Issuer Risk:
the risk that the value of a security may decline for a reason directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Foreign (Non-U.S.) Investment Risk:
the risk that investing in foreign (non-U.S.) securities may
result in the Fund experiencing more rapid and extreme changes in value than a fund that invests
exclusively in securities of U.S. companies, due to smaller markets, differing reporting,
accounting and auditing standards, and nationalization, expropriation or confiscatory taxation,
currency blockage, or political changes or diplomatic developments. Foreign securities may also be
less liquid and more difficult to value than securities of U.S. issuers
Emerging Markets Risk:
the risk of investing in emerging market securities, primarily increased
foreign (non-U.S.) investment risk
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
E-228
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PIMCO Short Asset Investment Fund
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Ticker symbol:
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PAIDX (Inst. Class)
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Principal Investments and Strategies
|
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|
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|
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Investment Objective
|
|
Fund Focus
|
|
Credit Quality
|
|
Seeks maximum current
income, consistent with
daily liquidity.
|
|
Short maturity fixed income instruments
Average Portfolio Duration
<
1.5 years
|
|
Baa to Aaa
Dividend Frequency
Declared daily and distributed monthly
|
The Fund seeks to achieve its investment objective by investing under normal circumstances at least
65% of its total assets in a diversified portfolio of Fixed Income Instruments of varying
maturities, which may be represented by forwards or derivatives such as options, futures contracts
or swap agreements. “Fixed Income Instruments” include bonds, debt securities and other similar
instruments issued by various U.S. and non-U.S. public- or private-sector entities. The average
portfolio duration of this Fund will vary based on Pacific Investment Management Company LLC’s
(“PIMCO”) forecast for interest rates and will normally not exceed one and one-half years. Duration
is a measure used to determine the sensitivity of a security’s price to changes in interest rates.
The longer a security’s duration, the more sensitive it will be to changes in interest rates.
The Fund invests primarily in investment grade debt securities rated Baa or higher by Moody’s
Investors Service, Inc. (“Moody’s”), or equivalently rated by Standard & Poor’s Ratings Services
(“S&P”) or Fitch, Inc. (“Fitch”), or, if unrated, determined by PIMCO to be of comparable quality.
The Fund may not invest in securities denominated in foreign currencies, but may invest without
limit in U.S. dollar-denominated securities of foreign issuers. In addition, the Fund may invest up
to 10% of its total assets in U.S. dollar-denominated securities and instruments that are
economically tied to emerging market countries. The Fund may invest up to 60% of its total assets
in corporate issuers.
The Fund may invest, without limitation, in derivative instruments, such as options, futures
contracts or swap agreements, subject to applicable law and any other restrictions described in the
Fund’s prospectus or Statement of Additional Information. The Fund may invest up to 20% of its
total assets in asset-backed securities and up to 10% of its total assets in privately issued
mortgage-backed securities. The Fund may invest up to 10% of its total assets in interest rate
swaps and up to 5% of its total assets in credit default swaps. The Fund may purchase or sell
securities on a when-issued, delayed delivery or forward commitment basis and may engage in short
sales. The Fund may, without limitation, 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 or dollar rolls).
Principal Risks
It is possible to lose money on an investment in the Fund. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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 risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
Issuer Risk:
the risk that the value of a security may decline for a reason directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Mortgage-Related and Other Asset-Backed Securities Risk:
the risk of investing in mortgage-related
and other asset-backed securities, including interest rate risk, extension risk and prepayment risk
E-229
Foreign (Non-U.S.) Investment Risk:
the risk that investing in foreign (non-U.S.) securities may
result in the Fund experiencing more rapid and extreme changes in value than a fund that invests
exclusively in securities of U.S. companies, due to smaller markets, differing reporting,
accounting and auditing standards, and nationalization, expropriation or confiscatory taxation,
currency blockage, or political changes or diplomatic developments. Foreign securities may also be
less liquid and more difficult to value than securities of U.S. issuers
Emerging Markets Risk:
the risk of investing in emerging market securities, primarily increased
foreign (non-U.S.) investment risk
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
E-230
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PIMCO Short Duration Municipal Income Fund
|
|
Ticker symbol:
|
|
|
|
PSDIX (Inst. Class)
|
Principal Investments and Strategies
|
|
|
|
|
|
|
Investment Objective
|
|
Fund Focus
|
|
Credit Quality
|
|
Seeks high current
income exempt from
federal income tax,
consistent with
preservation of capital.
|
|
Short to intermediate
maturity municipal
securities (exempt from
federal income tax)
Average Portfolio Duration
<
3 years
|
|
Baa to Aaa
Dividend Frequency
Declared daily and
distributed monthly
|
The Fund seeks to achieve its investment objective by investing under normal circumstances at least
80% of its 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 does not intend to invest in securities whose interest is subject to the federal
alternative minimum tax. The Fund may only invest in investment grade debt securities. The Fund may
invest more than 25% of its total assets in bonds of issuers in California and New York. To the
extent that the Fund concentrates its investments in California or New York, it will be subject to
California or New York State-Specific Risk. The Fund may also invest 25% or more of its total
assets in Municipal Bonds that finance education, health care, housing, transportation, utilities
and other similar projects, and 25% or more of its total assets in industrial development bonds.
The average portfolio duration of this Fund varies based on Pacific Investment Management Company
LLC’s (“PIMCO”) forecast for interest rates and under normal market conditions is not expected to
exceed three years. Duration is a measure used to determine the sensitivity of a security’s price
to changes in interest rates. The longer a security’s duration, the more sensitive it will be to
changes in interest rates. The portfolio manager focuses on bonds with the potential to offer
attractive current income, typically looking for bonds that can provide consistently attractive
current yields or that are trading at competitive market prices.
The Fund may invest in derivative instruments, such as options, futures contracts or swap
agreements, or in mortgage- or asset-backed securities. The Fund may purchase or sell securities on
a when-issued, delayed delivery or forward commitment basis and may engage in short sales. The Fund
may also invest in securities issued by entities, such as trusts, whose underlying assets are
Municipal Bonds, including, without limitation, residual interest bonds. The Fund may, without
limitation, 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 or dollar rolls). The Fund may also invest up to 10% of its total assets in preferred
stocks.
Principal Risks
It is possible to lose money on an investment in the Fund. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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 risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
Issuer Risk:
the risk that the value of a security may decline for a reason directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
E-231
Equity Risk:
the risk that the value of equity securities, such as common stocks and preferred
stocks, may decline due to general market conditions which are not specifically related to a
particular company or to factors affecting a particular industry or industries. Equity securities
generally have greater price volatility than fixed income securities
Mortgage-Related and Other Asset-Backed Securities Risk:
the risk of investing in mortgage-related
and other asset-backed securities, including interest rate risk, extension risk and prepayment risk
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
California State-Specific Risk:
the risk that by concentrating its investments in California
Municipal Bonds, the Fund may be affected significantly by economic, regulatory or political
developments affecting the ability of California issuers to pay interest or repay principal
New York State-Specific Risk:
the risk that by concentrating its investments in New York Municipal
Bonds, the Fund may be affected significantly by economic, regulatory or political developments
affecting the ability of New York issuers to pay interest or repay principal
Municipal Project-Specific Risk:
the risk that the Fund may be more sensitive to adverse economic,
business or political developments if it invests a substantial portion of its assets in the bonds
of similar projects (such as those relating to education, health care, housing, transportation, and
utilities), industrial development bonds, or in bonds from issuers in a single state
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
E-232
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PIMCO Short-Term Fund
|
|
Ticker symbol:
|
|
|
|
PTSHX (Inst. Class)
|
Principal Investments and Strategies
|
|
|
|
|
|
|
Investment Objective
|
|
Fund Focus
|
|
Credit Quality
|
|
Seeks maximum current
income, consistent with
preservation of capital
and daily liquidity.
|
|
Money market instruments
and short maturity Fixed
Income Instruments
Average Portfolio Duration
<1 year
|
|
B to Aaa; maximum 20% of total assets
below Baa
Dividend Frequency
Declared daily and distributed monthly
|
The Fund seeks to achieve its investment objective by investing under normal circumstances at least
65% of its total assets in a diversified portfolio of Fixed Income Instruments of varying
maturities, which may be represented by forwards or derivatives such as options, futures contracts
or swap agreements. “Fixed Income Instruments” include bonds, debt securities and other similar
instruments issued by various U.S. and non-U.S. public- or private-sector entities. The average
portfolio duration of this Fund will vary based on Pacific Investment Management Company LLC’s
(“PIMCO”) forecast for interest rates and will normally not exceed one year. Duration is a measure
used to determine the sensitivity of a security’s price to changes in interest rates. The longer a
security’s duration, the more sensitive it will be to changes in interest rates. In addition, the
dollar-weighted average portfolio maturity of the Fund, under normal circumstances, is expected not
to exceed three years.
The Fund invests primarily in investment grade debt securities, but may invest up to 10% of its
total assets in high yield securities (“junk bonds”) rated B or higher by Moody’s Investors
Service, Inc. (“Moody’s”), or equivalently rated by Standard & Poor’s Ratings Services (“S&P”) or
Fitch, Inc. (“Fitch”), or, if unrated, determined by PIMCO to be of comparable quality. The Fund
may invest up to 10% of its total 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 limit its foreign currency exposure (from non-U.S. dollar-denominated securities or
currencies) to 20% of its total assets.
The Fund may invest, without limitation, in derivative instruments, such as options, futures
contracts or swap agreements, or in mortgage- or asset-backed securities, subject to applicable law
and any other restrictions described in the Fund’s prospectus or Statement of Additional
Information. The Fund may purchase or sell securities on a when-issued, delayed delivery or forward
commitment basis and may engage in short sales. The Fund may, without limitation, 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 or dollar
rolls). The Fund may also invest up to 10% of its total assets in preferred stocks.
Principal Risks
It is possible to lose money on an investment in the Fund. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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 risk that high yield securities and unrated securities of similar credit
quality (commonly known as “junk bonds”) are subject to greater levels of credit and liquidity
risks. High yield securities are considered primarily speculative with respect to the issuer’s
continuing ability to make principal and interest payments
Market Risk:
the risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
Issuer Risk:
the risk that the value of a security may decline for a reason directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
E-234
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Equity Risk:
the risk that the value of equity securities, such as common stocks and preferred
stocks, may decline due to general market conditions which are not specifically related to a
particular company or to factors affecting a particular industry or industries. Equity securities
generally have greater price volatility than fixed income securities
Mortgage-Related and Other Asset-Backed Securities Risk:
the risk of investing in mortgage-related
and other asset-backed securities, including interest rate risk, extension risk and prepayment risk
Foreign (Non-U.S.) Investment Risk:
the risk that investing in foreign (non-U.S.) securities may
result in the Fund experiencing more rapid and extreme changes in value than a fund that invests
exclusively in securities of U.S. companies, due to smaller markets, differing reporting,
accounting and auditing standards, and nationalization, expropriation or confiscatory taxation,
currency blockage, or political changes or diplomatic developments. Foreign securities may also be
less liquid and more difficult to value than securities of U.S. issuers
Currency Risk:
the risk that foreign currencies will decline in value relative to the U.S. dollar
and affect the Fund’s investments in foreign (non-U.S.) currencies or in securities that trade in,
and receive revenues in, or in derivatives that provide exposure to, foreign (non-U.S.) currencies
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
E-234
|
|
|
|
|
PIMCO Small Company Fundamental IndexPLUS
®
AR Strategy Fund
|
|
Ticker symbol:
|
|
|
|
PCFIX (Inst. Class)
|
Principal Investments and Strategies
|
|
|
|
|
|
|
Investment Objective
|
|
Fund Focus
|
|
Credit Quality
|
|
Seeks total return which
exceeds that of its
benchmark.
|
|
Enhanced
RAFI
®
Small Company Fundamental
Index derivatives backed by
a portfolio of fixed income
instruments
Average Collateral Fixed
Income Duration
(-3) to 8 years
|
|
B to Aaa; max 20% of
total assets below
Baa
Dividend Frequency
Quarterly
|
The Fund seeks total return which exceeds that of the Russell 2000
®
Index (the
“Benchmark Index”), by investing under normal circumstances in derivatives based on the Enhanced
RAFI
®
US Small, backed by a diversified portfolio of short to intermediate duration Fixed Income
Instruments, which may be represented by forwards or derivatives such as options, futures contracts
or swap agreements. The Enhanced RAFI
®
US Small is constructed using the Fundamental Index
®
methodology, which is a patented, innovative indexing approach developed by Research Affiliates,
LLC. The methodology weights companies by fundamental factors — including sales, cash flows,
dividends and book value, with additional screens for quality of earnings, financial distress and
other parameters — in an effort to enhance returns. In managing the Fund’s investments in Fixed
Income Instruments, PIMCO utilizes an absolute return approach, which is designed to have
flexibility with respect to duration, overall sector exposures, non-U.S. exposures and credit
quality, both as a function of the strategy’s investment guidelines and lack of a fixed income
index benchmark. The absolute return approach does not apply to the equity index replicating
component of the Fund. “Fixed Income Instruments” include bonds, debt securities and other similar
instruments issued by various U.S. and non-U.S. public or private-sector entities. The Fund uses
the Enhanced RAFI
®
US Small derivatives to attempt to equal or exceed the daily performance of the
Benchmark Index. The values of the Enhanced RAFI
®
US Small derivatives should closely track changes
in the value of Enhanced RAFI
®
US Small. However, Enhanced RAFI
®
US Small 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. As of
June 30, 2013, the Enhanced RAFI
®
US Small is comprised of stocks with a market capitalization
ranging from $50.4 million to $8.80 billion.
Research Affiliates, LLC, the Fund’s sub-adviser, provides investment advisory services in
connection with the Fund’s use of the Enhanced RAFI
®
US Small by, among other things, providing
Pacific Investment Management Company LLC (“PIMCO”), or counterparties designated by PIMCO, with a
model portfolio reflecting the composition of the Enhanced RAFI
®
US Small for purposes of
developing Enhanced RAFI
®
US Small derivatives. PIMCO actively manages the Fixed Income Instruments
held by the Fund with a view toward enhancing the Fund’s total return, subject to an overall
portfolio duration which normally varies from (negative) 3 years to positive 8 years based on
PIMCO’s forecast for interest rates. Duration is a measure used to determine the sensitivity of a
security’s price to changes in interest rates. The longer a security’s duration, the more sensitive
it will be to changes in interest rates.
The Fund typically will seek to gain exposure to the Enhanced RAFI
®
US Small by investing in total
return swap agreements. In a typical swap agreement, the Fund will receive the price appreciation
(or depreciation) on the Enhanced RAFI
®
US Small from the counterparty to the swap agreement in
exchange for paying the counterparty an agreed upon fee. The Fund’s sub-adviser facilitates the
Fund’s use of the Enhanced RAFI
®
US Small derivatives by providing a model portfolio of the
Enhanced RAFI
®
US Small to the Fund’s swap counterparties, who in turn are able to provide total
return swaps based on the Enhanced RAFI
®
US Small to the Fund. Because Enhanced RAFI
®
US Small is a
proprietary index, there may be a limited number of counterparties willing or able to serve as
counterparties to a swap agreement. If such swap agreements are not available, the Fund may invest
in other derivative instruments, “baskets” of stocks, or individual securities to replicate the
performance of the Enhanced RAFI
®
US Small.
The Fund seeks to remain invested in the Enhanced RAFI
®
US Small derivatives even when the Enhanced
RAFI
®
US Small is declining. Though the Fund does not normally invest directly in the Enhanced
RAFI
®
US Small securities, when the Enhanced RAFI
®
US Small derivatives appear to be overvalued
relative to the Enhanced RAFI
®
US Small, the Fund may invest all of its assets in a “basket” of
Enhanced RAFI
®
US Small stocks.
The Fund may invest, without limitation, in derivative instruments, such as options, futures
contracts or swap agreements, or in mortgage- or asset-backed securities, subject to applicable law
and any other restrictions described in the Fund’s prospectus or Statement of Additional
Information. The Fund may purchase or sell securities on a when-issued, delayed delivery or forward
commitment basis and may engage in short sales. Assets not invested in equity securities or
derivatives may be invested in Fixed Income Instruments. The Fund may invest up to 20% of its total
assets in high yield securities (“junk bonds”) rated B or higher by Moody’s Investors Service, Inc.
(“Moody’s”), or equivalently rated by Standard & Poor’s Ratings Services (“S&P”) or Fitch, Inc.
(“Fitch”), or, if unrated, determined by PIMCO to be of comparable quality (except that within such
limitation, the Fund may invest in
E-235
mortgage-related securities rated below B). The Fund may invest,
without limitation, in securities denominated in foreign (non-U.S.) currencies and in U.S.
dollar-denominated securities of foreign (non-U.S.) issuers. The Fund may invest up to 25% of its
total assets in securities and instruments that are economically tied to emerging market countries.
The Fund will normally limit its foreign currency exposure (from non-U.S. dollar denominated
securities or currencies) to 20% of its total assets. The Fund may also invest up to 10% of its
total assets in preferred stocks.
Principal Risks
It is possible to lose money on an investment in the Fund. Under certain conditions, generally in a
market where the value of both Enhanced RAFI
®
US Small derivatives and fixed income securities are
declining or in periods of heightened market volatility, the Fund may experience greater losses or
lesser gains than would be the case if it invested directly in a portfolio of Enhanced RAFI
®
US
Small stocks. The principal risks of investing in the Fund, which could adversely affect its net
asset value, yield and total return are:
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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 risk that high yield securities and unrated securities of similar credit
quality (commonly known as “junk bonds”) are subject to greater levels of credit and liquidity
risks. High yield securities are considered primarily speculative with respect to the issuer’s
continuing ability to make principal and interest payments
Market Risk:
the risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
Issuer Risk:
the risk that the value of a security may decline for a reason directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Equity Risk:
the risk that the value of equity securities, such as common stocks and preferred
stocks, may decline due to general market conditions which are not specifically related to a
particular company or to factors affecting a particular industry or industries. Equity securities
generally have greater price volatility than fixed income securities
Mortgage-Related and Other Asset-Backed Securities Risk:
the risk of investing in mortgage-related
and other asset-backed securities, including interest rate risk, extension risk and prepayment risk
Foreign (Non-U.S.) Investment Risk:
the risk that investing in foreign (non-U.S.) securities may
result in the Fund experiencing more rapid and extreme changes in value than a fund that invests
exclusively in securities of U.S. companies, due to smaller markets, differing reporting,
accounting and auditing standards, and nationalization, expropriation or confiscatory taxation,
currency blockage, or political changes or diplomatic developments. Foreign securities may also be
less liquid and more difficult to value than securities of U.S. issuers
Emerging Markets Risk:
the risk of investing in emerging market securities, primarily increased
foreign (non-U.S.) investment risk
Currency Risk:
the risk that foreign currencies will decline in value relative to the U.S. dollar
and affect the Fund’s investments in foreign (non-U.S.) currencies or in securities that trade in,
and receive revenues in, or in derivatives that provide exposure to, foreign (non-U.S.) currencies
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
E-236
Smaller Company Risk:
the risk that the value of securities issued by a smaller company may go up
or down, sometimes rapidly and unpredictably as compared to more widely held securities, due to
narrow markets and limited resources of smaller companies. A Fund’s investments in smaller
companies subject it to greater levels of credit, market and issuer risk
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
E-237
|
|
|
|
|
PIMCO Small Cap StocksPLUS
®
AR Strategy Fund
|
|
Ticker symbol:
|
|
|
|
PSCSX (Inst. Class)
|
Principal Investments and Strategies
|
|
|
|
|
|
|
Investment Objective
|
|
Fund Focus
|
|
Credit Quality
|
|
Seeks total return which
exceeds that of the Russell
2000
®
Index
|
|
Russell
2000
®
Index derivatives backed by
a diversified portfolio of
Fixed Income Instruments
Average Collateral Fixed
Income Duration
(-3) to 8 years
|
|
B to Aaa; maximum 20% of total
assets below Baa
Dividend Frequency
Declared and distributed quarterly
|
The Fund seeks to exceed the total return of the Russell 2000
®
Index by investing under normal
circumstances in Russell 2000
®
Index derivatives, backed by a diversified portfolio of Fixed Income
Instruments actively managed by Pacific Investment Management Company LLC (“PIMCO”). In managing
the Fund’s investments in Fixed Income Instruments, PIMCO utilizes an absolute return approach,
which is designed to have flexibility with respect to duration, overall sector exposures, non-U.S.
exposures and credit quality, both as a function of the strategy’s investment guidelines and lack
of a fixed income index benchmark. The absolute return approach does not apply to the equity index
replicating component of the Fund. “Fixed Income Instruments” include bonds, debt securities and
other similar instruments issued by various U.S. and non-U.S. public- or private-sector entities.
The Fund may invest in common stocks, options, futures, options on futures and swaps. The Fund
normally uses Russell 2000
®
Index derivatives instead of Russell 2000
®
Index stocks to attempt to
equal or exceed the performance of the Russell 2000
®
Index. The Fund typically will seek to gain
long exposure to its benchmark index in an amount, under normal circumstances, approximately equal
to the Fund’s net assets. The value of Russell 2000
®
Index derivatives should closely track changes
in the value of the index. However, Russell 2000
®
Index derivatives may be purchased with a small
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 Instruments held by the Fund with a view toward enhancing the Fund’s total return,
subject to an overall portfolio duration which normally varies from (negative) 3 years to positive
8 years based on PIMCO’s forecast for interest rates. Duration is a measure used to determine the
sensitivity of a security’s price to changes in interest rates. The longer a security’s duration,
the more sensitive it will be to changes in interest rates.
The Russell 2000
®
Index is composed of 2,000 of the smallest companies in the Russell 3000
®
Index,
which represents approximately 10% of the total market capitalization of the Russell 3000
®
Index.
As of June 30, 2013, the Russell 2000
®
Index’s average market capitalization (dollar-weighted) was
$1.59 billion. The Fund seeks to remain invested in Russell 2000
®
Index derivatives or Russell
2000
®
Index stocks even when the Russell 2000
®
Index is declining.
Though the Fund does not normally invest directly in Russell 2000
®
Index securities, when Russell
2000
®
Index derivatives appear to be overvalued relative to the Russell 2000
®
Index, the Fund may
invest all of its assets in a “basket” of Russell 2000
®
Index stocks. The Fund also may invest in
exchange-traded funds based on the Russell 2000
®
Index.
The Fund may invest, without limitation, in derivative instruments, such as options, futures
contracts or swap agreements, or in mortgage- or asset-backed securities, subject to applicable law
and any other restrictions described in the Fund’s prospectus or Statement of Additional
Information. The Fund may purchase or sell securities on a when-issued, delayed delivery or forward
commitment basis and may engage in short sales. Assets not invested in equity securities or
derivatives may be invested in Fixed Income Instruments. The Fund may invest up to 20% of its total
assets in high yield securities (“junk bonds”) rated B or higher by Moody’s Investors Service, Inc.
(“Moody’s”), or equivalently rated by Standard & Poor’s Ratings Services (“S&P”) or Fitch, Inc.
(“Fitch”), or, if unrated, determined by PIMCO to be of comparable quality (except that within such
limitation, the Fund may invest in mortgage-related securities rated below B). The Fund may invest,
without limitation, in securities denominated in foreign currencies and in U.S. dollar-denominated
securities of foreign issuers. With respect to the Fund’s fixed income investments, the Fund may
invest up to 25% of its total assets in securities and instruments that are economically tied to
emerging market countries. With respect to the Fund’s fixed icome investments, the Fund will
normally limit its foreign currency exposure (from non-U.S. dollar-denominated securities or
currencies) to 20% of its total assets. The Fund may also invest up to 10% of its total assets in
preferred stocks.
Principal Risks
It is possible to lose money on an investment in the Fund. Under certain conditions, generally in a
market where the value of both Russell 2000
®
Index derivatives and fixed income
securities are declining or in periods of heightened market volatility, the Fund may experience
greater losses or lesser gains than would be the case if it invested directly in a portfolio of
Russell 2000
®
Index stocks. The principal risks of investing in the Fund, which could
adversely affect its net asset value, yield and total return are:
E-238
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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 risk that high yield securities and unrated securities of similar credit
quality (commonly known as “junk bonds”) are subject to greater levels of credit and liquidity
risks. High yield securities are considered primarily speculative with respect to the issuer’s
continuing ability to make principal and interest payments
Market Risk:
the risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
Issuer Risk:
the risk that the value of a security may decline for a reason directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Equity Risk:
the risk that the value of equity securities, such as common stocks and preferred
stocks, may decline due to general market conditions which are not specifically related to a
particular company or to factors affecting a particular industry or industries. Equity securities
generally have greater price volatility than fixed income securities
Mortgage-Related and Other Asset-Backed Securities Risk:
the risk of investing in mortgage-related
and other asset-backed securities, including interest rate risk, extension risk and prepayment risk
Foreign (Non-U.S.) Investment Risk:
the risk that investing in foreign (non-U.S.) securities may
result in the Fund experiencing more rapid and extreme changes in value than a fund that invests
exclusively in securities of U.S. companies, due to smaller markets, differing reporting,
accounting and auditing standards, and nationalization, expropriation or confiscatory taxation,
currency blockage, or political changes or diplomatic developments. Foreign securities may also be
less liquid and more difficult to value than securities of U.S. issuers
Emerging Markets Risk:
the risk of investing in emerging market securities, primarily increased
foreign (non-U.S.) investment risk
Currency Risk:
the risk that foreign currencies will decline in value relative to the U.S. dollar
and affect the Fund’s investments in foreign (non-U.S.) currencies or in securities that trade in,
and receive revenues in, or in derivatives that provide exposure to, foreign (non-U.S.) currencies
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Smaller Company Risk:
the risk that the value of securities issued by a smaller company may go up
or down, sometimes rapidly and unpredictably as compared to more widely held securities, due to
narrow markets and limited resources of smaller companies. A Fund’s investments in smaller
companies subject it to greater levels of credit, market and issuer risk
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
E-239
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PIMCO StocksPLUS
®
Fund
|
|
Ticker symbol:
|
|
|
|
PSTKX (Inst. Class)
|
Principal Investments and Strategies
|
|
|
|
|
|
|
Investment Objective
|
|
Fund Focus
|
|
Credit Quality
|
|
Seeks total return which
exceeds that of the S&P
500 Index.
|
|
S&P 500 Index
derivatives backed
by a portfolio of
short-term Fixed
Income Instruments
Average Collateral
Fixed Income
Duration
<
1 year
|
|
B to Aaa; maximum 10% of total
assets below Baa
Dividend Frequency
Declared and distributed quarterly
|
The Fund seeks to exceed the total return of the S&P 500 Index by investing under normal
circumstances in S&P 500 Index derivatives, backed by a portfolio of Fixed Income Instruments.
“Fixed Income Instruments” include bonds, debt securities and other similar instruments issued by
various U.S. and non-U.S. public- or private-sector entities. The Fund may invest in common stocks,
options, futures, options on futures and swaps. The Fund normally uses S&P 500 Index derivatives in
addition to or in place of S&P 500 Index stocks to attempt to equal or exceed the daily performance
of the S&P 500 Index. The value of S&P 500 Index derivatives should closely track changes in the
value of the S&P 500 Index. The Fund typically will seek to gain long exposure to its benchmark
index in an amount, under normal circumstances, approximately equal to the Fund’s net assets.
However, S&P 500 Index 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. Pacific Investment Management Company LLC (“PIMCO”) actively
manages the Fixed Income Instruments 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 used to determine the sensitivity of a security’s price to changes in
interest rates. The longer a security’s duration, the more sensitive it will be to changes in
interest rates.
The S&P 500 Index 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 seeks to remain invested in S&P 500
Index derivatives or S&P 500 Index stocks even when the S&P 500 Index is declining.
Though the Fund does not normally invest directly in S&P 500 Index securities, when S&P 500 Index
derivatives appear to be overvalued relative to the S&P 500 Index, the Fund may invest all of its
assets in a “basket” of S&P 500 Index stocks. The Fund also may invest in exchange-traded funds
based on the S&P 500 Index, such as Standard & Poor’s Depositary Receipts.
The Fund may invest, without limitation, in derivative instruments, such as options, futures
contracts or swap agreements, or in mortgage- or asset-backed securities, subject to applicable law
and any other restrictions described in the Fund’s prospectus or Statement of Additional
Information. The Fund may purchase or sell securities on a when-issued, delayed delivery or forward
commitment basis and may engage in short sales. Assets not invested in equity securities or
derivatives may be invested in Fixed Income Instruments. The Fund may invest up to 10% of its total
assets in high yield securities (“junk bonds”) rated B or higher by Moody’s Investors Service, Inc.
(“Moody’s”), or equivalently rated by Standard & Poor’s Ratings Services (“S&P”) or Fitch, Inc.
(“Fitch”), or, if unrated, determined by PIMCO to be of comparable quality (except that within such
limitation, the Fund may invest in mortgage-related securities rated below B). The Fund may invest
up to 30% of its total assets in securities denominated in foreign currencies and may invest beyond
this limit in U.S. dollar-denominated securities of foreign issuers. The Fund may invest up to 10%
of its total assets in securities and instruments that are economically tied to emerging market
countries. The Fund will normally limit its foreign currency exposure (from non-U.S.
dollar-denominated securities or currencies) to 20% of its total assets. The Fund may also invest
up to 10% of its total assets in preferred stocks.
Principal Risks
It is possible to lose money on an investment in the Fund. Under certain conditions, generally in a
market where the value of both S&P 500 Index derivatives and Fixed Income Instruments are declining
or in periods of heightened market volatility, the Fund may experience greater losses or lesser
gains than would be the case if it invested directly in a portfolio of S&P 500 Index stocks. The
principal risks of investing in the Fund, which could adversely affect its net asset value, yield
and total return are:
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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
E-240
High Yield Risk:
the risk that high yield securities and unrated securities of similar credit
quality (commonly known as “junk bonds”) are subject to greater levels of credit and liquidity
risks. High yield securities are considered primarily speculative with respect to the issuer’s
continuing ability to make principal and interest payments
Market Risk:
the risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
Issuer Risk:
the risk that the value of a security may decline for a reason directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Equity Risk:
the risk that the value of equity securities, such as common stocks and preferred
stocks, may decline due to general market conditions which are not specifically related to a
particular company or to factors affecting a particular industry or industries. Equity securities
generally have greater price volatility than fixed income securities
Mortgage-Related and Other Asset-Backed Securities Risk:
the risk of investing in mortgage-related
and other asset-backed securities, including interest rate risk, extension risk and prepayment risk
Foreign (Non-U.S.) Investment Risk:
the risk that investing in foreign (non-U.S.) securities may
result in the Fund experiencing more rapid and extreme changes in value than a fund that invests
exclusively in securities of U.S. companies, due to smaller markets, differing reporting,
accounting and auditing standards, and nationalization, expropriation or confiscatory taxation,
currency blockage, or political changes or diplomatic developments. Foreign securities may also be
less liquid and more difficult to value than securities of U.S. issuers
Emerging Markets Risk:
the risk of investing in emerging market securities, primarily increased
foreign (non-U.S.) investment risk
Currency Risk:
the risk that foreign currencies will decline in value relative to the U.S. dollar
and affect the Fund’s investments in foreign (non-U.S.) currencies or in securities that trade in,
and receive revenues in, or in derivatives that provide exposure to, foreign (non-U.S.) currencies
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
E-241
|
|
|
|
|
PIMCO StocksPLUS
®
Long Duration Fund
|
|
Ticker symbol:
|
|
|
|
PSLDX (Inst. Class)
|
Principal Investments and Strategies
|
|
|
|
|
|
|
Investment Objective
|
|
Fund Focus
|
|
Credit Quality
|
|
Seeks total return which
exceeds that of its
benchmarks consistent
with prudent investment
management.
|
|
S&P 500 Index
derivatives backed
by a portfolio of
actively managed
long-term Fixed
Income Instruments
Average Collateral
Fixed Income
Duration
+/- 2 years of
Barclays Capital
Long-Term
Government/Credit
Index
|
|
B to Aaa; maximum 10% of total
assets below Baa
Dividend Frequency
Declared and distributed quarterly
|
The Fund seeks to exceed the total return of its benchmark indexes, the S&P 500 Index and a
secondary blended index (as described below, and together with the S&P 500 Index, the “Indexes”),
by investing under normal circumstances in S&P 500 Index derivatives, backed by a diversified
portfolio of long-term Fixed Income Instruments. “Fixed Income Instruments” include bonds, debt
securities and other similar instruments issued by various U.S. and non-U.S. public- or
private-sector entities. The Fund may invest in common stocks, options, futures, options on futures
and swaps. The Fund normally uses S&P 500 Index derivatives instead of S&P 500 Index stocks to
attempt to equal or exceed the daily performance of the Indexes. The Fund typically will seek to
gain long exposure to the S&P 500 Index in an amount, under normal circumstances, approximately
equal to the Fund’s net assets. The value of S&P 500 Index derivatives should closely track changes
in the value of the S&P 500 Index. However, S&P 500 Index derivatives may be purchased with a small
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. Pacific Investment Management
Company LLC (“PIMCO”) actively manages the Fixed Income Instruments held by the Fund with a view
toward enhancing the Fund’s total return, subject to an overall portfolio duration which normally
varies within two years (plus or minus) of the portfolio duration of the securities comprising the
Barclays Long-Term Government/Credit Index, as calculated by PIMCO, which as of June 30, 2013 was
13.54 years. Duration is a measure used to determine the sensitivity of a security’s price to
changes in interest rates. The longer a security’s duration, the more sensitive it will be to
changes in interest rates.
The S&P 500 Index 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 seeks to remain invested in S&P 500
Index derivatives and/or S&P 500 Index stocks even when the S&P 500 Index is declining.
Though the Fund does not normally invest directly in S&P 500 Index securities, when S&P 500 Index
derivatives appear to be overvalued relative to the S&P 500 Index, the Fund may invest all of its
assets in a “basket” of S&P 500 Index stocks. The Fund also may invest in exchange-traded funds
based on the S&P 500 Index, such as Standard & Poor’s Depositary Receipts.
The Fund may invest, without limitation, in derivative instruments, such as options, futures
contracts or swap agreements, or in mortgage- or asset-backed securities, subject to applicable law
and any other restrictions described in the Fund’s prospectus or Statement of Additional
Information. The Fund may purchase or sell securities on a when-issued, delayed delivery or forward
commitment basis and may engage in short sales. Assets not invested in equity securities or
derivatives may be invested in Fixed Income Instruments. The Fund may invest up to 10% of its total
assets in high yield securities (“junk bonds”) rated B or higher by Moody’s Investors Service, Inc.
(“Moody’s”), or equivalently rated by Standard & Poor’s Ratings Services (“S&P”) or Fitch, Inc.
(“Fitch”), or if unrated, determined by PIMCO to be of comparable quality. The Fund may invest up
to 30% of its total assets in securities denominated in foreign currencies and may invest beyond
this limit in U.S. dollar-denominated securities of foreign issuers. The Fund may invest up to 15%
of its total assets in securities and instruments that are economically tied to emerging market
countries. The Fund will normally limit its foreign currency exposure (from non-U.S.
dollar-denominated securities or currencies) to 20% of its total assets. The Fund may also invest
up to 10% of its total assets in preferred stocks.
Principal Risks
It is possible to lose money on an investment in the Fund. Under certain conditions, generally in a
market where the value of both S&P 500 Index derivatives and Fixed Income Instruments are declining
or in periods of heightened market volatility, the Fund may experience greater losses or lesser
gains than would be the case if it invested directly in a portfolio of S&P 500 Index stocks. The
principal risks of investing in the Fund, which could adversely affect its net asset value, yield
and total return are:
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
E-242
Credit Risk:
the risk that 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 risk that high yield securities and unrated securities of similar credit
quality (commonly known as “junk bonds”) are subject to greater levels of credit and liquidity
risks. High yield securities are considered primarily speculative with respect to the issuer’s
continuing ability to make principal and interest payments
Market Risk:
the risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
Issuer Risk:
the risk that the value of a security may decline for a reason directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Equity Risk:
the risk that the value of equity securities, such as common stocks and preferred
stocks, may decline due to general market conditions which are not specifically related to a
particular company or to factors affecting a particular industry or industries. Equity securities
generally have greater price volatility than fixed income securities
Mortgage-Related and Other Asset-Backed Securities Risk:
the risk of investing in mortgage-related
and other asset-backed securities, including interest rate risk, extension risk and prepayment risk
Foreign (Non-U.S.) Investment Risk:
the risk that investing in foreign (non-U.S.) securities may
result in the Fund experiencing more rapid and extreme changes in value than a fund that invests
exclusively in securities of U.S. companies, due to smaller markets, differing reporting,
accounting and auditing standards, and nationalization, expropriation or confiscatory taxation,
currency blockage, or political changes or diplomatic developments. Foreign securities may also be
less liquid and more difficult to value than securities of U.S. issuers
Emerging Markets Risk:
the risk of investing in emerging market securities, primarily increased
foreign (non-U.S.) investment risk
Currency Risk:
the risk that foreign currencies will decline in value relative to the U.S. dollar
and affect the Fund’s investments in foreign (non-U.S.) currencies or in securities that trade in,
and receive revenues in, or in derivatives that provide exposure to, foreign (non-U.S.) currencies
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
E-243
|
|
|
|
|
PIMCO StocksPLUS
®
Absolute Return Fund
|
|
Ticker symbol:
|
|
|
|
PSPTX (Inst. Class)
|
Principal Investments and Strategies
|
|
|
|
|
|
|
Investment Objective
|
|
Fund Focus
|
|
Credit Quality
|
|
Seeks total return which
exceeds that of the S&P
500 Index.
|
|
S&P 500 Index
derivatives backed
by a portfolio of
Fixed Income
Instruments
Average Collateral
Fixed Income
Duration
(-3) to 8 years
|
|
B to Aaa; maximum 20% of total
assets below Baa
Dividend Frequency
Declared and distributed quarterly
|
The Fund seeks to exceed the total return of the S&P 500 Index by investing under normal
circumstances in S&P 500 Index derivatives, backed by a portfolio of Fixed Income Instruments. In
managing the Fund’s investments in Fixed Income Instruments, PIMCO utilizes an absolute return
approach, which is designed to have flexibility with respect to duration, overall sector exposures,
non-U.S. exposures and credit quality, both as a function of the strategy’s investment guidelines
and lack of a fixed income index benchmark. The absolute return approach does not apply to the
equity index replicating component of the Fund. “Fixed Income Instruments” include bonds, debt
securities and other similar instruments issued by various U.S. and non-U.S. public- or
private-sector entities. The Fund may invest in common stocks, options, futures, options on futures
and swaps. The Fund normally uses S&P 500 Index derivatives instead of S&P 500 Index stocks to
attempt to equal or exceed the daily performance of the S&P 500 Index. The Fund typically will seek
to gain long exposure to its benchmark index in an amount, under normal circumstances,
approximately equal to the Fund’s net assets. The value of S&P 500 Index derivatives should closely
track changes in the value of the S&P 500 Index. However, S&P 500 Index derivatives may be
purchased with a small 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. Pacific Investment Management Company LLC (“PIMCO”) actively manages the Fixed Income
Instruments held by the Fund with a view toward enhancing the Fund’s total return, subject to an
overall portfolio duration which normally varies from (negative) 3 years to positive 8 years based
on PIMCO’s forecast for interest rates. Duration is a measure used to determine the sensitivity of
a security’s price to changes in interest rates. The longer a security’s duration, the more
sensitive it will be to changes in interest rates.
The S&P 500 Index 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 seeks to remain invested in S&P 500
Index derivatives or S&P 500 Index stocks even when the S&P 500 Index is declining.
Though the Fund does not normally invest directly in S&P 500 Index securities, when S&P 500 Index
derivatives appear to be overvalued relative to the S&P 500 Index, the Fund may invest all of its
assets in a “basket” of S&P 500 Index stocks. The Fund also may invest in exchange-traded funds
based on the S&P 500 Index, such as Standard & Poor’s Depositary Receipts.
The Fund may invest, without limitation, in derivative instruments, such as options, futures
contracts or swap agreements, or in mortgage- or asset-backed securities, subject to applicable law
and any other restrictions described in the Fund’s prospectus or Statement of Additional
Information. The Fund may purchase or sell securities on a when-issued, delayed delivery or forward
commitment basis and may engage in short sales. Assets not invested in equity securities or
derivatives may be invested in Fixed Income Instruments. The Fund may invest up to 20% of its total
assets in high yield securities (“junk bonds”) rated B or higher by Moody’s Investors Service, Inc.
(“Moody’s”), or equivalently rated by Standard & Poor’s Ratings Services (“S&P”) or Fitch, Inc.
(“Fitch”), or, if unrated, determined by PIMCO to be of comparable quality (except that within such
limitation, the Fund may invest in mortgage-related securities rated below B). The Fund may invest,
without limitation, in securities denominated in foreign currencies and in U.S. dollar-denominated
securities of foreign issuers. The Fund may invest up to 25% of its total assets in securities and
instruments that are economically tied to emerging market countries. The Fund will normally limit
its foreign currency exposure (from non-U.S. dollar-denominated securities or currencies) to 20% of
its total assets. The Fund may also invest up to 10% of its total assets in preferred stocks.
Principal Risks
It is possible to lose money on an investment in the Fund. Under certain conditions, generally in a
market where the value of both S&P 500 Index derivatives and Fixed Income Instruments are declining
or in periods of heightened market volatility, the Fund may experience greater losses or lesser
gains than would be the case if it invested directly in a portfolio of S&P 500 Index stocks. The
principal risks of investing in the Fund, which could adversely affect its net asset value, yield
and total return are:
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
E-244
Credit Risk:
the risk that 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 risk that high yield securities and unrated securities of similar credit
quality (commonly known as “junk bonds”) are subject to greater levels of credit and liquidity
risks. High yield securities are considered primarily speculative with respect to the issuer’s
continuing ability to make principal and interest payments
Market Risk:
the risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
Issuer Risk:
the risk that the value of a security may decline for a reason directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Equity Risk:
the risk that the value of equity securities, such as common stocks and preferred
stocks, may decline due to general market conditions which are not specifically related to a
particular company or to factors affecting a particular industry or industries. Equity securities
generally have greater price volatility than fixed income securities
Mortgage-Related and Other Asset-Backed Securities Risk:
the risk of investing in mortgage-related
and other asset-backed securities, including interest rate risk, extension risk and prepayment risk
Foreign (Non-U.S.) Investment Risk:
the risk that investing in foreign (non-U.S.) securities may
result in the Fund experiencing more rapid and extreme changes in value than a fund that invests
exclusively in securities of U.S. companies, due to smaller markets, differing reporting,
accounting and auditing standards, and nationalization, expropriation or confiscatory taxation,
currency blockage, or political changes or diplomatic developments. Foreign securities may also be
less liquid and more difficult to value than securities of U.S. issuers
Emerging Markets Risk:
the risk of investing in emerging market securities, primarily increased
foreign (non-U.S.) investment risk
Currency Risk:
the risk that foreign currencies will decline in value relative to the U.S. dollar
and affect the Fund’s investments in foreign (non-U.S.) currencies or in securities that trade in,
and receive revenues in, or in derivatives that provide exposure to, foreign (non-U.S.) currencies
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
E-245
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PIMCO StocksPLUS
®
AR Short Strategy Fund
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Ticker symbol:
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PSTIX (Inst. Class)
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Principal Investments and Strategies
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Investment Objective
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Fund Focus
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Credit Quality
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Seeks total return
through the
implementation of short
investment positions on
the S&P 500 Index.
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Short S&P 500 Index
derivatives backed
by a portfolio of
Fixed Income
Instruments
Average Collateral
Fixed Income
Duration
(-3) to 8 years
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B to Aaa; maximum 20% of total
assets below Baa
Dividend Frequency
Declared and distributed quarterly
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The Fund seeks to achieve its investment objective by investing primarily in short positions with
respect to the S&P 500 Index (the “Index”) or specific Index securities, backed by a portfolio of
Fixed Income Instruments, such that the Fund’s net asset value may vary inversely with the value of
the Index on a daily basis, subject to certain limitations summarized below. In managing the Fund’s
investments in Fixed Income Instruments, PIMCO utilizes an absolute return approach, which is
designed to have flexibility with respect to duration, overall sector exposures, non-U.S. exposures
and credit quality, both as a function of the strategy’s investment guidelines and lack of a fixed
income index benchmark. The absolute return approach does not apply to the equity index replicating
component of the Fund. “Fixed Income Instruments” include bonds, debt securities and other similar
instruments issued by various U.S. and non-U.S. public- or private-sector entities. The Fund will
generally benefit when the price of the Index is declining. When the Index is rising, the Fund will
generally not perform as well. Fixed Income Instruments owned by the Fund may also benefit or
detract from the Fund’s net asset value. The Fund is designed for investors seeking to take
advantage of declines in the value of the Index, or investors wishing to hedge existing long equity
positions. However, the Fund is not designed or expected to produce returns which replicate the
inverse of the performance of the Index due to compounding, Pacific Investment Management Company
LLC’s (“PIMCO”) active management, Fund fees and expenses and other factors discussed below.
The Fund will maintain short positions through the use of a combination of derivatives, including
options, futures, options on futures, and swaps. The Fund may invest, without limitation, in such
instruments. While the Fund will, under normal circumstances, invest primarily in Index short
positions backed by a portfolio of Fixed Income Instruments, PIMCO may reduce the Fund’s exposure
to Index short positions when PIMCO deems it appropriate to do so. Additionally, the Fund may
purchase call options on Index futures contracts or on other similar Index derivatives in an effort
to limit the total potential decline in the Fund’s net asset value during a market in which prices
of securities are rising or expected to rise. Because the Fund invests primarily in short
positions, gains and losses in the Fund will primarily be taxable as short-term gains or losses.
However, a portion of the gains or losses from certain types of derivatives, including futures
contracts on broad-based stock indexes in which the Fund may choose to invest, will be taxable as
long-term gains or losses.
Assets not invested in equity securities or derivatives 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 normally varies
from (negative) 3 years to positive 8 years based on PIMCO’s forecast for interest rates. Duration
is a measure used to determine the sensitivity of a security’s price to changes in interest rates.
The longer a security’s duration, the more sensitive it will be to changes in interest rates. The
Fund may invest up to 20% of its total assets in high yield securities (“junk bonds”) rated B or
higher by Moody’s Investors Service, Inc. (“Moody’s”), or equivalently rated by Standard & Poor’s
Ratings Services (“S&P”) or Fitch, Inc. (“Fitch”), or, if unrated, determined by PIMCO to be of
comparable quality (except that within such limitation, the Fund may invest in mortgage-related
securities rated below B). The Fund may invest, without limitation, in securities denominated in
foreign currencies and in U.S. dollar-denominated securities of foreign issuers. The Fund may
invest up to 25% of its total assets in securities and instruments that are economically tied to
emerging market countries. The Fund will normally limit its foreign currency exposure (from
non-U.S. dollar-denominated securities or currencies) to 20% of its total assets. The Fund is
non-diversified, which means that it may invest its assets in a smaller number of issuers than a
diversified fund. The Fund may also invest up to 10% of its total assets in preferred stocks.
Although the Fund uses derivatives and other short positions to gain exposures that may vary
inversely with the performance of the Index on a daily basis, the Fund as a whole is not designed
or expected to produce returns which replicate the inverse of the performance of the Index, and the
degree of variation could be substantial, particularly over longer periods.
Principal Risks
It is possible to lose money on an investment in the Fund. Under certain conditions, even if the
value of the Index is declining (which could be beneficial to the Fund’s short strategy), this
could be offset by declining values of Fixed Income Instruments held by the Fund. Conversely, it is
possible that rising fixed income securities prices could be offset by a rising Index (which could
lead to losses
E-246
in a short strategy). In either scenario the Fund may experience losses. In a market
where the value of the Index is rising and the Fund’s Fixed Income Instrument holdings are
declining, the Fund may experience substantial losses. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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 risk that high yield securities and unrated securities of similar credit
quality (commonly known as “junk bonds”) are subject to greater levels of credit and liquidity
risks. High yield securities are considered primarily speculative with respect to the issuer’s
continuing ability to make principal and interest payments
Market Risk:
the risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
Issuer Risk:
the risk that the value of a security may decline for a reason directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Inverse Correlation and Compounding Risk:
the risk that the Fund’s performance may vary
substantially from the inverse performance of the Index for a number of reasons, including the
effects of compounding on the performance of the Fund’s derivatives short positions for periods
greater than one day, the results of PIMCO’s active management of the Fund (including income and
gains or losses from Fixed Income Instruments and variations in the Fund’s level of short exposure)
and that derivatives positions in general may not correlate exactly with an index
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Equity Risk:
the risk that the value of equity securities, such as common stocks and preferred
stocks, may decline due to general market conditions which are not specifically related to a
particular company or to factors affecting a particular industry or industries. Equity securities
generally have greater price volatility than fixed income securities
Mortgage-Related and Other Asset-Backed Securities Risk:
the risk of investing in mortgage-related
and other asset-backed securities, including interest rate risk, extension risk and prepayment risk
Foreign (Non-U.S.) Investment Risk:
the risk that investing in foreign (non-U.S.) securities may
result in the Fund experiencing more rapid and extreme changes in value than a fund that invests
exclusively in securities of U.S. companies, due to smaller markets, differing reporting,
accounting and auditing standards, and nationalization, expropriation or confiscatory taxation,
currency blockage, or political changes or diplomatic developments. Foreign securities may also be
less liquid and more difficult to value than securities of U.S. issuers
Emerging Markets Risk:
the risk of investing in emerging market securities, primarily increased
foreign (non-U.S.) investment risk
Currency Risk:
the risk that foreign currencies will decline in value relative to the U.S. dollar
and affect the Fund’s investments in foreign (non-U.S.) currencies or in securities that trade in,
and receive revenues in, or in derivatives that provide exposure to, foreign (non-U.S.) currencies
Issuer Non-Diversification Risk:
the risk of focusing investments in a small number of issuers,
including being more susceptible to risks associated with a single economic, political or
regulatory occurrence than a more diversified portfolio might be. Funds that are “non-diversified”
may invest a greater percentage of their assets in the securities of a single issuer (such as bonds
issued by a particular state) than funds that are “diversified”
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
E-247
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
E-248
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PIMCO Tax Managed Real Return Fund
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Ticker symbol:
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PTMIX
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Principal Investments and Strategies
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Investment Objective
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Fund Focus
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Credit Quality
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Seeks to provide
after-tax
inflation-protected
return, consistent with
prudent investment
management.
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Investment grade
municipal bonds
(including pre-refunded
municipal bonds) and
inflation-indexed
securities
Average Portfolio Duration
<
8 years for the
Fixed Income Portion of
the Fund
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Baa to Aaa
Dividend Frequency
Declared Daily and Distributed Monthly
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The Fund seeks to achieve its investment objective by investing under normal circumstances at least
50% of its 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”), with the
remainder of the Fund’s assets invested in inflation-indexed bonds of varying maturities issued by
the U.S. government, its agencies or instrumentalities (such as Treasury Inflation Protected
Securities (“TIPS”)), and other types of Fixed Income Instruments, which may be represented by
forwards or derivatives such as options, futures contracts or swap agreements (such as CPI swaps).
“Fixed Income Instruments” include bonds, debt securities and other similar instruments issued by
various U.S. and non-U.S. public- or private-sector entities. “Real return” equals total return
less the estimated cost of inflation. The average portfolio duration of the fixed income portion of
this Fund will normally vary based on Pacific Investment Management Company LLC’s (“PIMCO”)
forecast for interest rates and under normal market conditions is not expected to exceed eight
years. Duration is a measure used to determine the sensitivity of a security’s price to changes in
interest rates. The longer a security’s duration, the more sensitive it will be to changes in
interest rates.
Municipal Bonds generally are issued by or on behalf of states and local governments and their
agencies, authorities and other instrumentalities. The Fund does not intend to invest in securities
whose interest is subject to the federal alternative minimum tax. The Fund may invest 25% or more
of its total assets in Municipal Bonds that finance education, health care, housing,
transportation, utilities and other similar projects, and 25% or more of its total assets in
industrial development bonds.
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 All Urban Consumers (“CPI”) as the inflation measure. Effective duration takes into
account that for certain bonds expected cash flows will fluctuate as interest rates change and is
defined in nominal yield terms, which is market convention for most bond investors and managers.
Because market convention for bonds is to use nominal yields to measure duration, durations for
real return bonds, which are based on real yields, are converted to nominal durations through a
conversion factor. The resulting nominal duration typically can range from 20% and 90% of the
respective real duration. All inflation-indexed security holdings will be measured in effective
(nominal) duration terms.
As part of its principal investment strategies, the Fund’s investment in derivatives may consist
largely of swaps (including CPI swaps) where the Fund receives inflation-indexed payments. A CPI
swap is a fixed maturity, over-the-counter derivative in which the investor receives the “realized”
rate of inflation as measured by the CPI over the life of the swap. The investor in turn pays a
fixed annualized rate over the life of the swap. This fixed rate is often referred to as the
“breakeven inflation” rate and is generally representative of the difference between treasury
yields and TIPS yields of similar maturities at the initiation of the swap. CPI swaps are typically
in “bullet” format, where all cash flows are exchanged at maturity. The Fund may also invest in
municipal inflation-indexed securities.
The Fund may invest in investment-grade securities rated Baa or higher by Moody’s Investors
Service, Inc. (“Moody’s”), or equivalently rated by Standard & Poor’s Ratings Services (“S&P”) or
Fitch, Inc. (“Fitch”), or, if unrated, determined by PIMCO to be of comparable quality. The Fund
will normally limit its non-U.S. dollar-denominated securities exposure to 5% of its total assets.
The Fund is non-diversified, which means that it may invest its assets in a smaller number of
issuers than a diversified fund.
The Fund seeks to minimize shareholders’ tax liability in connection with the Fund’s distribution
of realized capital gain by minimizing the net gains available for distribution. In doing so, the
Fund typically sells securities when the anticipated performance benefit justifies the resulting
gain. This strategy often includes minimizing the sale of securities with large unrealized gain,
holding securities long enough to avoid short-term capital gains taxes, selling securities with a
higher cost basis first and offsetting capital gains realized in one security by selling another
security at a capital loss. In addition, the Fund seeks to minimize distributions that are taxed as
ordinary income.
The Fund may invest in derivative instruments, such as options, futures contracts or swap
agreements. The Fund may purchase or sell securities on a when-issued, delayed delivery or forward
commitment basis and may engage in short sales. The Fund may, without limitation, 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 or dollar
rolls).
E-249
Principal Risks
It is possible to lose money on an investment in the Fund. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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 risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
Issuer Risk:
the risk that the value of a security may decline for a reason directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Issuer Non-Diversification Risk:
the risk of focusing investments in a small number of issuers,
including being more susceptible to risks associated with a single economic, political or
regulatory occurrence than a more diversified portfolio might be. Funds that are “non-diversified”
may invest a greater percentage of their assets in the securities of a single issuer (such as bonds
issued by a particular state) than funds that are “diversified”
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
Municipal Project-Specific Risk:
the risk that the Fund may be more sensitive to adverse economic,
business or political developments if it invests a substantial portion of its assets in the bonds
of similar projects (such as those relating to education, health care, housing, transportation, and
utilities), industrial development bonds, or in bonds from issuers in a single state
Inflation-Indexed Security Risk:
the risk that inflation-indexed debt securities are subject to the
effects of changes in market interest rates caused by factors other than inflation (real interest
rates). In general, the value of an inflation-indexed security, including TIPS, tends to decrease
when real interest rates increase and can increase when real interest rates decrease. Interest
payments on inflation-indexed securities are unpredictable and will fluctuate as the principal and
interest are adjusted for inflation. There can be no assurance that the inflation index used will
accurately measure the real rate of inflation in the prices of goods and services. Any increase in
the principal amount of an inflation-indexed debt security will be considered taxable ordinary
income, even though the Fund will not receive the principal until maturity
Tax Risk:
the risk that the tax treatment of swap agreements and other derivative instruments, such
as commodity-linked derivative instruments, including commodity index-linked notes, swap
agreements, commodity options, futures, and options on futures, may be affected by future
regulatory or legislative changes that could affect whether income from such investments is
“qualifying income” under Subchapter M of the Internal Revenue Code, or otherwise affect the
character, timing and/or amount of the Fund’s taxable income or gains and distributions
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
E-250
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PIMCO Total Return Fund
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Ticker symbol:
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PTTRX (Inst. Class)
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Principal Investments and Strategies
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Investment Objective
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Fund Focus
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Credit Quality
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Seeks maximum total
return, consistent with
preservation of capital
and prudent investment
management.
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Intermediate maturity
Fixed Income Instruments
Average Portfolio Duration
+/- 2 years of its
benchmark; see
description below
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B to Aaa; maximum 10% of total assets
below Baa
Dividend Frequency
Declared daily and distributed monthly
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The Fund seeks to achieve its investment objective by investing under normal circumstances at least
65% of its total assets in a diversified portfolio of Fixed Income Instruments of varying
maturities, which may be represented by forwards or derivatives such as options, futures contracts,
or swap agreements. “Fixed Income Instruments” include bonds, debt securities and other similar
instruments issued by various U.S. and non-U.S. public- or private-sector entities. The average
portfolio duration of this Fund normally varies within two years (plus or minus) of the portfolio
duration of the securities comprising the Barclays U.S. Aggregate Index, as calculated by Pacific
Investment Management Company LLC (“PIMCO”), which as of June 30, 2013 was 5.18 years. Duration is
a measure used to determine the sensitivity of a security’s price to changes in interest rates. The
longer a security’s duration, the more sensitive it will be to changes in interest rates.
The Fund invests primarily in investment-grade debt securities, but may invest up to 10% of its
total assets in high yield securities (“junk bonds”) rated B or higher by Moody’s Investors
Service, Inc. (“Moody’s”), or equivalently rated by Standard & Poor’s Ratings Services (“S&P”) or
Fitch, Inc. (“Fitch”), or, if unrated, determined by Pacific Investment Management Company LLC
(“PIMCO”) to be of comparable quality (except that within such limitation, the Fund may invest in
mortgage-related securities rated below B). The Fund may invest up to 30% of its total assets in
securities denominated in foreign currencies, and may invest beyond this limit in U.S.
dollar-denominated securities of foreign issuers. The Fund may invest up to 15% of its total assets
in securities and instruments that are economically tied to emerging market countries. The Fund
will normally limit its foreign currency exposure (from non-U.S. dollar-denominated securities or
currencies) to 20% of its total assets.
The Fund may invest, without limitation, in derivative instruments, such as options, futures
contracts or swap agreements, or in mortgage- or asset-backed securities, subject to applicable law
and any other restrictions described in the Fund’s prospectus or Statement of Additional
Information. The Fund may purchase or sell securities on a when-issued, delayed delivery or forward
commitment basis and may engage in short sales. The Fund may invest up to 10% of its total assets
in preferred stock, convertible securities and other equity-related securities.
The Fund may, without limitation, 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 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, foreign currency appreciation, or improving
credit fundamentals for a particular sector or security.
Principal Risks
It is possible to lose money on an investment in the Fund. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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 risk that high yield securities and unrated securities of similar credit
quality (commonly known as “junk bonds”) are subject to greater levels of credit and liquidity
risks. High yield securities are considered primarily speculative with respect to the issuer’s
continuing ability to make principal and interest payments
Market Risk:
the risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
E-251
Issuer Risk:
the risk that the value of a security may decline for a reason directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Equity Risk:
the risk that the value of equity or equity-related securities may decline due to
general market conditions which are not specifically related to a particular company or to factors
affecting a particular industry or industries. Equity or equity-related securities generally have
greater price volatility than fixed income securities
Mortgage-Related and Other Asset-Backed Securities Risk:
the risk of investing in mortgage-related
and other asset-backed securities, including interest rate risk, extension risk and prepayment risk
Foreign (Non-U.S.) Investment Risk:
the risk that investing in foreign (non-U.S.) securities may
result in the Fund experiencing more rapid and extreme changes in value than a fund that invests
exclusively in securities of U.S. companies, due to smaller markets, differing reporting,
accounting and auditing standards, and nationalization, expropriation or confiscatory taxation,
currency blockage, or political changes or diplomatic developments. Foreign securities may also be
less liquid and more difficult to value than securities of U.S. issuers
Emerging Markets Risk:
the risk of investing in emerging market securities, primarily increased
foreign (non-U.S.) investment risk
Currency Risk:
the risk that foreign currencies will decline in value relative to the U.S. dollar
and affect the Fund’s investments in foreign (non-U.S.) currencies or in securities that trade in,
and receive revenues in, or in derivatives that provide exposure to, foreign (non-U.S.) currencies
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
Convertible Securities Risk:
as convertible securities share both fixed income and equity
characteristics, they are subject to risks to which fixed income and equity investments are
subject. These risks include equity risk, interest rate risk and credit risk
E-252
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PIMCO Total Return Fund II
|
|
Ticker symbol:
|
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|
PMBIX (Inst. Class)
|
Principal Investments and Strategies
|
|
|
|
|
|
|
Investment Objective
|
|
Fund Focus
|
|
Credit Quality
|
|
Seeks maximum total
return, consistent with
preservation of capital
and prudent investment
management.
|
|
Intermediate maturity
Fixed Income Instruments
with quality and Non-U.S.
Issuer Restrictions
Average Portfolio Duration
+/-2 years of its
benchmark; see
description below
|
|
Baa to Aaa
Dividend Frequency
Declared daily and
distributed monthly
|
The Fund seeks to achieve its investment objective by investing under normal circumstances at least
65% of its total assets in a diversified portfolio of Fixed Income Instruments of varying
maturities, which may be represented by forwards or derivatives such as options, futures contracts,
or swap agreements. “Fixed Income Instruments” include bonds, debt securities and other similar
instruments issued by various U.S. public- or private-sector entities. The average portfolio
duration of this Fund normally varies within two years (plus or minus) of the portfolio duration of
the securities comprising the Barclays U.S. Aggregate Index, as calculated by PIMCO, which as of
June 30, 2013 was 5.18 years. Duration is a measure used to determine the sensitivity of a
security’s price to changes in interest rates. The longer a security’s duration, the more sensitive
it will be to changes in interest rates. The Fund may invest only in investment grade U.S. dollar
denominated securities of U.S. issuers that are rated at least Baa by Moody’s Investors Service,
Inc. (“Moody’s”), or equivalently rated by Standard & Poor’s Ratings Services (“S&P”) or Fitch,
Inc. (“Fitch”), or, if unrated, determined by Pacific Investment Management Company LLC (“PIMCO”)
to be of comparable quality.
The Fund may invest, without limitation, in derivative instruments, such as options, futures
contracts or swap agreements, or in mortgage- or asset-backed securities, subject to applicable law
and any other restrictions described in the Fund’s prospectus or Statement of Additional
Information. The Fund may purchase or sell securities on a when-issued, delayed delivery or forward
commitment basis and may engage in short sales. The Fund may, without limitation, 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 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. The Fund may also invest up to
10% of its total assets in preferred stocks.
Principal Risks
It is possible to lose money on an investment in the Fund. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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 risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
Issuer Risk:
the risk that the value of a security may decline for a reason directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Equity Risk:
the risk that the value of equity securities, such as common stocks and preferred
stocks, may decline due to general market conditions which are not specifically related to a
particular company or to factors affecting a particular industry or industries. Equity securities
generally have greater price volatility than fixed income securities
E-253
Mortgage-Related and Other Asset-Backed Securities Risk:
the risk of investing in mortgage-related
and other asset-backed securities, including interest rate risk, extension risk and prepayment risk
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
E-254
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PIMCO Total Return Fund III
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Ticker symbol:
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PTSAX (Inst. Class)
|
Principal Investments and Strategies
|
|
|
|
|
|
|
Investment Objective
|
|
Fund Focus
|
|
Credit Quality
|
|
Seeks maximum total
return, consistent with
preservation of capital
and prudent investment
management.
|
|
Intermediate maturity
Fixed Income Instruments
with prohibitions on
firms engaged in socially
sensitive practices
Average Portfolio Duration
+/-2 years of its
benchmark; see
description below
|
|
B to Aaa; maximum 10% of total assets
below Baa
Dividend Frequency
Declared daily and distributed monthly
|
The Fund seeks to achieve its investment objective by investing under normal circumstances at least
65% of its total assets in a diversified portfolio of Fixed Income Instruments of varying
maturities, which may be represented by forwards or derivatives such as options, futures contracts,
or swap agreements. “Fixed Income Instruments” include bonds, debt securities and other similar
instruments issued by various U.S. and non-U.S. public- or private-sector entities. The average
portfolio duration of this Fund normally varies within two years (plus or minus) of the portfolio
duration of the securities comprising the Barclays U.S. Aggregate Index, as calculated by PIMCO,
which as of June 30, 2013 was 5.18 years. Duration is a measure used to determine the sensitivity
of a security’s price to changes in interest rates. The longer a security’s duration, the more
sensitive it will be to changes in interest rates. The Fund will not invest in the securities of
any issuer determined by Pacific Investment Management Company LLC (“PIMCO”) to be engaged
principally in the provision of healthcare services, the manufacture of alcoholic beverages,
tobacco products, pharmaceuticals or military equipment, the operation of gambling casinos or in
the production or trade of pornographic materials. To the extent possible on the basis of
information available to PIMCO, an issuer will be deemed to be principally engaged in an activity
if it derives more than 10% of its gross revenues from such activities. In addition, the Fund will
not invest directly in securities of issuers that are engaged in certain business activities in or
with the Republic of the Sudan (a “Sudan-Related Issuer”). In analyzing whether an issuer is a
Sudan-Related Issuer, PIMCO may rely upon, among other things, information from a list provided by
an independent third party.
The Fund invests primarily in investment grade securities, but may invest up to 10% of its total
assets in high yield securities (“junk bonds”) rated B or higher by Moody’s Investors Service, Inc.
(“Moody’s”), or equivalently rated by Standard & Poor’s Ratings Services (“S&P”) or Fitch, Inc.
(“Fitch”), or, if unrated, determined by PIMCO to be of comparable quality (except that within such
limitation, the Fund may invest in mortgage-backed securities rated below B). The Fund may invest
up to 30% of its total assets in securities denominated in foreign currencies, and may invest
beyond this limit in U.S. dollar-denominated securities of foreign issuers. The Fund may invest up
to 15% of its total assets in securities and instruments that are economically tied to emerging
market countries. The Fund will normally limit its foreign currency exposure (from non-U.S.
dollar-denominated securities or currencies) to 20% of its total assets.
The Fund may invest, without limitation, in derivative instruments, such as options, futures
contracts or swap agreements, or in mortgage- or asset-backed securities, subject to applicable law
and any other restrictions described in the Fund’s prospectus or Statement of Additional
Information. The Fund may purchase or sell securities on a when-issued, delayed delivery or forward
commitment basis and may engage in short sales. The Fund may, without limitation, 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 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, foreign
currency appreciation, or improving credit fundamentals for a particular sector or security. The
Fund may also invest up to 10% of its total assets in preferred stocks.
Principal Risks
It is possible to lose money on an investment in the Fund. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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
E-255
High Yield Risk:
the risk that high yield securities and unrated securities of similar credit
quality (commonly known as “junk bonds”) are subject to greater levels of credit and liquidity
risks. High yield securities are considered primarily speculative with respect to the issuer’s
continuing ability to make principal and interest payments
Market Risk:
the risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
Issuer Risk:
the risk that the value of a security may decline for a reason directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Equity Risk:
the risk that the value of equity securities, such as common stocks and preferred
stocks, may decline due to general market conditions which are not specifically related to a
particular company or to factors affecting a particular industry or industries. Equity securities
generally have greater price volatility than fixed income securities
Mortgage-Related and Other Asset-Backed Securities Risk:
the risk of investing in mortgage-related
and other asset-backed securities, including interest rate risk, extension risk and prepayment risk
Foreign (Non-U.S.) Investment Risk:
the risk that investing in foreign (non-U.S.) securities may
result in the Fund experiencing more rapid and extreme changes in value than a fund that invests
exclusively in securities of U.S. companies, due to smaller markets, differing reporting,
accounting and auditing standards, and nationalization, expropriation or confiscatory taxation,
currency blockage, or political changes or diplomatic developments. Foreign securities may also be
less liquid and more difficult to value than securities of U.S. issuers
Emerging Markets Risk:
the risk of investing in emerging market securities, primarily increased
foreign (non-U.S.) investment risk
Currency Risk:
the risk that foreign currencies will decline in value relative to the U.S. dollar
and affect the Fund’s investments in foreign (non-U.S.) currencies or in securities that trade in,
and receive revenues in, or in derivatives that provide exposure to, foreign (non-U.S.) currencies
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
E-256
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PIMCO Total Return Fund IV
|
|
Ticker symbol:
|
|
|
|
PTUIX (Inst. Class)
|
Principal Investments and Strategies
|
|
|
|
|
|
|
Investment Objective
|
|
Fund Focus
|
|
Credit Quality
|
|
Seeks maximum total
return, consistent with
preservation of capital
and prudent investment
management.
|
|
Diversified portfolio of
fixed income instruments of
varying maturities
Average Portfolio Duration
+/-1.5 years of its benchmark
|
|
Baa to Aaa
Dividend Frequency
Declared daily and
distributed monthly
|
The Fund seeks to achieve its investment objective by investing under normal circumstances at least
80% of its net assets in a diversified portfolio of Fixed Income Instruments of varying maturities.
“Fixed Income Instruments” include bonds, debt securities and other similar instruments issued by
various U.S. and non-U.S. public- or private-sector entities. The average portfolio duration of
this Fund normally varies within one and a half years (plus or minus) of the portfolio duration of
the securities comprising the Barclays U.S. Aggregate Index, as calculated by Pacific Investment
Management Company LLC (“PIMCO”), which as of June 30, 2013 was 5.18 years. Duration is a measure
used to determine the sensitivity of a security’s price to changes in interest rates. The longer a
security’s duration, the more sensitive it will be to changes in interest rates.
The Fund may invest without limitation in the core sectors of the bond market including government
bonds, mortgage bonds and corporate bonds and will generally seek to maintain positive exposure to
these sectors. The Fund may invest only in investment grade securities of issuers that are rated at
least Baa by Moody’s Investors Service, Inc., (“Moody’s”), or equivalently rated by Standard &
Poor’s Ratings Services (“S&P”) or Fitch, Inc. (“Fitch”), or if unrated, determined by PIMCO to be
of comparable quality. The Fund may invest up to 15% of its total assets in securities denominated
in foreign currencies, and may invest beyond this limit in U.S. dollar-denominated securities of
foreign issuers, although the Fund will normally limit its foreign currency exposure (from non-U.S.
dollar-denominated securities or currencies) to 5% of its total assets. The Fund may invest up to
10% of its total assets in securities and instruments that are economically tied to emerging market
countries.
The Fund may invest in certain derivative instruments, such as futures contracts or swap
agreements, or in mortgage- or asset-backed securities, subject to applicable law and any other
restrictions described in the Fund’s prospectus or Statement of Additional Information. The Fund
may purchase or sell securities on a when-issued, delayed delivery or forward commitment basis and
may engage in short sales, including short exposures obtained using derivative instruments, up to
10% of its total assets. The Fund may, without limitation, 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 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, foreign currency appreciation, or
improving credit fundamentals for a particular sector or security. The Fund may invest up to 10% of
its total assets in preferred stock, convertible securities and other equity-related securities,
although the Fund will not invest in common stock.
Principal Risks
It is possible to lose money on an investment in the Fund. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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 risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
Issuer Risk:
the risk that the value of a security may decline for a reason directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
E-257
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Equity Risk:
the risk that the value of equity or equity-related securities may decline due to
general market conditions which are not specifically related to a particular company or to factors
affecting a particular industry or industries. Equity or equity-related securities generally have
greater price volatility than fixed income securities
Mortgage-Related and Other Asset-Backed Securities Risk:
the risk of investing in mortgage-related
and other asset-backed securities, including interest rate risk, extension risk and prepayment risk
Foreign (Non-U.S.) Investment Risk:
the risk that investing in foreign (non-U.S.) securities may
result in the Fund experiencing more rapid and extreme changes in value than a fund that invests
exclusively in securities of U.S. companies, due to smaller markets, differing reporting,
accounting and auditing standards, and nationalization, expropriation or confiscatory taxation,
currency blockage, or political changes or diplomatic developments. Foreign securities may also be
less liquid and more difficult to value than securities of U.S. issuers
Emerging Markets Risk:
the risk of investing in emerging market securities, primarily increased
foreign (non-U.S.) investment risk
Leveraging Risk:
the risk that certain transactions of the Fund, such as the use of when-issued,
delayed delivery or forward commitment transactions, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
Convertible Securities Risk:
as convertible securities share both fixed income and equity
characteristics, they are subject to risks to which fixed income and equity investments are
subject. These risks include equity risk, interest rate risk and credit risk
E-258
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|
|
PIMCO Unconstrained Bond Fund
|
|
Ticker symbol:
|
|
|
|
PFIUX (Inst. Class)
|
Principal Investments and Strategies
|
|
|
|
|
|
|
Investment Objective
|
|
Fund Focus
|
|
Credit Quality
|
|
Seeks maximum long-term
return, consistent with
preservation of capital
and prudent investment
management.
|
|
Broad range of Fixed
Income Instruments
Average Portfolio Duration
(-3) to 8 years
|
|
Maximum 40% of total assets below Baa
Dividend Frequency
Declared daily and distributed monthly
|
The Fund seeks to achieve its investment objective by investing under normal circumstances at least
80% of its assets in a diversified portfolio of Fixed Income Instruments of varying maturities,
which may be represented by forwards or derivatives such as options, futures contracts, or swap
agreements. “Fixed Income Instruments” include bonds, debt securities and other similar instruments
issued by various U.S. and non-U.S. public- or private-sector entities. The Fund intends to utilize
various investment strategies in a broad array of fixed income sectors to achieve its investment
objective. The Fund will not be constrained by management against an index. The average portfolio
duration of this Fund will normally vary from (negative) 3 years to positive 8 years based on
Pacific Investment Management Company LLC’s (“PIMCO”) forecast for interest rates. Duration is a
measure used to determine the sensitivity of a security’s price to changes in interest rates. The
longer a security’s duration, the more sensitive it will be to changes in interest rates.
The Fund may invest in both investment-grade securities and high yield securities (“junk bonds”)
subject to a maximum of 40% of its total assets in securities rated below Baa by Moody’s Investors
Service, Inc. (“Moody’s”), or equivalently rated by Standard & Poor’s Ratings Services (“S&P”) or
Fitch, Inc. (“Fitch”), or, if unrated, determined by PIMCO to be of comparable quality. The Fund
may also invest without limitation in securities denominated in foreign currencies and in U.S.
dollar-denominated securities of foreign issuers. In addition, the Fund may invest up to 50% of its
total assets in securities and instruments that are economically tied to emerging market countries.
The Fund will normally limit its foreign currency exposure (from non-U.S. dollar-denominated
securities or currencies) to 35% of its total assets. The Fund may also invest up to 10% of its
total assets in preferred stocks.
The Fund may invest, without limitation, in derivative instruments, such as options, futures
contracts or swap agreements, or in mortgage- or asset-backed securities, subject to applicable law
and any other restrictions described in the Fund’s prospectus or Statement of Additional
Information. The Fund may purchase or sell securities on a when-issued, delayed delivery or forward
commitment basis and may engage in short sales. The Fund may, without limitation, 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 or dollar
rolls).
Principal Risks
It is possible to lose money on an investment in the Fund. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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 risk that high yield securities and unrated securities of similar credit
quality (commonly known as “junk bonds”) are subject to greater levels of credit and liquidity
risks. High yield securities are considered primarily speculative with respect to the issuer’s
continuing ability to make principal and interest payments
Market Risk:
the risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
Issuer Risk:
the risk that the value of a security may decline for a reason directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
E-259
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Equity Risk:
the risk that the value of equity securities, such as common stocks and preferred
stocks, may decline due to general market conditions which are not specifically related to a
particular company or to factors affecting a particular industry or industries. Equity securities
generally have greater price volatility than fixed income securities
Mortgage-Related and Other Asset-Backed Securities Risk:
the risk of investing in mortgage-related
and other asset-backed securities, including interest rate risk, extension risk and prepayment risk
Foreign (Non-U.S.) Investment Risk:
the risk that investing in foreign (non-U.S.) securities may
result in the Fund experiencing more rapid and extreme changes in value than a fund that invests
exclusively in securities of U.S. companies, due to smaller markets, differing reporting,
accounting and auditing standards, and nationalization, expropriation or confiscatory taxation,
currency blockage, or political changes or diplomatic developments. Foreign securities may also be
less liquid and more difficult to value than securities of U.S. issuers
Emerging Markets Risk:
the risk of investing in emerging market securities, primarily increased
foreign (non-U.S.) investment risk
Currency Risk:
the risk that foreign currencies will decline in value relative to the U.S. dollar
and affect the Fund’s investments in foreign (non-U.S.) currencies or in securities that trade in,
and receive revenues in, or in derivatives that provide exposure to, foreign (non-U.S.) currencies
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
E-260
|
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|
|
|
PIMCO Unconstrained Tax Managed Bond Fund
|
|
Ticker symbol:
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|
|
PUTIX (Inst. Class)
|
Principal Investments and Strategies
|
|
|
|
|
|
|
Investment Objective
|
|
Fund Focus
|
|
Credit Quality
|
|
Seeks maximum long-term
after tax return,
consistent with
preservation of capital
and prudent investment
management.
|
|
Broad range of Fixed
Income Instruments
Average Portfolio Duration
(-3) to 10 years
|
|
Maximum 40% of total assets below Baa
Dividend Frequency
Declared daily and distributed monthly
|
The Fund seeks to achieve its investment objective by investing under normal circumstances at least
80% of its assets in a diversified portfolio of Fixed Income Instruments of varying maturities,
which may be represented by forwards or derivatives such as options, futures contracts, or swap
agreements. “Fixed Income Instruments” include bonds, debt securities and other similar instruments
issued by various U.S. and non-U.S. public- or private-sector entities. The Fund intends to utilize
various investment strategies in a broad array of fixed income sectors to achieve its investment
objective. The Fund will not be constrained by management against an index. The average portfolio
duration of this Fund will normally vary from (negative) 3 years to positive 10 years based on
Pacific Investment Management Company LLC’s (“PIMCO”) forecast for interest rates. Duration is a
measure used to determine the sensitivity of a security’s price to changes in interest rates. The
longer a security’s duration, the more sensitive it will be to changes in interest rates.
The Fund seeks to invest under normal circumstances at least 50% of its 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 does not intend to invest in securities whose interest is subject to the federal alternative
minimum tax. The Fund may invest more than 25% of its total assets in bonds of issuers in
California and New York. To the extent that the Fund concentrates its investments in California or
New York, it will be subject to California or New York State-Specific Risk. The Fund may also
invest 25% or more of its total assets in Municipal Bonds that finance education, health care,
housing, transportation, utilities and other similar projects, and 25% or more of its total assets
in industrial development bonds.
The Fund may invest in both investment-grade securities and high yield securities (“junk bonds”)
subject to a maximum of 40% of its total assets in securities rated below Baa by Moody’s Investors
Service, Inc. (“Moody’s”), or equivalently rated by Standard & Poor’s Ratings Services (“S&P”) or
Fitch, Inc. (“Fitch”), or, if unrated, determined by PIMCO to be of comparable quality. The Fund
may also invest up to 50% of its total assets in securities denominated in foreign currencies. The
Fund may invest up to 50% of its total assets in securities of foreign issuers. The Fund may invest
up to 50% of its total assets in securities and instruments that are economically tied to emerging
market countries. The Fund will normally limit its foreign currency exposure (from non-U.S.
dollar-denominated securities or currencies) to 35% of its total assets. The Fund may also invest
up to 10% of its total assets in preferred stocks.
The Fund may invest in derivative instruments, such as options, futures contracts or swap
agreements, or in mortgage- or asset-backed securities. The Fund may purchase or sell securities on
a when-issued, delayed delivery or forward commitment basis and may engage in short sales. The Fund
may, without limitation, 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 or dollar rolls). In addition, the Fund may also invest in securities
issued by entities, such as trusts, whose underlying assets are Municipal Bonds, including, without
limitation, residual interest bonds.
Principal Risks
It is possible to lose money on an investment in the Fund. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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
E-261
High Yield Risk:
the risk that high yield securities and unrated securities of similar credit
quality (commonly known as “junk bonds”) are subject to greater levels of credit and liquidity
risks. High yield securities are considered primarily speculative with respect to the issuer’s
continuing ability to make principal and interest payments
Market Risk:
the risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
Issuer Risk:
the risk that the value of a security may decline for a reason directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Equity Risk:
the risk that the value of equity securities, such as common stocks and preferred
stocks, may decline due to general market conditions which are not specifically related to a
particular company or to factors affecting a particular industry or industries. Equity securities
generally have greater price volatility than fixed income securities
Mortgage-Related and Other Asset-Backed Securities Risk:
the risk of investing in mortgage-related
and other asset-backed securities, including interest rate risk, extension risk and prepayment risk
Foreign (Non-U.S.) Investment Risk:
the risk that investing in foreign (non-U.S.) securities may
result in the Fund experiencing more rapid and extreme changes in value than a fund that invests
exclusively in securities of U.S. companies, due to smaller markets, differing reporting,
accounting and auditing standards, and nationalization, expropriation or confiscatory taxation,
currency blockage, or political changes or diplomatic developments. Foreign securities may also be
less liquid and more difficult to value than securities of U.S. issuers
Emerging Markets Risk:
the risk of investing in emerging market securities, primarily increased
foreign (non-U.S.) investment risk
Currency Risk:
the risk that foreign currencies will decline in value relative to the U.S. dollar
and affect the Fund’s investments in foreign (non-U.S.) currencies or in securities that trade in,
and receive revenues in, or in derivatives that provide exposure to, foreign (non-U.S.) currencies
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
California State-Specific Risk:
the risk that by concentrating its investments in California
Municipal Bonds, the Fund may be affected significantly by economic, regulatory or political
developments affecting the ability of California issuers to pay interest or repay principal
New York State-Specific Risk:
the risk that by concentrating its investments in New York Municipal
Bonds, the Fund may be affected significantly by economic, regulatory or political developments
affecting the ability of New York issuers to pay interest or repay principal
Municipal Project-Specific Risk:
the risk that the Fund may be more sensitive to adverse economic,
business or political developments if it invests a substantial portion of its assets in the bonds
of similar projects (such as those relating to education, health care, housing, transportation, and
utilities), industrial development bonds, or in bonds from issuers in a single state
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
E-262
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PIMCO PIMCO EqS
®
Dividend Fund
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Ticker symbol:
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PQDIX (Inst. Class)
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Principal Investments and Strategies
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Investment Objective
The Fund’s primary
investment objective is
to seek to provide
current income that
exceeds the average yield
on global stocks. The
Fund’s secondary
objective is to seek to
provide long-term capital
appreciation
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Fund Focus
Global equity and
equity-related
securities
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Approximate Primary
Capitalization Range
All capitalizations
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The Fund seeks to achieve its investment objective by investing under normal circumstances at least
75% of its assets in equity and equity-related securities, including common and preferred stock
(and securities convertible into, or that Pacific Investment Management Company LLC (“PIMCO”)
expects to be exchanged for, common or preferred stock), as well as securities issued by real
estate investment trusts, master limited partnerships and other equity trusts and depositary
receipts. The Fund may invest in securities issued by large-capitalization, mid-capitalization and
small-capitalization companies.
When making equity investments, PIMCO uses bottom-up, fundamental analysis to seek to identify
attractively valued issuers that currently pay dividends and have the potential for earnings and
dividend growth over time. PIMCO seeks to increase portfolio diversification by investing in
companies that are in various stages of the business life cycle. PIMCO also seeks to incorporate
its extensive global macro insights into the portfolio construction process.
The Fund may also invest in “Fixed Income Instruments” of varying maturities. Fixed Income
Instruments include bonds, debt securities and other similar instruments issued by various U.S. and
non-U.S. public- or private-sector entities. The debt investments of the Fund may include
investment-grade securities and high yield securities (“junk bonds”) of any rating.
The Fund may also invest in derivative instruments, such as options, futures contracts, swap
agreements, equity-linked notes, equity-linked securities and participatory notes, consistent with
its investment objectives. The Fund may purchase or sell securities on a when-issued, delayed
delivery or forward commitment basis and may engage in short sales. The Fund may also enter into
reverse repurchase agreements and lend portfolio securities.
The Fund may invest a significant portion of its assets in securities and instruments that are
economically tied to foreign (non-U.S.) countries. The Fund may also invest in securities and
instruments that are economically tied to emerging market countries. The Fund may obtain foreign
currency exposure (from non-U.S. dollar-denominated securities or currencies) without limitation.
Principal Risks
It is possible to lose money on an investment in the Fund. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
Equity Risk:
the risk that the value of equity securities, such as common stocks and preferred
stocks, may decline due to general market conditions which are not specifically related to a
particular company or to factors affecting a particular industry or industries. Equity securities
generally have greater price volatility than fixed income securities
Dividend-Oriented Stocks Risk:
companies that have paid regular dividends to shareholders may
decrease or eliminate dividend payments in the future. A decrease in dividend payments by an issuer
may result in a decrease in the value of the security held by the Fund or the Fund receiving less
income
Value Investing Risk:
a value stock may decrease in price or may not increase in price as
anticipated by PIMCO if it continues to be undervalued by the market or the factors that PIMCO
believes will cause the stock price to increase do not occur
Foreign (Non-U.S.) Investment Risk:
the risk that investing in foreign (non-U.S.) securities may
result in the Fund experiencing more rapid and extreme changes in value than a fund that invests
exclusively in securities of U.S. companies, due to smaller markets, differing reporting,
accounting and auditing standards, increased risk of delayed settlement of portfolio transactions
or loss of certificates of portfolio securities, and the risk of unfavorable foreign government
actions, including nationalization, expropriation or confiscatory taxation, currency blockage, or
political changes or diplomatic developments. Foreign securities may also be less liquid and more
difficult to value than securities of U.S. issuers
E-263
Emerging Markets Risk:
the risk of investing in emerging market securities, primarily increased
foreign (non-U.S.) investment risk
Market Risk:
the risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
Issuer Risk:
the risk that the value of a security may decline for reasons directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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 and Distressed Company Risk:
the risk that high yield securities and unrated securities
of similar credit quality (commonly known as “junk bonds”) and securities of distressed companies
may be subject to greater levels of credit, issuer and liquidity risks. Securities of distressed
companies include both debt and equity securities. High yield securities and debt securities of
distressed companies are considered primarily speculative with respect to the issuer’s continuing
ability to make principal and interest payments. Distressed companies may be engaged in
restructurings or bankruptcy proceedings
Currency Risk:
the risk that foreign currencies will decline in value relative to the U.S. dollar
and affect the Fund’s investments in foreign (non-U.S.) currencies or in securities that trade in,
and receive revenues in, or in derivatives that provide exposure to, foreign (non-U.S.) currencies
Real Estate Risk:
the risk that the Fund’s investments in real estate investment trusts (“REITs”)
or real estate-linked derivative instruments will subject the Fund to risks similar to those
associated with direct ownership of real estate, including losses from casualty or condemnation,
and changes in local and general economic conditions, supply and demand, interest rates, zoning
laws, regulatory limitations on rents, property taxes and operating expenses. The Fund’s
investments in REITs or real estate-linked derivative instruments subject it to management and tax
risks
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
Small-Cap and Mid-Cap Company Risk:
the risk that the value of securities issued by
small-capitalization and mid-capitalization companies may go up or down, sometimes rapidly and
unpredictably, due to narrow markets and limited managerial and financial resources
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
Convertible Securities Risk:
the risk that the market values of convertible securities tend to
decline as interest rates increase and, conversely, to increase as interest rates decline. A
convertible security’s market value, however, tends to reflect the market price of the common stock
of the issuing company when that stock price approaches or is greater than the convertible
security’s “conversion price”
E-264
Please see “Description of Principal Risks” in the Fund’s prospectus for a more detailed
description of the risks of investing in the Fund. An investment in the Fund is not a deposit of a
bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
E-265
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PIMCO EqS
®
Emerging Markets Fund
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Ticker symbol:
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PEQWX (Inst. Class)
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Principal Investments and Strategies
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Investment Objective
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Fund Focus
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Approximate Primary Capitalization Range
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Seeks capital appreciation
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Equity and
equity-related
securities
economically tied to
emerging market
countries
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All capitalizations
|
The Fund seeks to achieve its investment objective by investing under normal circumstances at least
80% of its assets in a diversified portfolio of investments economically tied to emerging market
countries. The Fund will invest a substantial portion of its assets in equity and equity-related
securities, including common and preferred stock (and securities convertible into, or that Pacific
Investment Management Company LLC (“PIMCO”) expects to be exchanged for, common or preferred
stock). The Fund may also invest in fixed income securities, including debt securities issued by
both corporate and government issuers. The Fund may invest in commodity related instruments,
including exchange-traded funds, futures and other investment companies.
PIMCO has broad discretion to identify countries that it considers to qualify as emerging markets.
The Fund emphasizes investments in countries with relatively low gross national product per capita
and with the potential for higher trend economic growth. The Fund likely will focus its investments
in companies having principal activities in Asia, Africa, the Middle East, Latin America and the
developing countries of Europe. Assets not invested in emerging market securities may be invested
in instruments of any issuer in any market.
When making investments, PIMCO uses a fundamental approach to stock selection and attempts to
identify investments that are undervalued by the market in comparison to PIMCO’s own assessment of
a companies’ value. Factors considered in the analysis include strong and improving cashflow
generation, earnings profile, normalized profitability level and returns on capital. PIMCO also
seeks to incorporate its extensive global macro insight in determining the impact of economic
factors on emerging equity markets and underlying securities in the portfolio. PIMCO evaluates the
merits of each investment separately and there are no specific limitations on the value, asset
size, earnings, or industry classification of the Fund’s investments. The Fund may invest in
securities issued by large-capitalization, mid-capitalization and small-capitalization companies.
The Fund generally considers large- and mid-cap companies to be those with market capitalizations
greater than $1.5 billion.
The Fund will seek to gain exposure to certain investments, such as the commodity futures markets
or equity securities economically tied to India, primarily through investments in the PIMCO
Mauritius Fund I, Ltd., a wholly owned subsidiary of the Fund organized under the laws of the
Republic of Mauritius (the “Subsidiary”). The Subsidiary is advised by PIMCO, and has the same
investment objective as the Fund. As discussed in greater detail elsewhere in the prospectus, the
Subsidiary (unlike the Fund) may obtain favorable tax treatment on its investments in equity
securities economically tied to India and may also invest without limitation in commodity
index-linked swap agreements and other commodity-linked derivative instruments.
The debt investments of the Fund may include investment-grade securities and high yield securities
(“junk bonds”) of any rating. The Fund may obtain foreign currency exposure (from non-U.S.
dollar-denominated securities or currencies) without limitation. The Fund may invest, without
limitation, in securities denominated in foreign currencies and in U.S. dollar-denominated
securities of foreign issuers. The Fund may invest in instruments whose return is based on the
return of an emerging market security, such as a derivative instrument, rather than investing
directly in emerging market securities. The Fund may also invest in other derivative instruments,
such as options, futures contracts or swap agreements consistent with its investment objective,
subject to applicable law and any other restrictions described in the Fund’s prospectus or
Statement of Additional Information. The Fund may purchase or sell securities on a when-issued,
delayed delivery or forward commitment basis and may engage, without limitation, in short sales.
The Fund may also enter into reverse repurchase agreements and lend portfolio securities.
Principal Risks
It is possible to lose money on an investment in the Fund. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
Equity Risk:
the risk that the value of equity securities, such as common stocks and preferred
stocks, may decline due to general market conditions which are not specifically related to a
particular company or to factors affecting a particular industry or industries. Equity securities
generally have greater price volatility than fixed income securities
E-266
Foreign (Non-U.S.) Investment Risk:
the risk that investing in foreign (non-U.S.) securities may
result in the Fund experiencing more rapid and extreme changes in value than a fund that invests
exclusively in securities of U.S. companies, due to smaller markets, differing reporting,
accounting and auditing standards, increased risk of delayed settlement of portfolio transactions
or loss of certificates of portfolio securities, and the risk of unfavorable foreign government
actions, including nationalization, expropriation or confiscatory taxation, currency blockage, or
political changes or diplomatic developments. Foreign securities may also be less liquid and more
difficult to value than securities of U.S. issuers
Emerging Markets Risk:
the risk of investing in emerging market securities, primarily increased
foreign (non-U.S.) investment risk
Market Risk:
the risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
Issuer Risk:
the risk that the value of a security may decline for reasons directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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 and Distressed Company Risk:
the risk that high yield securities and unrated securities
of similar credit quality (commonly known as “junk bonds”) and securities of distressed companies
may be subject to greater levels of credit, issuer and liquidity risks. Securities of distressed
companies include both debt and equity securities. High yield securities and debt securities of
distressed companies are considered primarily speculative with respect to the issuer’s continuing
ability to make principal and interest payments. Distressed companies may be engaged in
restructurings or bankruptcy proceedings
Currency Risk:
the risk that foreign currencies will decline in value relative to the U.S. dollar
and affect the Fund’s investments in foreign (non-U.S.) currencies or in securities that trade in,
and receive revenues in, or in derivatives that provide exposure to, foreign (non-U.S.) currencies
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
Small-Cap and Mid-Cap Company Risk:
the risk that the value of securities issued by
small-capitalization and mid-capitalization companies may go up or down, sometimes rapidly and
unpredictably, due to narrow markets and limited managerial and financial resources
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
Convertible Securities Risk:
the risk that the market values of convertible securities tend to
decline as interest rates increase and, conversely, to increase as interest rates decline. A
convertible security’s market value, however, tends to reflect the market price of the common stock
of the issuing company when that stock price approaches or is greater than the convertible
security’s “conversion price”
Commodity Risk:
the risk that investing in commodity-linked derivative instruments may subject the
Fund to greater volatility than investments in traditional securities. The value of
commodity-linked derivative instruments may be affected by changes in overall market movements,
commodity index volatility, changes in interest rates, or factors affecting a particular industry
or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs and
international economic, political and regulatory developments
E-267
Tax Risk:
the risk that the tax treatment of swap agreements and other derivative instruments, such
as commodity-linked derivative instruments, including commodity index-linked notes, swap
agreements, commodity options, futures, and options on futures, may be affected by future
regulatory or legislative changes that could affect the character, timing and/or amount of the
Fund’s taxable income or gains and distributions
Subsidiary Risk:
the risk that, by investing in the Subsidiary, the Fund is indirectly exposed to
the risks associated with the Subsidiary’s investments. There is no guarantee that the investment
objective of the Subsidiary will be achieved
E-268
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PIMCO EqS Pathfinder Fund
®
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Ticker symbol:
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PTHWX
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Principal Investments and Strategies
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Investment Objective
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Fund Focus
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Approximate Primary Capitalization Range
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Seeks capital appreciation
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Equity securities of
issuers that PIMCO
believes are
undervalued
|
|
All capitalizations
|
The Fund seeks to achieve its investment objective by investing under normal circumstances in
equity securities, including common and preferred stock (and securities convertible into, or that
Pacific Investment Management Company LLC (“PIMCO”) expects to be exchanged for, common or
preferred stock), of issuers that PIMCO believes are undervalued. The Fund’s bottom-up value
investment style attempts to identify securities that are undervalued by the market in comparison
to PIMCO’s own determination of the company’s value, taking into account criteria such as asset
value, book value and cash flow and earnings estimates.
When making investments, PIMCO evaluates the merits of each investment separately and there are no
specific limitations on the value, asset size, earnings or industry classification of the Fund’s
investments. The Fund may invest in securities issued by large-capitalization, mid-capitalization
and small-capitalization companies. The Fund generally considers large- and mid-cap companies to be
those with market capitalizations greater than $1.5 billion. The Fund may invest, without
limitation, in securities and instruments that are economically tied to foreign (non-U.S.)
countries. The Fund may also invest in securities and instruments that are economically tied to
emerging market countries.
The Fund may also invest in U.S. and non-U.S. sovereign government debt and other debt securities,
including bank loans, that PIMCO selects on the basis of its determination of the security’s value
and not necessarily based on the coupon rate or credit rating of the security. The debt investments
of the Fund may include high yield securities (“junk bonds”) of any rating. The Fund may invest in
the securities of distressed companies including defaulted securities, which typically involve
investments in lower-rated debt securities and loans but may also include equity securities of
distressed companies.
The Fund may invest in commodity-related investments. The Fund will seek to gain exposure to the
commodity futures markets primarily through investments in the PIMCO Cayman Commodity Fund VI,
Ltd., a wholly owned subsidiary of the Fund organized under the laws of the Cayman Islands (the
“Subsidiary”). The Subsidiary is advised by PIMCO, and has the same investment objective as the
Fund. As discussed in greater detail elsewhere in the prospectus, the Subsidiary (unlike the Fund)
may invest without limitation in commodity index-linked swap agreements and other commodity-linked
derivative instruments.
The Fund may engage in a risk arbitrage strategy to take advantage of a perceived relationship
between the value of two securities. Under an arbitrage strategy, the Fund may purchase one
security while selling short another security. The security purchased is generally considered by
PIMCO to be undervalued relative to the price of the security sold short, or the security sold
short is generally considered to be overvalued relative to the price of the security purchased.
Issuers of securities acquired pursuant to an arbitrage strategy may be engaged in certain types of
corporate events, such as restructurings, acquisitions, mergers, takeovers, tender or exchange
offers or liquidations. The Fund may attempt to hedge foreign currency exposure using foreign
currency exchange contracts and other investments and may utilize derivative instruments to hedge
against other market risks. The Fund may also invest in derivative instruments, such as options,
futures contracts or swap agreements consistent with its investment objective. The Fund may
purchase or sell securities on a when-issued, delayed delivery or forward commitment basis and may
engage in short sales. The Fund may also enter into reverse repurchase agreements and lend
portfolio securities.
The Fund may purchase securities to seek to influence or control management of an issuer, or may
invest in other companies that do so, when the portfolio managers believe such actions would
benefit the Fund.
Principal Risks
It is possible to lose money on an investment in the Fund. The principal risks of investing in the
Fund, which could adversely affect its net asset value, yield and total return are:
Equity Risk:
the risk that the value of equity securities, such as common stocks and preferred
stocks, may decline due to general market conditions which are not specifically related to a
particular company or to factors affecting a particular industry or industries. Equity securities
generally have greater price volatility than fixed income securities
Value Investing Risk:
a value stock may decrease in price or may not increase in price as
anticipated by PIMCO if it continues to be undervalued by the market or the factors that PIMCO
believes will cause the stock price to increase do not occur
E-269
Foreign (Non-U.S.) Investment Risk:
the risk that investing in foreign (non-U.S.) securities may
result in the Fund experiencing more rapid and extreme changes in value than a fund that invests
exclusively in securities of U.S. companies, due to smaller markets, differing reporting,
accounting and auditing standards, increased risk of delayed settlement of portfolio transactions
or loss of certificates of portfolio securities, and the risk of unfavorable foreign government
actions, including nationalization, expropriation or confiscatory taxation, currency blockage, or
political changes or diplomatic developments. Foreign securities may also be less liquid and more
difficult to value than securities of U.S. issuers
Emerging Markets Risk:
the risk of investing in emerging market securities, primarily increased
foreign (non-U.S.) investment risk
Market Risk:
the risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
Issuer Risk:
the risk that the value of a security may decline for reasons directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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 and Distressed Company Risk:
the risk that high yield securities and unrated securities
of similar credit quality (commonly known as “junk bonds”) and securities of distressed companies
may be subject to greater levels of credit, issuer and liquidity risks. Securities of distressed
companies include both debt and equity securities. High yield securities and debt securities of
distressed companies are considered primarily speculative with respect to the issuer’s continuing
ability to make principal and interest payments. Distressed companies may be engaged in
restructurings or bankruptcy proceedings
Currency Risk:
the risk that foreign currencies will decline in value relative to the U.S. dollar
and affect the Fund’s investments in foreign (non-U.S.) currencies or in securities that trade in,
and receive revenues in, or in derivatives that provide exposure to, foreign (non-U.S.) currencies
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO will
not produce the desired results and that legislative, regulatory, or tax developments may affect
the investment techniques available to PIMCO and the individual portfolio manager in connection
with managing the Fund. There is no guarantee that the investment objective of the Fund will be
achieved
Small-Cap and Mid-Cap Company Risk:
the risk that the value of securities issued by
small-capitalization and mid-capitalization companies may go up or down, sometimes rapidly and
unpredictably, due to narrow markets and limited managerial and financial resources
Arbitrage Risk:
the risk that securities purchased pursuant to an arbitrage strategy intended to
take advantage of a perceived relationship between the value of two securities may not perform as
expected
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, market,
credit and management risks, mispricing or improper valuation. Changes in the value of the
derivative may not correlate perfectly with the underlying asset, rate or index, and the Fund could
lose more than the principal amount invested
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
Commodity Risk:
the risk that investing in commodity-linked derivative instruments may subject the
Fund to greater volatility than investments in traditional securities. The value of
commodity-linked derivative instruments may be affected by changes in overall market movements,
commodity index volatility, changes in interest rates, or factors affecting a particular industry
or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs and
international economic, political and regulatory developments
E-270
Tax Risk:
the risk that the tax treatment of swap agreements and other derivative instruments, such
as commodity-linked derivative instruments, including commodity index-linked notes, swap
agreements, commodity options, futures, and options on futures, may be affected by future
regulatory or legislative changes that could affect the character, timing and/or amount of the
Fund’s taxable income or gains and distributions
Subsidiary Risk:
the risk that, by investing in the Subsidiary, the Fund is indirectly exposed to
the risks associated with the Subsidiary’s investments. There is no guarantee that the investment
objective of the Subsidiary will be achieved
E-271
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PIMCO Worldwide Fundamental Advantage AR Strategy Fund
|
|
Ticker symbol:
|
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PWWIX (Inst. Class)
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Principal Investments and Strategies
|
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Investment Objective
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Fund Focus
|
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Credit Quality
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Seeks total return which
exceeds that of its
benchmark.
|
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RAFI
®
Country Neutral U.S.
Global Index
derivatives backed
by a portfolio of
fixed income
investments
|
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B to Aa; Maximum of
20% of total assets
below Baa
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Average Collateral
Fixed Income
Duration
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Dividend Frequency
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(-3) to 8 years
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Quarterly
|
The Fund seeks to achieve its investment objective by investing under normal circumstances in
derivatives providing exposure to a proprietary global equity market neutral index designed by the
Fund’s sub-adviser, Research Affiliates, LLC (“Research Affiliates”), backed by a diversified
portfolio of short and intermediate maturity Fixed Income Instruments. In managing the Fund’s
investments in Fixed Income Instruments, PIMCO utilizes an absolute return approach, which is
designed to have flexibility with respect to duration, overall sector exposures, non-U.S. exposures
and credit quality, both as a function of the strategy’s investment guidelines and lack of a fixed
income index benchmark. “Fixed Income Instruments” include bonds, debt securities and other similar
instruments issued by various U.S. and non-U.S. public- or private-sector entities. The Fund’s
strategy with respect to maintaining exposure to the RAFI
®
Country Neutral L/S Global Index (the
“Index”) can be characterized as “market neutral” because it seeks to maintain equal long and short
equity positions while returning the relative appreciation (or depreciation) of the Index. The Fund
will invest in instruments that are economically tied to at least three countries (one of which may
be the United States).
The Index consists of stocks issued by companies domiciled in developed and developing countries
that satisfy certain liquidity and other proprietary inclusion criteria. Stocks held long in the
Index are based on a combination of fundamental factors, including sales, cash flow, book values
and, if applicable, dividends (sales, cash flow and dividends are averaged over the prior five
years). The Index seeks to capture outperformance relative to stocks held short in the Index, which
are based on market capitalization. Capitalization weighted indexes generally overweight overvalued
stocks and underweight undervalued stocks. By contrast, indexes based on fundamental factors, such
as the Index, seek to avoid this problem by weighting stocks based on variables that do not depend
on the fluctuations of market valuation. The Index seeks to capture the return difference between a
fundamental and capitalization weighted index of stocks. The number of companies selected for
inclusion in the Index and related weightings are calibrated using a proprietary algorithm that
looks to enhance return, liquidity and diversification. The Index may include, and therefore the
Fund may invest in, securities issued by large-capitalization, mid-capitalization and
small-capitalization companies.
The Fund may invest in common stocks, options, futures, options on futures and swaps to approximate
exposure to the Index or other similar indexes. The Fund typically will seek to simultaneously gain
long and short exposure to the Index, each in an amount, under normal circumstances, approximately
equal to the Fund’s net assets. While the Fund will, under normal circumstances, seek to maintain
approximately equal value exposure in its long and short positions in the Index in an effort to
offset the effects on the Fund’s performance of general stock market movements, PIMCO may increase
or decrease the Fund’s long or short exposure to the Index when PIMCO deems it appropriate to do
so. Because the Index is a proprietary index, there may be a limited number of counterparties
willing or able to serve as counterparties to a swap agreement. If such swap agreements are not
available, or when PIMCO otherwise deems it appropriate to do so, the Fund may invest in, or take
short positions in, other derivative instruments, “baskets” of stocks, or individual securities to
replicate the performance of the Index. The Fund also may invest in exchange-traded funds.
The values of derivatives based on the Index should closely track changes in the value of the
Index. However, these 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 Fund’s assets may
be invested in Fixed Income Instruments. Research Affiliates provides investment advisory services
in connection with the Fund’s use of the Index by, among other things, providing PIMCO, or
counterparties designated by PIMCO, with a model portfolio reflecting the composition of the Index
for purposes of developing the Index derivatives. PIMCO actively manages the Fixed Income
Instruments held by the Fund with a view toward enhancing the Fund’s total return, subject to an
overall portfolio duration which normally varies from (negative) 3 years to positive 8 years based
on PIMCO’s forecast for interest rates. Duration is a measure used to determine the sensitivity of
a security’s price to changes in interest rates. The longer a security’s duration, the more
sensitive it will be to changes in interest rates.
The Fund may invest, without limitation, in derivative instruments, such as currency options,
futures, options on futures and swap agreements, or in mortgage- or asset-backed securities,
subject to applicable law and any other restrictions described in the Fund’s prospectus or
Statement of Additional Information. The Fund may purchase or sell securities on a when-issued,
delayed delivery or forward commitment basis and may engage in short sales. Assets not invested in
equity securities or derivatives may be invested in Fixed Income Instruments. The Fund may invest
up to 20% of its total assets in high yield securities (“junk bonds”) rated B or higher
E-272
by Moody’s
Investors Service, Inc. (“Moody’s”), or equivalently rated by Standard & Poor’s Rating Services
(“S&P”) or Fitch, Inc. (“Fitch”), or, if unrated, determined by PIMCO to be of comparable quality
(except that within such limitation, the Fund may invest in mortgage-related securities rated below
B). The Fund may also invest, without limitation, in securities denominated in foreign currencies
and in U.S. dollar-denominated securities of foreign issuers. With respect to the Fund’s fixed
income investments, the Fund may invest up to 25% of its total assets in Fixed Income Instruments
that are economically tied to emerging market countries, but may gain emerging markets exposure
beyond this limit through other securities and instruments. With respect to the Fund’s fixed income
investments, the Fund will normally limit its foreign currency exposure from non-U.S.
dollar-denominated Fixed Income Instruments to 20% of its total assets, but may gain foreign
currency exposure beyond this limit through other securities and instruments. The Fund may also
invest up to 10% of its total assets in preferred stocks.
Principal Risks
It is possible to lose money on an investment in the Fund. Although the Fund seeks to protect
against equity market risk arising from its long exposure to the Index by maintaining short
exposure to a proprietary index of market capitalization weighted global equities, under certain
conditions, generally in a market where the Index underperforms relative to the proprietary index
of market capitalization weighted global equities and fixed income securities are declining or in
periods of heightened market volatility, the Fund may experience losses. The principal risks of
investing in the Fund, which could adversely affect its net asset value, yield and total return
are:
Interest Rate Risk:
the risk that fixed income securities will decline in value because of an
increase in interest rates; a fund with a longer average portfolio duration will be more sensitive
to changes in interest rates than a fund with a shorter average portfolio duration
Credit Risk:
the risk that 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 risk that high yield securities and unrated securities of similar credit
quality (commonly known as “junk bonds”) are subject to greater levels of credit and liquidity
risks. High yield securities are considered primarily speculative with respect to the issuer’s
continuing ability to make principal and interest payments
Market Risk:
the risk that the value of securities owned by the Fund may go up or down, sometimes
rapidly or unpredictably, due to factors affecting securities markets generally or particular
industries
Issuer Risk:
the risk that the value of a security may decline for a reason directly related to the
issuer, such as management performance, financial leverage and reduced demand for the issuer’s
goods or services
Liquidity Risk:
the risk that a particular investment may be difficult to purchase or sell and that
the Fund may be unable to sell illiquid securities at an advantageous time or price or achieve its
desired level of exposure to a certain sector
Derivatives Risk:
the risk of investing in derivative instruments, including liquidity, interest
rate, market, credit and management risks, mispricing or improper valuation. Changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or index, and the
Fund could lose more than the principal amount invested
Equity Risk:
the risk that the value of equity securities, such as common stocks and preferred
stocks, may decline due to general market conditions which are not specifically related to a
particular company or to factors affecting a particular industry or industries. Equity securities
generally have greater price volatility than fixed income securities
Mortgage-Related and Other Asset-Backed Securities Risk:
the risk of investing in mortgage-related
and other asset-backed securities, including interest rate risk, extension risk and prepayment risk
Foreign (Non-U.S.) Investment Risk:
the risk that investing in foreign (non-U.S.) securities may
result in the Fund experiencing more rapid and extreme changes in value than a fund that invests
exclusively in securities of U.S. companies, due to smaller markets, differing reporting,
accounting and auditing standards, and nationalization, expropriation or confiscatory taxation,
currency blockage, or political changes or diplomatic developments. Foreign securities may also be
less liquid and more difficult to value than securities of U.S. issuers
Emerging Markets Risk:
the risk of investing in emerging market securities, primarily increased
foreign (non-U.S.) investment risk
Currency Risk:
the risk that foreign currencies will decline in value relative to the U.S. dollar
and affect the Fund’s investments in foreign (non-U.S.) currencies or in securities that trade in,
and receive revenues in, or in derivatives that provide exposure to, foreign (non-U.S.) currencies
E-273
Leveraging Risk:
the risk that certain transactions of the Fund, such as reverse repurchase
agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward
commitment transactions, or derivative instruments, may give rise to leverage, causing the Fund to
be more volatile than if it had not been leveraged
Management Risk:
the risk that the investment techniques and risk analyses applied by PIMCO and
Research Affiliates will not produce the desired results and that legislative, regulatory, or tax
developments may affect the investment techniques available to PIMCO, Research Affiliates and the
individual portfolio manager in connection with managing the Fund. There is no guarantee that the
investment objective of the Fund will be achieved
Small-Cap and Mid-Cap Company Risk:
the risk that the value of securities issued by
small-capitalization and mid-capitalization companies may go up or down, sometimes rapidly and
unpredictably, due to narrow markets and limited managerial and financial resources
Short Sale Risk:
the risk of entering into short sales, including the potential loss of more money
than the actual cost of the investment, and the risk that the third party to the short sale may
fail to honor its contract terms, causing a loss to the Fund
E-274
PART C. OTHER INFORMATION
Item 28. Exhibits
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(a)
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Articles of Incorporation.
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(1)
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Amended & Restated Agreement and Declaration of Trust, dated as of March 28, 2008.(2)
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(1)
|
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Amended and Restated Bylaws, dated as of March 28, 2008.(2)
|
|
(c)
|
|
Instruments Defining Rights of Securities Holdings.
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|
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(1)
|
|
Article III (Shares) and Article V (Shareholders’ Voting Powers and Meetings) of the Amended & Restated Agreement and Declaration of Trust filed with exhibit (a)(1).
|
|
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|
|
(2)
|
|
Article 9 (Issuance of Shares Certificates) and Article 11 (Shareholders’ Voting Powers and Meetings) of the Amended and Restated Bylaws filed with exhibit (b)(1).
|
|
(d)
|
|
Investment Advisory Contracts.
|
|
|
(1)
|
|
(i)
|
|
Investment Management Agreement dated March 28, 2008 with Allianz Global Investors Fund Management LLC.(2)
|
|
|
(ii)
|
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Amended and Restated Investment Management Agreement dated July 8, 2008 with Allianz Global Investors Fund Management LLC.(3)
|
|
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|
|
(iii)
|
|
Form of Revised Schedule to Investment Management Agreement (Schedule A) with Allianz Global Investors Fund Management LLC to add the Allianz Global Investors Solutions Retirement Income Fund, Allianz Global Investors Solutions 2015 Fund, Allianz Global Investors Solutions 2020 Fund, Allianz
Global Investors Solutions 2030 Fund, Allianz Global Investors Solutions 2040 Fund and Allianz Global Investors Solutions 2050 Fund.(5)
|
|
|
|
|
(iv)
|
|
Revised Schedule to Investment Management Agreement (Schedule A) dated April 20, 2009 with Allianz Global Investors Fund Management LLC to add the Allianz Global Investors Solutions Core Allocation Fund, Allianz Global Investors Solutions Growth Allocation Fund and Allianz NFJ Global Dividend
Value Fund.(7)
|
|
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|
(v)
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|
Revised Schedule to Investment Management Agreement (Schedule A) dated April 7, 2010 with Allianz Global Investors Fund Management LLC to add the Allianz NACM Convertible Fund, Allianz NACM High Yield Bond Fund, Allianz NACM International Growth Opportunities Fund, Allianz NACM Emerging Growth
Fund, Allianz NACM Micro Cap Fund, Allianz NACM Small to Mid Cap Growth Fund, Allianz NACM Ultra Micro Cap Fund and Allianz RCM China Equity Fund.(10)
|
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(vi)
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Revised Schedule to Investment Management Agreement (Schedule A) with Allianz Global Investors Fund Management LLC to add the Allianz AGIC Focused Opportunity Fund and Allianz RCM Redwood Fund.(12)
|
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(vii)
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Revised Schedule to Investment Management Agreement (Schedule A) with Allianz Global Investors Fund Management LLC to add the Allianz RCM All Alpha Fund.(14)
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(viii)
|
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Amended and Restated Investment Management Agreement dated September 1, 2011 with Allianz Global Investors Fund Management LLC.(15)
|
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(ix)
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Revised Schedule to Investment Management Agreement (Schedule A) with Allianz Global Investors Fund Management LLC to add the F&T Behavioral Advantage Large Cap Fund.(15)
|
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(x)
|
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Form of Revised Schedule to Investment Management Agreement (Schedule A) with Allianz Global Investors Fund Management LLC to add the RCM Short Duration High Income Fund and the NFJ Diversified International Value Fund.(16)
|
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(xi)
|
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Form of Revised Schedule to Investment Management Agreement (Schedule A) with Allianz Global Investors Fund Management LLC to add AGIC Global Managed Volatility Fund, AGIC Global Investors Solutions 2025 Fund, AGIC Global Investors Solutions 2035 Fund, AGIC Global Investors Solutions 2045 Fund
and AGIC Global Investors Solutions 2055 Fund.(17)
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(xii)
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Revised Schedule to Investment Management Agreement (Schedule A) with Allianz Global Investors Fund Management LLC to add NFJ International Small-Cap Value Fund.(19)
|
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(xiii)
|
|
Form of Revised Schedule to Investment Management Agreement (Schedule A) with Allianz Global Investors Fund Management LLC to add AllianzGI Structured Alpha Fund, AllianzGI U.S. Equity Hedged Fund and AllianzGI NFJ Emerging Markets Value Fund.(20)
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1
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(xiv)
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Form of Revised Schedule to Investment Management Agreement (Schedule A) with Allianz Global Investors Fund Management LLC to add AllianzGI Dynamic Emerging Multi-Asset Fund and AllianzGI Multi-Asset Real Return Fund.(21)
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(xv)
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Revised Schedule to Investment Management Agreement (Schedule A) with Allianz Global Investors Fund Management LLC to add AllianzGI Global Fundamental Strategy Fund.(23)
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(xvi)
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Revised Schedule to Investment Management Agreement (Schedule A) with Allianz Global Investors Fund Management LLC to add AllianzGI Best Styles Global Equity Fund.(25)
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(xvii)
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Revised Schedule to Investment Management Agreement (Schedule A) with Allianz Global Investors Fund Management LLC to add AllianzGI Emerging Markets Debt Fund — To be filed by amendment.
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(2)
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(i)
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Sub-Advisory Agreement between Allianz Global Investors Fund Management LLC and RCM Capital Management LLC, dated March 28, 2008.(2)
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(ii)
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Revised Schedule to Sub-Advisory Agreement (Schedule A) dated July 8, 2008 between Allianz Global Investors Fund Management LLC and RCM Capital Management LLC to add the Allianz RCM All Horizons Fund, the Allianz RCM Disciplined Equity Fund and the Allianz RCM International Opportunities Fund.(3)
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(iii)
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Revised Schedule to Sub-Advisory Agreement (Schedule A) dated June 4, 2010 with Allianz Global Investors Fund Management LLC and RCM Capital Management LLC to add the RCM China Equity Fund.(10)
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(iv)
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Revised Schedule to Sub-Advisory Agreement (Schedule A) with Allianz Global Investors Fund Management LLC and RCM Capital Management LLC to add Allianz RCM Redwood Fund.(12)
|
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(v)
|
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Revised Schedule to Sub-Advisory Agreement (Schedule A) with Allianz Global Investors Fund Management LLC and RCM Capital Management LLC to add Allianz RCM All Alpha Fund.(14)
|
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(vi)
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Form of Revised Schedule to Sub-Advisory Agreement (Schedule A) with Allianz Global Investors Fund Management LLC and RCM Capital Management LLC to add RCM Short Duration High Income fund.(16)
|
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(vii)
|
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Form of Revised Schedule to Sub-Advisory Agreement (Schedule A) with Allianz Global Investors Fund Management LLC and RCM Capital Management LLC to add AllianzGI Dynamic Emerging Multi-Asset Fund and AllianzGI Multi-Asset Real Return Fund.(21)
|
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(3)
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(i)
|
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Portfolio Management Agreement between RCM Capital Management LLC and Allianz Global Investors Advisory GmbH, dated as of March 28, 2008.(2)
|
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(ii)
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Revised Schedule to Portfolio Management Agreement (Schedule A) dated July 8, 2008 between RCM Capital Management LLC and Allianz Global Investors Advisory GmbH to add the Allianz RCM All Horizons Fund and the Allianz RCM International Opportunities Fund.(3)
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(4)
|
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(i)
|
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Sub-Advisory Agreement dated July 8, 2008 between Allianz Global Investors Fund Management LLC and Nicholas-Applegate Capital Management, LLC.(3)
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(ii)
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Form of Revised Schedule to Sub-Advisory Agreement (Schedule A) between Allianz Global Investors Fund Management LLC and Nicholas-Applegate Capital Management LLC to add the Allianz NACM International Growth Fund.(5)
|
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(iii)
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Novation of Sub-Advisory Agreement between Allianz Global Investors Fund Management LLC, Allianz Global Investors Capital LLC, Nicholas-Applegate Capital Management LLC and Allianz Funds Multi-Strategy Trust.(11)
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(iv)
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Revised Schedule to Sub-Advisory Agreement (Schedule A) between Allianz Global Investors Fund Management LLC and Allianz Global Investors Capital LLC to add Allianz AGIC Focused Opportunity Fund.(12)
|
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(v)
|
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Form of Revised Schedule to Sub-Advisory Agreement (Schedule A) between Allianz Global Investors Fund Management LLC and Allianz Global Investors Capital LLC to add Allianz AGIC Global Managed Volatility Fund.(17)
|
2
|
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(vi)
|
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Form of Revised Schedule to Sub-Advisory Agreement (Schedule A) between Allianz Global Investors Fund Management LLC and Allianz Global Investors Capital LLC to add AllianzGI Structured Alpha Fund and AllianzGI U.S. Equity Hedged Fund.(20)
|
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(5)
|
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(i)
|
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Form of Sub-Advisory Agreement between Allianz Global Investors Fund Management LLC and Allianz Global Investors Solutions LLC.(5)
|
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(ii)
|
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Revised Schedule to Sub-Advisory Agreement (Schedule A) dated April 20, 2009 between Allianz Global Investors Fund Management LLC and Allianz Global Investors Solutions LLC to add the Allianz Global Investors Solutions Core Allocation Fund and Allianz Global Investors Solutions Growth Allocation Fund.(6)
|
|
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|
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(iii)
|
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Revised Schedule to Sub-Advisory Agreement (Schedule A) dated September 1, 2011 between Allianz Global Investors Fund Management LLC and Allianz Global Investors Solutions LLC.(15)
|
|
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|
|
(iv)
|
|
Form of Revised Schedule to Sub-Advisory Agreement (Schedule A) between Allianz Global Investors Fund Management LLC and Allianz Global Investors Solutions LLC to add Allianz AGIC Global Investors Solutions 2025 Fund, Allianz AGIC Global Investors Solutions 2035 Fund, Allianz AGIC Global Investors Solutions 2045 Fund and Allianz
AGIC Global Investors Solutions 2055 Fund.(17)
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(6)
|
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Form of Sub-Advisory Agreement between Allianz Global Investors Fund Management LLC and NFJ Investment Group LLC.(7)
|
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(i)
|
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Form of Revised Schedule to Sub-Advisory Agreement (Schedule A) between Allianz Global Investors Fund Management LLC and NFJ Investment Group LLC.(16)
|
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|
(ii)
|
|
Revised Schedule to Sub-Advisory Agreement (Schedule A) between Allianz Global Investors Fund Management LLC and NFJ Investment Group LLC to add NFJ International Small-Cap Value Fund.(19)
|
|
|
|
|
(iii)
|
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Form of Revised Schedule to Sub-Advisory Agreement (Schedule A) between Allianz Global Investors Fund Management LLC and NFJ Investment Group LLC to add AllianzGI NFJ Emerging Markets Value Fund.(20)
|
|
|
(7)
|
|
Form of Portfolio Management Agreement between RCM Capital Management LLC and RCM Asia Pacific Limited.(10)
|
|
|
|
|
(8)
|
|
Form of Sub-Advisory Agreement between Allianz Global Investors Fund Management LLC and Fuller & Thaler Asset Management, Inc.(15)
|
|
|
|
|
(9)
|
|
Form of Portfolio Management Agreement between Allianz Global Investors Fund Management LLC and Caywood-Scholl Capital Management LLC.(16)
|
|
|
(10)
|
|
(i)
|
|
Amended and Restated Sub-Advisory Agreement with Allianz Global Investors Fund Management LLC and Allianz Global Investors U.S. LLC, dated July 1, 2013.(23)
|
|
|
(ii)
|
|
Revised Schedule to Sub-Advisory Agreement (Schedule A) with Allianz Global Investors Fund Management LLC and Allianz Global Investors U.S. LLC to add AllianzGI Best Styles Global Equity Fund.(24)
|
|
|
|
|
(iii)
|
|
Revised Schedule to Sub-Advisory Agreement (Schedule A) with Allianz Global Investors Fund Management LLC and Allianz Global Investors U.S. LLC to add AllianzGI Emerging Markets Debt Fund — To be filed by amendment.
|
|
(e)
|
|
Distribution Contracts.
|
|
|
(1)
|
|
(i)
|
|
Form of Amended and Restated Distribution Contract dated March 28, 2008 with Allianz Global Investors Distributors LLC.(2)
|
|
|
(ii)
|
|
Second Amended and Restated Distribution Contract dated July 8, 2008 with Allianz Global Investors Distributors LLC.(3)
|
|
|
|
|
(iii)
|
|
Form of Third Amended and Restated Distribution Contract with Allianz Global Investors Distributors LLC.(5)
|
3
|
|
(iv)
|
|
Fourth Amended and Restated Distribution Contract dated April 20, 2009 with Allianz Global Investors Distributors LLC.(6)
|
|
|
|
|
(v)
|
|
Revised Schedule to Distribution Contract (Schedule A) dated April 9, 2010 with Allianz Global Investors Distributors LLC.(10)
|
|
|
|
|
(vi)
|
|
Revised Schedule to Distribution Contract (Schedule A) with Allianz Global Investors Distributors LLC.(12)
|
|
|
|
|
(vii)
|
|
Revised Schedule to Distribution Contract (Schedule A) with Allianz Global Investors Distributors LLC.(14)
|
|
|
|
|
(viii)
|
|
Form of Revised Schedule to Distribution Contract (Schedule A) with Allianz Global Investors Distributors LLC.(16)
|
|
|
|
|
(ix)
|
|
Form of Revised Schedule to Distribution Contract (Schedule A) with Allianz Global Investors Distributors LLC.(17)
|
|
|
|
|
(x)
|
|
Revised Schedule to Distribution Contract (Schedule A) with Allianz Global Investors Distributors LLC.(19)
|
|
|
|
|
(xi)
|
|
Form of Revised Schedule to Distribution Contract (Schedule A) with Allianz Global Investors Distributors LLC.(20)
|
|
|
|
|
(xii)
|
|
Form of Revised Schedule to Distribution Contract (Schedule A) with Allianz Global Investors Distributors LLC.(21)
|
|
|
|
|
(xiii)
|
|
Form of Fifth Amended and Restated Distribution Contract with Allianz Global Investors Distributors LLC.(22)
|
|
|
|
|
(xiv)
|
|
Revised Schedule to Fifth Amended and Restated Distribution Contract (Schedule A) with Allianz Global Investors Distributors LLC.(23)
|
|
|
|
|
(xv)
|
|
Revised Schedule to Fifth Amended and Restated Distribution Contract (Schedule A) with Allianz Global Investors Distributors LLC.(24)
|
|
|
|
|
(xvi)
|
|
Revised Schedule to Fifth Amended and Restated Distribution Contract (Schedule A) with Allianz Global Investors Distributors LLC — To be filed by amendment.
|
|
|
(2)
|
|
Form of Selected Dealer Agreement with respect to Class A, B and C shares.(2)
|
|
|
|
|
(3)
|
|
Form of Selected Dealer Agreement with respect to Class D shares between Registrant and Allianz Global Investors Distributors LLC.(2)
|
|
|
|
|
(4)
|
|
Form of Amendment to Dealer Agreement between Registrant and Allianz Global Investors Distributors LLC.(2)
|
|
|
|
|
(5)
|
|
Selected Dealer Agreement between PIMCO Funds Distributors LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated dated as of July 29, 2002.(2)
|
|
(f)
|
|
Not applicable.
|
|
|
|
(g)
|
|
Custodian Agreements.
|
|
|
(1)
|
|
(i)
|
|
Custody and Investment Accounting Agreement dated March 28, 2008 with State Street Bank & Trust Company.(15)
|
|
|
(ii)
|
|
Amendment to Custody and Investment Accounting Agreement with State Street Bank & Trust Company, dated June 13, 2013.(23)
|
|
|
|
|
(iii)
|
|
Amendment to Custody and Investment Accounting Agreement with State Street Bank & Trust Company.(25)
|
|
|
|
|
(iv)
|
|
Amendment to Custody and Investment Accounting Agreement with State Street Bank & Trust Company — To be filed by amendment.
|
|
|
(2)
|
|
Foreign Securities Depositories Delegation Agreement dated March 28, 2008 among Allianz Global Investors Fund Management LLC, RCM Capital Management LLC and Allianz Global Investors Advisory GmbH, and accepted and agreed to by Registrant.(2)
|
|
|
|
|
(3)
|
|
Form of Foreign Securities Depositories Delegation Agreement between Allianz Global Investors Fund Management LLC and Nicholas-Applegate Capital Management LLC, accepted and agreed to by Registrant.(4)
|
4
|
|
(4)
|
|
Form of Foreign Securities Depositories Delegation Agreement between Allianz Global Investors Fund Management LLC and Allianz Global Investors Solutions LLC.(5)
|
|
|
|
|
(5)
|
|
Form of Foreign Securities Depositories Delegation Agreement between Allianz Global Investors Fund Management LLC and NFJ Investment Group LLC.(7)
|
|
|
|
|
(6)
|
|
Form of Foreign Securities Depositories Delegation Agreement among Allianz Global Investors Fund Management LLC, RCM Capital Management LLC and RCM Asia Pacific Limited, and accepted and agreed to by Registrant.(10)
|
|
(h)
|
|
Other Material Contracts.
|
|
|
(1)
|
|
(i)
|
|
Transfer Agency and Services Agreement dated March 28, 2008 with Boston Financial Data Services, Inc.(2)
|
|
|
(ii)
|
|
Transfer Agency and Services Agreement dated October 3, 2008 with Boston Financial Data Services, Inc.(5)
|
|
|
|
|
(iii)
|
|
Revised Schedule A to Transfer Agency and Services Agreement dated May 4, 2009.(8)
|
|
|
|
|
(iv)
|
|
Revised Schedule A to Transfer Agency and Services Agreement dated July 15, 2009.(8)
|
|
|
|
|
(v)
|
|
Amendment to Transfer Agency and Services Agreement dated September 1, 2011 with Boston Financial Data Services, Inc.(15)
|
|
|
|
|
(vi)
|
|
Revised Schedule A to Transfer Agency and Services Agreement dated December 14, 2011.(18)
|
|
|
|
|
(vii)
|
|
Revised Schedule A to Transfer Agency and Service Agreement with Boston Financial Data Services, Inc. dated May 23, 2012.(19)
|
|
|
|
|
(viii)
|
|
Revised Schedule A to Transfer Agency and Service Agreement with Boston Financial Data Services, Inc. dated December 14, 2012.(22)
|
|
|
|
|
(ix)
|
|
Form of Amendment to Transfer Agency and Service Agreement with Boston Financial Data Services, Inc. dated June 21, 2013.(23)
|
|
|
|
|
(x)
|
|
Revised Schedule A to Transfer Agency and Service Agreement with Boston Financial Data Services, Inc.(25)
|
|
|
|
|
(xi)
|
|
Revised Schedule A to Transfer Agency and Service Agreement with Boston Financial Data Services, Inc. — To be filed by amendment.
|
|
|
(2)
|
|
(i)
|
|
Form of Shareholder Servicing Agreement.(2)
|
|
|
|
|
(3)
|
|
(i)
|
|
Expense Limitation Agreement dated March 28, 2008 with Allianz Global Investors Fund Management LLC.(2)
|
|
|
(ii)
|
|
Revised Schedule to the Expense Limitation Agreement (Schedule A) dated July 8, 2008 with Allianz Global Investors Fund Management LLC.(3)
|
|
|
|
|
(iii)
|
|
Form of Amended and Restated Expense Limitation Agreement with Allianz Global Investors Fund Management LLC.(5)
|
|
|
|
|
(iv)
|
|
Revised Schedule to Expense Limitation Agreement (Schedule A) dated April 20, 2009 with Allianz Global Investors Fund Management LLC to add the Allianz Global Investors Solutions Growth Allocation Fund
and the Allianz NFJ Global Dividend Value Fund.(6)
|
|
|
|
|
(v)
|
|
Form of Revised Schedule to Expense Limitation Agreement (Schedule A) with Allianz Global Investors Fund Management LLC.(7)
|
|
|
|
|
(vi)
|
|
Revised Schedule to Expense Limitation Agreement (Schedule A) dated April 1, 2010 with Allianz Global Investor Fund Management LLC.(10)
|
|
|
|
|
(vii)
|
|
Revised Schedule to Expense Limitation Agreement (Schedule A) with Allianz Global Investors Fund Management LLC.(12)
|
|
|
|
|
(viii)
|
|
Revised Schedule to Expense Limitation Agreement (Schedule A) with Allianz Global Investors Fund Management LLC.(14)
|
|
|
|
|
(ix)
|
|
Form of Revised Schedule to Expense Limitation Agreement (Schedule A) with Allianz Global Investors Fund Management LLC.(16)
|
5
|
|
(x)
|
|
Form of Revised Schedule to Expense Limitation Agreement (Schedule A) with Allianz Global Investors Fund Management LLC to add Allianz AGIC Global Managed Volatility Fund.(17)
|
|
|
|
|
(xi)
|
|
Revised Schedule to Expense Limitation Agreement (Schedule A) with Allianz Global Investors Fund Management LLC to add NFJ International Small-Cap Value Fund.(19)
|
|
|
|
|
(xii)
|
|
Form of Revised Schedule to Expense Limitation Agreement (Schedule A) with Allianz Global Investors Fund Management LLC dated September 11, 2012.(20)
|
|
|
|
|
(xiii)
|
|
Form of Revised Schedule to Expense Limitation Agreement (Schedule A) with Allianz Global Investors Fund Management LLC to add AllianzGI Structured Alpha Fund, AllianzGI U.S. Equity Hedged Fund and
AllianzGI NFJ Emerging Markets Value Fund.(20)
|
|
|
|
|
(xiv)
|
|
Form of Revised Schedule to Expense Limitation Agreement (Schedule A) with Allianz Global Investors Fund Management LLC to add AllianzGI Dynamic Emerging Multi-Asset Fund and AllianzGI Multi-Asset Real
Return Fund.(21)
|
|
|
|
|
(xv)
|
|
Form of Revised Schedule to Expense Limitation Agreement (Schedule A) with Allianz Global Investors Fund Management LLC.(22)
|
|
|
|
|
(xvi)
|
|
Revised Schedule to Expense Limitation Agreement (Schedule A) with Allianz Global Investors Fund Management LLC to add AllianzGI Global Fundamental Strategy Fund.(23)
|
|
|
|
|
(xvii)
|
|
Revised Schedule to Expense Limitation Agreement (Schedule A) with Allianz Global Investors Fund Management LLC to add AllianzGI Best Styles Global Equity Fund.(24)
|
|
|
|
|
(xviii)
|
|
Revised Schedule to Expense Limitation Agreement (Schedule A) with Allianz Global Investors Fund Management LLC.(25)
|
|
|
|
|
(xix)
|
|
Revised Schedule to Expense Limitation Agreement (Schedule A) with Allianz Global Investors Fund Management LLC to add AllianzGI Emerging Markets Debt Fund — To be filed by amendment.
|
|
|
(4)
|
|
Expense Limitation Agreement for Allianz Global Investors Solutions Core Allocation Fund dated April 20, 2009 with Allianz Global Investors Fund Management LLC.(6)
|
|
|
(5)
|
|
(i)
|
|
Form of Management Fee Waiver Agreement with Allianz Global Investors Fund Management LLC.(5)
|
|
|
(ii)
|
|
Revised Schedule to Management Fee Waiver Agreement (Schedule A) dated April 20, 2009 with Allianz Global Investors Fund Management LLC to add the Allianz Global Investors Solutions Core Allocation Fund and Allianz Global Investors Solutions Growth Allocation Fund.(6)
|
|
|
(6)
|
|
Expense Limitation Agreement for Allianz NACM Convertible Fund, Allianz NACM High Yield Bond Fund, Allianz NACM International Growth Opportunities Fund, Allianz NACM International Growth Fund, Allianz NACM Emerging Growth Fund, Allianz NACM Small to Mid Cap Growth Fund, Allianz Micro Cap Fund and Allianz NACM Ultra Micro Cap Fund dated March 31, 2010 with Allianz Global Investors Fund Management LLC.(10)
|
|
|
(7)
|
|
(i)
|
|
Amended and Restated Expense Limitation Agreement for Allianz Global Investors Solutions Retirement Income Fund, Allianz Global Investors Solutions 2015 Fund, Allianz Global Investors Solutions 2020 Fund, Allianz Global Investors Solutions 2030 Fund, Allianz Global Investors Solutions 2040 Fund and Allianz Global Investors Solutions 2050 Fund dated September 1, 2011 with Allianz Global Investors Fund
Management LLC.(15)
|
|
|
(ii)
|
|
Form of Revised Schedule to Expense Limitation Agreement (Schedule A) with Allianz Global Investors Fund Management LLC to add Allianz AGIC Global Investors Solutions 2025 Fund, Allianz AGIC Global Investors Solutions 2035 Fund, Allianz AGIC Global Investors Solutions 2045 Fund and Allianz AGIC Global Investors Solutions 2055 Fund.(17)
|
|
|
|
|
(iii)
|
|
Form of Revised Schedule to Expense Limitation Agreement (Schedule A) with Allianz Global Investors Fund Management LLC.(22)
|
|
|
|
|
(iv)
|
|
Revised Schedule to Expense Limitation Agreement (Schedule A) with Allianz Global Investors Fund Management LLC.(25)
|
|
|
(8)
|
|
(i)
|
|
Administration Agreement with Allianz Global Investors Fund Management LLC.
|
6
|
|
(ii)
|
|
Form of Amended and Restated Administration Agreement with Allianz Global Investors Fund Management LLC.(22)
|
|
|
|
|
(iii)
|
|
Revised Schedule to Amended and Restated Administration Agreement (Exhibit A) with Allianz Global Investors Fund Management LLC.(25)
|
|
(i)
|
|
Opinions and Consents of Counsel.(2)(3)(4)(5)(6)(7)(8)(9)(10)(14)(17)(19)(20)(21)(23)(24) — To be filed by amendment.
|
|
|
|
(j)
|
|
Not applicable.
|
|
|
|
(k)
|
|
Subscription Agreement with Allianz Asset Management of America L.P. (formerly known as Allianz Global Investors of America L.P.).(2)
|
|
|
|
(l)
|
|
Distribution and Servicing Plans.
|
|
|
(1)
|
|
Form of Distribution and Servicing Plan for Class A Shares.(1)
|
|
|
|
|
(2)
|
|
Form of Distribution Plan and Servicing Plan for Class B Shares.(6)
|
|
|
|
|
(3)
|
|
Form of Distribution and Servicing Plan for Class C Shares.(1)
|
|
|
|
|
(4)
|
|
Form of Amended and Restated Distribution Plan for Class D Shares.(2)
|
|
|
|
|
(5)
|
|
Form of Administrative Services Plan for Class P Shares.(2)
|
|
|
|
|
(6)
|
|
Form of Distribution and Servicing Plan for Class R Shares.(5)
|
|
|
|
|
(7)
|
|
Form of Distribution Plan for Administrative Class Shares.(5)
|
|
|
|
|
(8)
|
|
Form of Administrative Services Plan for Administrative Class Shares.(5)
|
|
|
|
|
(9)
|
|
Form of Administrative Services Plan for Class P-1 Shares.(10)
|
|
|
|
|
(10)
|
|
Second Amended and Restated Administrative Services Plan for Class P Shares.(14)
|
|
|
|
|
(11)
|
|
Amended and Restated Distribution and Servicing Plan for Class C Shares.(21)
|
|
|
(1)
|
|
Multi-Class Plan of Registrant.(2)
|
|
|
|
|
(2)
|
|
Amended and Restated Multi-Class Plan of Registrant dated July 8, 2008.(3)
|
|
|
|
|
(3)
|
|
Second Amended and Restated Multi-Class Plan of Registrant dated December 17, 2008.(5)
|
|
|
|
|
(4)
|
|
Fourth Amended and Restated Multi-Class Plan of Registrant dated June 4, 2010.(10)
|
|
|
|
|
(5)
|
|
Fifth Amended and Restated Multi-Class Plan of Registrant dated June 22, 2010.(12)
|
|
|
|
|
(6)
|
|
Sixth Amended and Restated Multi-Class Plan of Registrant dated April 11, 2011.(14)
|
|
|
|
|
(7)
|
|
Seventh Amended and Restated Multi-Class Plan of Registrant dated August 16, 2011.(22)
|
|
|
|
|
(8)
|
|
Form of Eighth Amended and Restated Multi-Class Plan of Registrant.(22)
|
|
(n)
|
|
Reserved.
|
|
|
|
(o)
|
|
Code of Ethics.
|
|
|
(1)
|
|
Code of Ethics of the Registrant.(2)
|
|
|
|
|
(2)
|
|
Code of Ethics of Allianz Global Investors Fund Management LLC and Allianz Global Investors Distributors LLC.(2)
|
|
|
|
|
(3)
|
|
Code of Ethics of RCM Capital Management LLC and Caywood-Scholl Capital Management, LLC.(18)
|
|
|
|
|
(4)
|
|
Code of Ethics of Allianz Global Investors Advisory GmbH.(2)
|
|
|
|
|
(5)
|
|
Code of Ethics of Nicholas-Applegate Capital Management, LLC.(3)
|
|
|
|
|
(6)
|
|
Code of Ethics of Allianz Global Investors Solutions LLC.(5)
|
|
|
|
|
(7)
|
|
Code of Ethics of Allianz Global Investors Distributors LLC, Allianz Global Investors Management LLC, Allianz Asset Management of America L.P. (formerly known as Allianz Global Investors of America L.P.), Nicholas- Applegate Capital Management LLC and NFJ Investment Group LLC.(6)
|
|
|
|
|
(8)
|
|
Code of Ethics of Allianz Global Investors Distributors LLC, Allianz Global Investors Management LLC, Allianz Asset Management of America L.P. (formerly known as Allianz Global Investors of America L.P.), Allianz Global Investors Solutions LLC, Nicholas-Applegate Capital Management LLC and NFJ Investment Group LLC dated October 1, 2009.(12)
|
|
|
|
|
(9)
|
|
Code of Ethics of RCM Capital Management LLC dated March 2010.(12)
|
|
|
|
|
(10)
|
|
Code of Ethics of Fuller & Thaler Asset Management, Inc.(18)
|
7
|
|
(1)
|
|
Power of Attorney for Paul Belica.(l)
|
|
|
|
|
(2)
|
|
Power of Attorney for Hans W. Kertess.(1)
|
|
|
|
|
(3)
|
|
Power of Attorney for William B. Ogden, IV.(l)
|
|
|
|
|
(4)
|
|
Power of Attorney for John C. Maney.(l)
|
|
|
|
|
(5)
|
|
Power of Attorney for R. Peter Sullivan, 111.(1)
|
|
|
|
|
(6)
|
|
Power of Attorney for Diana L. Taylor.(3)
|
|
|
|
|
(7)
|
|
Power of Attorney for James A. Jacobson.(8)
|
|
|
|
|
(8)
|
|
Power of Attorney for Bradford K. Gallagher.(11)
|
|
|
|
|
(9)
|
|
Power of Attorney for Allan Rappaport.(11)
|
|
|
|
|
(10)
|
|
Power of Attorney for Lawrence G. Altadonna.(13)
|
|
|
|
|
(11)
|
|
Power of Attorney for Deborah A. Zoullas.(14)
|
|
|
|
|
(12)
|
|
Power of Attorney for Deborah A. DeCotis, Bradford K. Gallagher, James A. Jacobsen, Hans W. Kertess, John C. Maney, William B. Ogden, IV, Alan Rappaport, Lawrence G. Altadonna and Julian F. Sluyters dated March 10, 2014.(25)
|
|
|
|
|
|
(1)
|
|
Incorporated by reference to Registrant’s Amendment to its Registration Statement on
Form N-1A, file no. 333-148624, filed February 27, 2008.
|
|
|
|
(2)
|
|
Incorporated by reference to Registrant’s Amendment to its Registration Statement on Form N-1A,
file no. 333-148624, filed March 31, 2008.
|
|
|
|
(3)
|
|
Incorporated by reference to Registrant’s Amendment to its Registration Statement on Form N-1A,
file no. 333-148624, filed July 15, 2008.
|
|
|
|
(4)
|
|
Incorporated by reference to Registrant’s Amendment to its Registration Statement on Form N-1A,
file no. 333-148624, filed October 3, 2008.
|
|
|
|
(5)
|
|
Incorporated by reference to Registrant’s Amendment to its Registration Statement on Form N-1A,
file no. 333-148624, filed December 17, 2008.
|
|
|
|
(6)
|
|
Incorporated by reference to Registrant’s Amendment to its Registration Statement on Form N-1A,
file no. 333-148624, filed April 20, 2009.
|
|
|
|
(7)
|
|
Incorporated by reference to Registrant’s Amendment to its Registration Statement on Form N-1A,
file no. 333-148624, filed May 27, 2009.
|
|
|
|
(8)
|
|
Incorporated by reference to Registrant’s Amendment to its Registration Statement on Form N-1A,
file no. 333-148624, filed January 15, 2010.
|
|
|
|
(9)
|
|
Incorporated by reference to Registrant’s Amendment to its Registration Statement on Form N-1A,
File no. 333-148624, filed April 1, 2010.
|
|
|
|
(10)
|
|
Incorporated by reference to Registrant’s Amendment to its Registration Statement on Form
N-1A, File No. 333-148624, filed June 4, 2010.
|
|
|
|
(11)
|
|
Incorporated by reference to Registrant’s Amendment to its Registration Statement on Form
N-1A, File No. 333-148624, filed October 1, 2010.
|
|
|
|
(12)
|
|
Incorporated by reference to Registrant’s Amendment to its Registration Statement on Form
N-1A, File No. 333-148624, filed December 17, 2010.
|
|
|
|
(13)
|
|
Incorporated by reference to Registrant’s Amendment to its Registration Statement on Form
N-1A, File No. 333-148624, filed January 14, 2011.
|
|
|
|
(14)
|
|
Incorporated by reference to Registrant’s Amendment to its Registration Statement on Form
N-1A, File No. 333-148624, filed April 1, 2011.
|
|
|
|
(15)
|
|
Incorporated by reference to Registrant’s Amendment to its Registration Statement on Form
N-1A, File No. 333-148624, filed September 9, 2011.
|
|
|
|
(16)
|
|
Incorporated by reference to Registrant’s Amendment to its Registration Statement on Form
N-1A, File No. 333-148624, filed September 22, 2011.
|
|
|
|
(17)
|
|
Incorporated by reference to Registrant’s Amendment to its Registration Statement on Form
N-1A, File No. 333-148624, filed December 14, 2011.
|
8
|
|
|
|
|
(18)
|
|
Incorporated by reference to Registrant’s Amendment to its Registration Statement on Form
N-1A, File No. 333-148624, filed March 30, 2012.
|
|
|
|
(19)
|
|
Incorporated by reference to Registrant’s Amendment to its Registration Statement on Form
N-1A, File No. 333-148624, filed May 23, 2012.
|
|
|
|
(20)
|
|
Incorporated by reference to Registrant’s Amendment to its Registration Statement on Form
N-1A, File No. 333-148624, filed October 3, 2012.
|
|
|
|
(21)
|
|
Incorporated by reference to Registrant’s Amendment to its Registration Statement on Form
N-1A, File No. 333-148624, filed December 14, 2012.
|
|
|
|
(22)
|
|
Incorporated by reference to Registrant’s Amendment to its Registration Statement on Form
N-1A, File No. 333-148624, filed March 29, 2013.
|
|
|
|
(23)
|
|
Incorporated by reference to Registrant’s Amendment to its Registration Statement on Form
N-1A, File No. 333-148624, filed July 1, 2013.
|
|
|
|
(24)
|
|
Incorporated by reference to Registrant’s Amendment to its Registration Statement on Form
N-1A, File No. 333-148624, filed November 26, 2013.
|
|
|
|
(25)
|
|
Incorporated by reference to Registrant’s Amendment to its Registration Statement on Form
N-1A, File No. 333-148624, filed March 28, 2014.
|
Item 29. Persons Controlled By or Under Common Control with Registrant
Not applicable.
Item 30. Indemnification
Reference is made to Article VII of Registrant’s Agreement and Declaration of Trust which is
incorporated by reference herein.
Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended
(the “Securities Act”), may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant understands that in
the opinion of the Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or controlling person
of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether such indemnification
by it is against public policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
Item 31. Business and Other Connections of the Trust’s Investment Adviser and Portfolio Managers
Unless otherwise stated, the principal business address of each organization listed is 1633
Broadway, New York, NY 10019.
Allianz Global Investors Fund Management LLC
|
|
|
|
|
|
|
Name
|
|
Position with Advisor
|
|
Other Affiliations
|
|
Julian Sluyters
|
|
Chairman — Management
Board
|
|
Member — Executive
Committee, Managing
Director and Chief
Operating Officer
of Allianz Global
Investors U.S.
Holdings LLC
|
|
|
|
|
|
|
|
John C. Maney
|
|
Member — Management
Board and Managing
Director
|
|
Member —
Management Board,
Managing Director
and Chief Operating
Officer of Allianz
Asset Management of
America LLC, Sole
Member —
Management Board,
Managing Director
and COO of
|
9
|
|
|
|
|
|
|
Name
|
|
Position with Advisor
|
|
Other Affiliations
|
|
|
|
|
|
Allianz
Asset Management of
America L.P., COO
of Allianz Asset
Management U.S.
Holding II LLC,
Director and COO of
PIMCO Global
Advisors
(Resources)
Limited, EVP of
PIMCO Japan Ltd,
Member — Board of
Directors and COO
of Allianz Asset
Management of
America Holdings
Inc., Sole Member
— Board of
Directors and COO
of Oppenheimer
Group, Inc.
|
|
|
|
|
|
|
|
John Carroll
|
|
Member — Management Board
|
|
Chief Executive
Officer of Allianz
Global Investors
Distributors LLC,
Member — Executive
Committee and
Managing Director
of Allianz Global
Investors U.S.
Holdings LLC
|
|
|
|
|
|
|
|
Michael J.
Puntoriero
|
|
Chief Financial Officer
|
|
Chief Financial
Officer of Allianz
Asset Management of
America Holdings
Inc., Allianz Asset
Management U.S.
Holding II LLC, NFJ
Investment Group
LLC, Oppenheimer
Group, Inc. Pacific
Investment
Management Company
LLC, PIMCO
Australia Pty Ltd.,
PIMCO Global
Holdings, LLC,
PIMCO Canada Corp.,
PIMCO Europe
Limited, PIMCO
Global Advisors
LLC, PIMCO Japan
Ltd., StocksPLUS
Management Inc.;
Managing Director
and Chief Financial
Officer of Allianz
Asset Management of
America LLC,
Allianz Asset
Management of
America L.P.,
Allianz Global
Investors U.S. LLC,
Allianz Global
Investors U.S.
Holdings LLC;
Director and Chief
Financial Officer
of PIMCO Global
Advisors
(Resources)
Limited; Managing
Director of Allianz
Global Investors
Distributors LLC.
|
|
|
|
|
|
|
|
Lawrence G.
Altadonna
|
|
Director
|
|
None.
|
|
|
|
|
|
|
|
Thomas J. Fuccillo
|
|
Managing Director, Chief
Legal
Officer and
Secretary
|
|
Managing Director
of Allianz Global
Investors U.S.
Holdings LLC and
Managing Director,
Chief Legal Officer
and Secretary of
Allianz Global
Investors
Distributors LLC
|
|
|
|
|
|
|
|
Richard F. Lee
|
|
Director
|
|
None.
|
10
|
|
|
|
|
|
|
Name
|
|
Position with Advisor
|
|
Other Affiliations
|
|
James T. Funaro
|
|
Senior Vice President —
Tax Matters
|
|
Senior Vice President
of Allianz Asset
Management of America
L.P. and Allianz Asset
Management of America
Holdings Inc.; Senior
Vice President — Tax
Matters of Allianz
Asset Management of
America LLC, Allianz
Global Investors U.S.
LLC, Allianz Global
Investors Distributors
LLC, Allianz Global
Investors U.S.
Holdings LLC, NFJ
Investment Group LLC,
Oppenheimer Group,
Inc., and Stocks PLUS
Management, Inc.
|
|
|
|
|
|
|
|
Vinh T. Nguyen
|
|
Senior Vice President and
Treasurer
|
|
Senior Vice President
and Treasurer of
Allianz Asset
Management of America
LLC, Allianz Asset
Management of America
L.P., Allianz Asset
Management of America
Holdings Inc., Allianz
Global Investors
Distributors LLC,
Allianz Global
Investors U.S. LLC,
Allianz Global
Investors U.S.
Holdings LLC, NFJ
Investment Group LLC,
Oppenheimer Group,
Inc., Pacific
Investment Management
Company LLC, PIMCO
Global Holdings, LLC,
PIMCO Global Advisors
LLC, PIMCO Global
Advisors (Resources)
Limited, Vice
President and
Controller of PIMCO
Australia Pty. Ltd.,
PIMCO Europe Limited
and PIMCO Japan Ltd.,
Treasurer of Allianz
Asset Management U.S.
Holding II LLC.
|
|
|
|
|
|
|
|
Colleen Martin
|
|
Executive Vice President
and Controller
|
|
Executive Vice
President and
Controller of Allianz
Asset Management of
America LLC, Allianz
Asset Management of
America L.P., Allianz
Asset Management of
America Holdings Inc.,
Allianz Global
Investors U.S. LLC,
Allianz Global
Investors U.S.
Holdings LLC, NFJ
Investment Group LLC,
Oppenheimer Group
Inc., PIMCO Global
Holdings, LLC, PIMCO
Global Advisers LLC,
PIMCO Global Advisors
(Resources) Limited;
Controller of
StocksPlus Management
Inc.; Chief Financial
Officer, Financial
Operations Principal,
Executive Vice
President and
Controller of Allianz
Global Investors
Distributors LLC;
Chief Financial
Officer, Financial
Operations Principal
of PIMCO Investments
LLC; and Controller of
Allianz Asset
Management U.S.
Holding II LLC.
|
|
|
|
|
|
|
|
Albert A. Pisano
|
|
Director and Chief
Compliance Officer
|
|
Senior Vice President
of Allianz Global
Investors U.S.
Holdings LLC.
|
|
|
|
|
|
|
|
Scott Whisten
|
|
Director
|
|
None.
|
|
|
|
|
|
|
|
Kellie E. Davidson
|
|
Assistant Secretary
|
|
Secretary of Allianz
Asset Management of
America LLC and
Allianz Asset
Management of America
L.P., Assistant
Secretary of Allianz
Asset Management of
America Holdings Inc.,
Allianz Global
Investors Distributors
LLC, Allianz Asset
Management U.S.
Holding II LLC,
Allianz Global
|
11
|
|
|
|
|
|
|
Name
|
|
Position with Advisor
|
|
Other Affiliations
|
|
|
|
|
|
Investors U.S.
Holdings LLC, NFJ
Investment Group LLC,
Oppenheimer Group,
Inc., PIMCO Global
Holdings, LLC, PIMCO
Global Advisors LLC,
PIMCO Global Advisors
(Resources) Limited
and Allianz Global
Investors U.S. LLC.
|
|
|
|
|
|
|
|
Richard Cochran
|
|
Vice President
|
|
None.
|
|
|
|
|
|
|
|
Orhan Dzemaili
|
|
Vice President
|
|
None.
|
|
|
|
|
|
|
|
Lauren B. Harman
|
|
Vice President
|
|
None.
|
|
|
|
|
|
|
|
Steve W. Howell
|
|
Vice President
|
|
None.
|
|
|
|
|
|
|
|
Mila Eisenfrats
|
|
Assistant Vice President
|
|
None.
|
|
|
|
|
|
|
|
Rod Greene
|
|
Assistant Vice President
|
|
None.
|
|
|
|
|
|
|
|
Joanne Sivillo
|
|
Assistant Vice President
|
|
None.
|
|
|
|
|
|
|
|
Leya Vishnevsky
|
|
Assistant Vice President
|
|
None.
|
|
|
|
|
|
|
|
Olga Yakubov
|
|
Assistant Vice President
|
|
None.
|
Allianz Global Investors U.S. LLC
Information relating to Allianz Global Investors U.S. LLC is incorporated by reference to its Form
ADV previously filed electronically on the IARD system.
Item 32. Principal Underwriters
|
(a)
|
|
Allianz Global Investors Distributors LLC (the “Distributor”) serves as Distributor of shares
for the Registrant and also of Allianz Funds, AllianzGI Managed Accounts Trust, Premier
Multi-Series VIT, and PIMCO Funds. The Distributor is an affiliate of Allianz Global Investors Fund
Management LLC, the Registrant’s Adviser.
|
|
|
|
(b)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Positions and
|
|
Name and Principal
|
|
Positions and Offices with Principal
|
|
Offices with
|
|
Business Address*
|
|
Underwriter
|
|
Registrant
|
|
John Carroll
|
|
Chief Executive Officer
|
|
None
|
|
Joseph Quirk
|
|
Managing Director, Chief Operating Officer
|
|
None
|
|
Glenn Dial
|
|
Managing Director
|
|
None
|
|
Gerard P. Marino
|
|
Managing Director
|
|
None
|
|
Michael J.
Puntoriero
|
|
Managing Director
|
|
None
|
|
Peter L. Slattery
|
|
Managing Director
|
|
None
|
|
Keith C. Wagner
|
|
Managing Director
|
|
None
|
|
Andrew J. Wilmot
|
|
Managing Director
|
|
None
|
|
Thomas J. Fuccillo
|
|
Managing Director, Chief Legal Officer and Secretary
|
|
None
|
|
Colleen Martin
|
|
Chief Financial Officer, Financial Operations
Principal, Executive Vice President and Controller
|
|
None
|
|
Richard Kirk
|
|
Director, Associate General Counsel
|
|
Assistant Secretary
|
|
Vinh T. Nguyen
|
|
Senior Vice President and Treasurer
|
|
None
|
|
Todd Campo
|
|
Director
|
|
None
|
|
Christopher A.
Casenhiser
|
|
Director
|
|
None
|
|
Ira W. Cox
|
|
Director
|
|
None
|
|
Stephen J. Dane
|
|
Director
|
|
None
|
|
Joseph F. Eleccion
|
|
Director
|
|
None
|
|
James T. Funaro
|
|
Senior Vice President — Tax Matters
|
|
None
|
|
William V. Healey
|
|
Director and Senior Counsel
|
|
None
|
|
Gordon Kerper
|
|
Director and Chief Compliance Officer
|
|
None
|
12
|
|
|
|
|
|
|
|
|
|
|
Positions and
|
|
Name and Principal
|
|
Positions and Offices with Principal
|
|
Offices with
|
|
Business Address*
|
|
Underwriter
|
|
Registrant
|
|
Leslie S. Kravetzky
|
|
Director
|
|
None
|
|
James F. Lyons
|
|
Director
|
|
None
|
|
Sean P. Maher
|
|
Director
|
|
None
|
|
Joseph Minnix
|
|
Director
|
|
None
|
|
Kerry A. Murphy
|
|
Director
|
|
None
|
|
Jeffrey P. Nizzardo
|
|
Director
|
|
None
|
|
Henry W. Orvin
|
|
Director
|
|
None
|
|
Greg H. Poplarski
|
|
Director
|
|
None
|
|
Joni H. Rheingold
|
|
Director
|
|
None
|
|
James Scott Rose
|
|
Director
|
|
None
|
|
Kevin M. Shanley
|
|
Director
|
|
None
|
|
Gregory K. Shannahan
|
|
Director
|
|
None
|
|
Kathleen C. Thompson
|
|
Director
|
|
None
|
|
Steve J. Welker
|
|
Director
|
|
None
|
|
Justin R. Wingate
|
|
Director
|
|
None
|
|
John T. Andrews
|
|
Vice President
|
|
None
|
|
Todd M. Barney
|
|
Vice President
|
|
None
|
|
Deborah Brennan
|
|
Vice President
|
|
None
|
|
Rosemary T. Conlon
|
|
Vice President
|
|
None
|
|
Andrew Cook
|
|
Vice President
|
|
None
|
|
Kilie Donahue
|
|
Vice President
|
|
None
|
|
Christopher D.
Francis
|
|
Vice President
|
|
None
|
|
Keith Frasier
|
|
Vice President
|
|
None
|
|
Stacy Lawn
|
|
Vice President
|
|
None
|
|
Christopher S. Leo
|
|
Vice President
|
|
None
|
|
Scott Lindsay
|
|
Vice President
|
|
None
|
|
Michael P. Lynch
|
|
Vice President
|
|
None
|
|
Troy C. Maag
|
|
Vice President
|
|
None
|
|
Todd C. Monastero
|
|
Vice President
|
|
None
|
|
Ryan T. Muller
|
|
Vice President
|
|
None
|
|
Debra C. Ohstrom
|
|
Vice President
|
|
None
|
|
Shohil A. Patel
|
|
Vice President
|
|
None
|
|
Raad J. Taha
|
|
Vice President
|
|
None
|
|
Elaine Tan
|
|
Vice President
|
|
None
|
|
Jordan Vettoretti
|
|
Vice President
|
|
None
|
|
Jeffrey A. Weaver
|
|
Vice President
|
|
None
|
|
Adam Moran
|
|
Assistant Vice President
|
|
None
|
|
Adam Sussman
|
|
Assistant Vice President
|
|
None
|
|
Alfred J. Caresa
|
|
Assistant Vice President
|
|
None
|
|
Kellie E. Davidson
|
|
Assistant Secretary
|
|
None
|
|
|
|
|
|
*
|
|
Principal business address for all individuals listed is 1633 Broadway, New York, NY 10019 or 680
Newport Center Drive, Suite 250, Newport Beach, CA 92660.
|
|
|
|
(c)
|
|
The Registrant has no principal underwriter that is not an affiliated person of the Registrant
or an affiliated person of such an affiliated person.
|
13
Item 33. Location of Accounts and Records
The account books and other documents required to be maintained by the Registrant pursuant to
Section 31(a) of the Investment Company Act of 1940 and the Rules thereunder and the Commodity
Exchange Act and the Rules thereunder will be maintained at the offices of State Street Bank &
Trust Co., 21 West 10th Street, Kansas City, Missouri 64105, and/or Boston Financial Data
Services-Midwest, 330 W. 9th Street, 5th Floor, Kansas City, Missouri 64105.
Item 34. Management Services
Not applicable.
Item 35. Undertakings
Not applicable.
14
NOTICE
A copy of the Agreement and Declaration of the Allianz Funds Multi-Strategy Trust (the “Trust”),
together with all amendments thereto, is on file with the Secretary of The Commonwealth of
Massachusetts and notice is hereby given that this instrument is executed on behalf of the Trust by
an officer of the Trust as an officer and not individually and that the obligations of or arising
out of this instrument are not binding upon any of the Trustees of the Trust or shareholders of any
series of the Trust individually but are binding only upon the assets and property of the Trust or
the respective series.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940,
the Registrant has duly caused this Post-Effective Amendment No. 58 (the “Amendment”) to be signed
on its behalf by the undersigned, thereto duly authorized, in the City of New York, and the State
of New York on the 11
th
day of April, 2014.
|
|
|
|
|
|
|
|
ALLIANZ FUNDS MULTI-STRATEGY TRUST
|
|
|
|
By:
|
/s/ Julian F. Sluyters
|
|
|
|
Name:
|
Julian F. Sluyters
|
|
|
|
Title:
|
President
|
|
|
|
Pursuant to the requirements of the Securities Act of 1933, this Amendment has been signed below by
the following persons in the capacities and on the dates indicated.
|
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
/s/ Julian F. Sluyters
|
|
President and Chief Executive Officer
|
|
April 11, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Lawrence G. Altadonna*
|
|
Treasurer and Principal Financial
|
|
|
|
|
|
and
Accounting Officer
|
|
|
|
|
|
/s/ Bradford K. Gallagher*
|
|
Trustee
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/ James A. Jacobson*
|
|
Trustee
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Hans W. Kertess*
|
|
Trustee
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/ John C. Maney*
|
|
Trustee
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/ William B. Ogden, IV*
|
|
Trustee
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Alan Rappaport*
|
|
Trustee
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Deborah A. DeCotis*
|
|
Trustee
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*By:
|
/s/ Julian F. Sluyters
|
|
|
|
|
Julian F. Sluyters
|
|
|
|
|
Attorney-In-fact and Agent for the
Individuals Noted Above
Date: April 11, 2014
|
|
15
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