PIMCO Long-Term Credit Bond Fund
Summary Prospectus
August 1,
2024
| Share Class: |
Inst |
I-2 |
A |
| Ticker: |
PTCIX |
PLCPX |
- |
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 total return which exceeds that of its benchmark, 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 67 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 |
Class A |
| Maximum Sales Charge (Load) Imposed on Purchases (as a
percentage of offering price) |
None |
None |
3.75% |
| Maximum Deferred Sales Charge (Load) (as a percentage of the lower
of the original purchase price or redemption
price) |
None |
None |
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 |
Class A |
| Management Fees |
0.55% |
0.65% |
0.70% |
| Distribution and/or Service (12b-1) Fees |
N/A |
N/A |
0.25% |
| Other Expenses(1) |
0.96% |
0.96% |
0.96% |
| Total Annual Fund Operating Expenses |
1.51% |
1.61% |
1.91% |
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 are 0.55%, 0.65% and 0.95% for Institutional Class, I-2 and Class A shares,
respectively.
Example. The Example is intended to help you compare the cost of investing in Institutional Class, I-2 or Class A 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 |
$154 |
$477 |
$824 |
$1,802 |
| I-2 |
$164 |
$508 |
$876 |
$1,911 |
| Class A |
$562 |
$953 |
$1,368 |
$2,524 |
If you do not redeem your shares:
| |
1 Year |
3 Years |
5 Years |
10 Years |
| Class A |
$562 |
$953 |
$1,368 |
$2,524 |
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 140% 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 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 Bloomberg U.S. Long Credit Index, as calculated by PIMCO, which as of May 31, 2024 was 11.91 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. 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 Ratings, Inc. (“Fitch”), or, if unrated, determined by
Pacific Investment Management Company LLC (“PIMCO”) to be of
PIMCO Funds | Summary Prospectus
PIMCO Long-Term Credit
Bond Fund
comparable quality. 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 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 (this limitation does not apply to investment grade sovereign debt
denominated in the local currency with less than 1 year remaining to maturity, which means the
Fund may invest, together with any other investments denominated in foreign currencies, up to 30% of its total assets in such instruments). 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 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
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, call and liquidity risks. High yield securities are considered primarily speculative with respect to the issuer’s continuing ability to make
principal and interest payments, and may be more volatile than higher-rated securities of similar maturity
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 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
2 Summary Prospectus | PIMCO Funds
Summary
Prospectus
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
Sovereign Debt Risk: the risk that investments in fixed income instruments issued by sovereign entities may decline in value as a
result of default or other adverse credit event resulting from an issuer’s inability or
unwillingness to make principal or interest payments in a timely fashion
Currency Risk: the risk that foreign (non-U.S.) currencies will change 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,
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. For periods prior to the inception date of I-2 shares (February 29, 2012), performance information shown in the table for these shares is based on the performance of the Fund’s
Institutional Class shares, adjusted to reflect the fees and expenses paid by these classes of shares. The Class A shares of the Fund have not commenced operations as of the date of this prospectus. 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) 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
August 1, 2024 | SUMMARY PROSPECTUS 3
PIMCO Long-Term Credit
Bond Fund
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 U.S. Long Credit Index. The index includes both corporate and non-corporate sectors with maturities equal to
or greater than 10 years. The corporate sectors are Industrial, Utility, and Finance, which include
both U.S. and non-U.S. corporations. The non-corporate sectors are Sovereign, Supranational,
Foreign Agency, and Foreign Local Government.
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 |
13.09% |
| Worst Quarter |
June 30, 2022 |
-13.63% |
| Year-to-Date |
June 30, 2024 |
-1.86% |
Average Annual Total Returns (for periods ended 12/31/23)
| |
1 Year |
5 Years |
10 Years |
| Institutional Class Return Before Taxes |
10.01% |
2.57% |
4.37% |
| Institutional Class Return After Taxes on Distributions(1) |
7.92% |
0.25% |
1.65% |
| Institutional Class Return After Taxes on Distributions
and Sales of Fund Shares(1) |
5.85% |
1.21% |
2.29% |
| I-2 Return Before Taxes |
9.91% |
2.47% |
4.26% |
| Bloomberg U.S. Aggregate Index (reflects no deductions
for fees, expenses or taxes) |
5.53% |
1.10% |
1.81% |
| Bloomberg U.S. Long Credit Index (reflects no
deductions for fees, expenses or taxes) |
10.73% |
2.70% |
3.88% |
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 Mark Kiesel and
Mohit Mittal. Mr. Kiesel is CIO Global Credit and a Managing Director of PIMCO and has managed the Fund since its inception in March 2009. Mr. Mittal is CIO Core
Strategies and a Managing Director of PIMCO and has managed the Fund since October
2016.
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 and I-2
The minimum initial investment for Institutional Class and I-2 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 and I-2 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
The minimum initial investment for Class A shares of the Fund is
$1,000. The minimum subsequent investment for Class A 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 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 Investor and
Distribution Solutions, Inc., 430 W. 7th Street, STE 219294, Kansas City, MO 64105-1407. The Fund
4 Summary Prospectus | PIMCO Funds
Summary
Prospectus
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.
PFL0769_080124