PIMCO GNMA and Government Securities Fund
Summary Prospectus
August 1,
2024
| Share Class: |
Inst |
I-2 |
I-3 |
A |
C |
| Ticker: |
PDMIX |
PPGNX |
PANNX |
PAGNX |
PCGNX |
Before you invest, you may want to review the Fund’s prospectus, which, as supplemented, contains more information about the Fund and its risks. You can find the Fund’s prospectus, reports to shareholders (once available) and other information about the Fund online at http://investments.pimco.com/prospectuses. You can also get this information at no cost by calling 888.87.PIMCO or by
sending an email request to piprocess@dstsystems.com. The Fund’s prospectus and Statement of Additional Information, both dated August 1, 2024, as supplemented, are incorporated by reference into this Summary Prospectus.
Investment Objective
The Fund seeks maximum total return, consistent with preservation of
capital and prudent investment management.
Fees and Expenses of the Fund
This table describes the fees and expenses that you may pay if you buy, hold and sell shares of the Fund. You
may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which
are not reflected in the table and example below. You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $100,000 in Class A shares of eligible funds offered by PIMCO Equity Series and PIMCO Funds. More information about these and other discounts is available in the “Classes of Shares” section on page 93 of the Fund’s prospectus, Appendix B to the Fund’s prospectus (Financial Firm-Specific Sales Charge Waivers and Discounts) or from your financial
professional.
Shareholder Fees (fees paid directly from your
investment):
| |
Inst
Class |
I-2 |
I-3 |
Class A |
Class C |
| Maximum Sales Charge (Load) Imposed on
Purchases (as a percentage of offering price) |
None |
None |
None |
3.75% |
None |
| Maximum Deferred Sales Charge (Load) (as a
percentage of the lower of the original purchase
price or redemption price) |
None |
None |
None |
1.00% |
1.00% |
Annual Fund Operating Expenses (expenses that you pay each year as a
percentage of the value of your investment):
| |
Inst
Class |
I-2 |
I-3 |
Class A |
Class C |
| Management Fees |
0.50% |
0.60% |
0.70% |
0.65% |
0.65% |
| Distribution and/or Service (12b-1) Fees |
N/A |
N/A |
N/A |
0.25% |
1.00% |
| Other Expenses(1) |
0.96% |
0.96% |
0.96% |
0.96% |
0.96% |
| Total Annual Fund Operating Expenses |
1.46% |
1.56% |
1.66% |
1.86% |
2.61% |
| Fee Waiver and/or Expense Reimbursement(2) |
N/A |
N/A |
(0.05%) |
N/A |
N/A |
| Total Annual Fund Operating Expenses
After Fee Waiver and/or Expense
Reimbursement |
1.46% |
1.56% |
1.61% |
1.86% |
2.61% |
1
“Other Expenses” include interest expense of 0.96%. Interest expense is
borne by the Fund separately from the management fees paid to Pacific Investment Management Company
LLC (“PIMCO”). Excluding interest expense, Total Annual Fund Operating
Expenses After Fee Waiver
and/or Expense Reimbursement are 0.50%, 0.60%, 0.65%, 0.90% and 1.65% for Institutional Class, I-2, I-3, Class A and Class C shares, respectively.
2
PIMCO has contractually agreed, through July 31, 2025, to reduce its supervisory and administrative fee for the Fund’s I-3 shares by 0.05% of the average daily
net assets attributable to I-3 shares of the Fund. This Fee Waiver Agreement renews annually unless
terminated by PIMCO upon at least 30 days’ prior notice to the end of the contract term.
Example. The Example is intended to help you compare the cost of investing in Institutional Class, I-2, I-3, Class A or Class C shares of the Fund with the costs of investing
in other mutual funds. The Example assumes that you invest $10,000 in the noted class of shares for the time periods indicated, and then hold or redeem all your shares at the end of those periods. The Example also
assumes that your investment has a 5% return each year and that the Fund’s operating expenses
remain the same. Although your actual costs may be higher or lower, based on these assumptions
your costs would be:
If you redeem your shares at
the end of each period:
| |
1 Year |
3 Years |
5 Years |
10 Years |
| Institutional Class |
$149 |
$462 |
$797 |
$1,746 |
| I-2 |
$159 |
$493 |
$850 |
$1,856 |
| I-3 |
$164 |
$519 |
$897 |
$1,961 |
| Class A |
$557 |
$938 |
$1,343 |
$2,473 |
| Class C |
$364 |
$811 |
$1,385 |
$2,762 |
If you do not redeem your shares:
| |
1 Year |
3 Years |
5 Years |
10 Years |
| Class A |
$557 |
$938 |
$1,343 |
$2,473 |
| Class C |
$264 |
$811 |
$1,385 |
$2,762 |
Portfolio Turnover
The Fund pays transaction costs when it buys and sells securities (or “turns over” its portfolio).
A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in the Annual Fund Operating
Expenses or in the Example tables, affect the Fund’s performance. During the most recent fiscal year, the Fund’s portfolio turnover rate was 1329% of the average value of its portfolio.
Principal Investment Strategies
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”) and of securities issued or guaranteed by the U.S. Government, its agencies or government-sponsored enterprises, 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 PIMCO’s market forecasts. 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
PIMCO Funds | Summary Prospectus
PIMCO GNMA and
Government Securities Fund
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 Ratings, 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;
provided that, investments in securities issued or guaranteed by the U.S. Government, its agencies or government-sponsored enterprises are not subject to this limit. In the event that ratings services assign
different ratings to the same security, PIMCO will use the highest rating as the credit rating for that security. 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 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 listed below.
Interest Rate Risk: the risk that fixed income securities will fluctuate in value because of a change 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
Call Risk: the risk that an issuer may exercise its right to redeem a fixed income security earlier than expected (a call). Issuers may call outstanding securities prior to their
maturity for a number of reasons (e.g., declining interest rates, changes in credit spreads and
improvements in the issuer’s credit quality). If an issuer calls a security that the Fund has invested in, the Fund may not recoup the full amount of its initial investment or may not
realize the full anticipated earnings from the investment and may be forced to reinvest in lower-yielding securities, securities with greater credit risks or securities with other, less favorable
features
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, or the issuer or guarantor
of collateral, is unable or unwilling, or is perceived (whether by market participants, rating agencies, pricing services or otherwise) as 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, changes in financial condition or
credit rating, financial leverage, reputation or 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 investments at an advantageous time or price
or achieve its desired level of exposure to a certain sector. Liquidity risk may result from the
lack of an active market, reduced number and capacity of traditional market participants to make
a market in fixed income securities, and may be magnified in a rising interest rate environment or other circumstances where investor redemptions from fixed income funds may be higher than normal, causing increased
supply in the market due to selling activity
Derivatives Risk: the risk of investing in derivative instruments (such as forwards, futures, swaps and structured securities)
and other similar investments, including leverage, liquidity, interest rate, market, counterparty
(including credit), operational, legal and management risks, and valuation complexity. Changes in the value of a derivative or other similar investment may not correlate perfectly with, and may be more sensitive to market events than,
the underlying asset, rate or index, and the Fund could lose more than the initial amount invested.
Changes in the value of a derivative or other similar instrument may also create margin delivery
or settlement payment obligations for the Fund. The Fund’s use of derivatives or other similar investments may result in losses to the Fund, a reduction in the Fund’s returns and/or increased volatility.
Non-centrally-cleared over-the-counter (“OTC”) derivatives or other similar investments are also subject to the risk that a counterparty to the transaction will not fulfill its contractual obligations to the other party, as many of
the protections afforded to centrally-cleared derivative transactions might not be available for
non-centrally-cleared OTC derivatives or other similar investments. The primary credit risk on
derivatives or other similar investments that are exchange-traded or traded through a central clearing counterparty resides with the Fund's clearing broker or the clearinghouse. Changes in regulation relating to a registered
fund’s use of derivatives and related
2 Summary Prospectus | PIMCO Funds
Summary
Prospectus
instruments could potentially limit or
impact the Fund’s ability to invest in derivatives, limit the Fund’s ability to employ certain strategies that use derivatives or other similar investments and/or adversely affect the value of derivatives or other similar
investments and the Fund’s performance
Equity Risk: the risk that the value of equity or equity-related securities, such as common stocks and preferred
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. In addition, preferred securities may be subject to greater credit risk or other risks, such as risks related to deferred and omitted
distributions, limited voting rights, liquidity, interest rates, regulatory changes and special redemption rights
Mortgage-Related and Other Asset-Backed Securities Risk: the risks of investing in mortgage-related and other asset-backed securities, including interest rate risk, extension risk, prepayment risk and credit risk. The Fund may invest in any
tranche of mortgage-related and other asset-backed securities, including junior and/or equity tranches (to the extent consistent with other of the Fund’s guidelines), which generally carry higher levels of the
foregoing risks
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, political changes,
diplomatic developments or the imposition of sanctions and other similar measures. 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, magnifying gains and losses and causing the Fund to be more volatile than if it had not been leveraged. This means that leverage entails a heightened risk of loss
Management Risk: the risk that the investment techniques and risk analyses applied by PIMCO will not produce the desired results and that actual or potential conflicts of
interest, legislative, regulatory, or tax restrictions, policies or developments may affect the investment techniques available to PIMCO and the individual portfolio managers in connection with managing the Fund and
may cause PIMCO to restrict or
prohibit participation in certain investments. There is no guarantee that the investment objective of the Fund
will be achieved
Short Exposure Risk: the risk of entering into short sales or other short positions, 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 or other short position will not fulfill its contractual obligations, causing a loss to the Fund
LIBOR Transition Risk: the risk related to the discontinuation and replacement of the London Interbank Offered Rate
(“LIBOR”). Certain instruments held by the Fund rely or relied in some fashion upon LIBOR. Although the transition process away from LIBOR for most instruments has been completed, some LIBOR use is
continuing and there are potential effects related to the transition away from LIBOR or the
continued use of LIBOR on the Fund, or on certain instruments in which the Fund invests, which
can be difficult to ascertain and could result in losses to the Fund
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.
Performance Information
The performance information shows summary performance information for the Fund in a bar chart and an Average
Annual Total Returns table. The information provides some indication of the risks of investing in the Fund by showing changes in its performance from year to year and by showing how the Fund’s average
annual returns compare with the returns of certain indexes. Absent any applicable fee waivers
and/or expense limitations, performance would have been lower. The bar chart shows performance of
the Fund’s Institutional Class shares. Performance for Class A and Class C shares in the Average Annual Total Returns table reflects the impact of sales charges. The Fund’s past performance, before and after taxes, is not necessarily an indication of
how the Fund will perform in the future.
In addition to the Fund’s performance, the Average Annual Total Returns table includes performance of:
(i) a broad-based securities market index (i.e., a regulatory index) and (ii) a supplemental index. It is not possible to invest directly in an unmanaged index. Effective July 24, 2024, the Fund’s regulatory index is the Bloomberg U.S. Aggregate Index. The Fund’s regulatory index is
shown in connection with certain regulatory requirements to provide a broad measure of market performance. The Bloomberg U.S. Aggregate Index represents securities that are SEC-registered, taxable, and dollar
denominated. The index covers the U.S. investment grade fixed rate bond market, with index
components for government and corporate securities, mortgage pass-through securities, and
asset-backed securities. These major sectors are subdivided into more specific indices that are calculated and reported on a regular basis. The supplemental index shown is the Bloomberg GNMA Index. The Bloomberg GNMA Index is an
unmanaged index covering mortgage-backed pass-through securities of the GNMA.
August 1, 2024 | SUMMARY PROSPECTUS 3
PIMCO GNMA and
Government Securities Fund
Performance for the Fund is updated daily
and quarterly and may be obtained as follows: daily and quarterly updates on the net asset value
and performance page at
https://www.pimco.com/en-us/product-finder.
| Best Quarter |
December 31, 2023 |
7.08% |
| Worst Quarter |
September 30, 2022 |
-5.74% |
| Year-to-Date |
June 30, 2024 |
0.12% |
Average Annual Total Returns (for periods ended 12/31/23)
| |
1 Year |
5 Years |
10 Years |
| Institutional Class Return Before Taxes |
6.32% |
0.71% |
1.55% |
| Institutional Class Return After Taxes on Distributions(1) |
4.56% |
-0.65% |
0.28% |
| Institutional Class Return After Taxes on Distributions
and Sales of Fund Shares(1) |
3.71% |
-0.01% |
0.64% |
| I-2 Return Before Taxes |
6.22% |
0.61% |
1.45% |
| I-3 Return Before Taxes |
6.17% |
0.56% |
1.40% |
| Class A Return Before Taxes |
1.94% |
-0.45% |
0.76% |
| Class C Return Before Taxes |
4.12% |
-0.44% |
0.39% |
| Bloomberg U.S. Aggregate Index (reflects no deductions
for fees, expenses or taxes) |
5.53% |
1.10% |
1.81% |
| Bloomberg GNMA Index (reflects no deductions for fees,
expenses or taxes) |
5.40% |
0.34% |
1.34% |
1
After-tax returns are calculated using the highest historical individual federal
marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax
returns depend on an investor’s tax situation and may differ from those shown, and the
after-tax returns shown are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. In some cases the return after taxes may exceed the return before taxes due to an assumed tax benefit from any losses on a sale of Fund shares at the end of the measurement period. After-tax returns are for Institutional Class shares only. After-tax returns for other classes will
vary.
Investment Adviser/Portfolio Managers
PIMCO serves as the investment adviser for the Fund. The Fund’s portfolio is jointly and primarily managed by Mike Cudzil, Daniel Hyman and Munish Gupta. Messrs. Cudzil and Hyman are Managing Directors of PIMCO. Mr. Cudzil has managed the
Fund since January 2013, and Mr. Hyman has managed the Fund since July 2012. Mr. Gupta is an
Executive Vice President of PIMCO and has managed the Fund since August 2022.
Purchase and Sale of Fund Shares
Fund shares may be purchased or sold (redeemed) on any business day
(normally any day when the New York Stock Exchange (“NYSE”) is open). Generally,
purchase and redemption orders for Fund shares are processed at the net asset value next calculated after an order is received by the Fund.
Institutional Class, I-2 and I-3
The minimum initial investment for Institutional Class, I-2 and I-3 shares of the Fund is $1 million, except
that the minimum initial investment may be modified for certain financial firms that submit orders on behalf of their customers.
You may sell (redeem) all or part of your Institutional Class, I-2 and I-3 shares of the Fund on any business
day. If you are the registered owner of the shares on the books of the Fund, depending on the elections made on the Account Application, you may sell by:
■
Sending a written request by regular mail to:
PIMCO Funds
P.O. Box 219024, Kansas City, MO 64121-9024
or by overnight mail to:
PIMCO Funds c/o SS&C Global Investor and Distribution Solutions, Inc.
P.O. Box 219024, Kansas City, MO 64121-9024
or by overnight mail to:
PIMCO Funds c/o SS&C Global Investor and Distribution Solutions, Inc.
430 W 7th Street, STE 219024, Kansas City, MO 64105-1407
■
Calling us at 888.87.PIMCO and a Shareholder Services associate will assist you
■
Sending a fax to our Shareholder Services department at 1.816.421.2861
■
Sending an e-mail to piprocess@dstsystems.com
Class A
and Class C
The minimum initial investment for Class A and Class C
shares of the Fund is $1,000. The minimum subsequent investment for Class A and Class C shares is
$50. The minimum initial investment may be modified for certain financial firms that submit orders on behalf of their customers. You may purchase or sell (redeem) all or part of your Class A and Class C shares through a
broker-dealer, or other financial firm, or, if you are the registered owner of the shares on the books of the Fund, by regular mail to PIMCO Funds, P.O. Box 219294, Kansas City, MO 64121-9294 or overnight mail to PIMCO Funds, c/o
SS&C Global
4 Summary Prospectus | PIMCO Funds
Summary
Prospectus
Investor and Distribution Solutions, Inc.,
430 W. 7th Street, STE 219294, Kansas City, MO 64105-1407. The Fund reserves the right to require
payment by wire or U.S. Bank check in connection with accounts opened directly with the Fund by
Account Application.
Tax Information
The Fund’s distributions are generally taxable to you as ordinary income,
capital gains, or a combination of the two, unless you are investing through a tax-deferred
arrangement, such as a 401(k) plan or an individual retirement account, in which case distributions may be taxable upon withdrawal.
Payments to Broker-Dealers and Other Financial Firms
If you purchase shares of the Fund through a broker-dealer or other financial firm (such as a bank), the Fund
and/or its related companies (including PIMCO) may pay the financial firm for the sale of those shares of the Fund and/or related services. These payments may create a conflict of interest by influencing the
broker-dealer or other financial firm and your salesperson to recommend the Fund over another
investment. Ask your salesperson or visit your financial firm’s website for more
information.
PFG0721_080124