1775 I Street, N.W. Washington, DC 20006-2401 +1 202 261 3300 Main +1 202 261 3333 Fax www.dechert.com
|
October 26, 2011
VIA EDGAR
Brick Barrientos
Division of Investment Management
U.S. Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
Re: PIMCO | Equity Series (the “Trust” or “Registrant”) |
File Nos. 333-164077, 811-22375
Dear Mr. Barrientos:
In an October 17, 2011 telephone conversation with me, you communicated the Securities and Exchange Commission (“SEC”) staff’s (the “Staff”) comments on Post-Effective Amendment No. 10 (“PEA 10”) to the Registrant’s registration statement under the Securities Act of 1933, as filed on August 31, 2011. PEA 10 was filed to make non-material changes to: (i) the prospectuses of the Registrant for each of the following classes: (a) the Institutional Class, Class P, Administrative Class and Class D; and (b) Class A, Class C and Class R (the “Prospectuses”); and (ii) the Statement of Additional Information. The Staff’s first comment related to those funds that had incomplete fee tables in the Prospectuses filed as part of PEA 10. You asked that completed fee tables and related footnotes for those funds be provided as correspondence to the Staff prior to the effectiveness of PEA 10. Accordingly, completed fee tables and footnotes for the applicable funds, as of the date above, are attached as an exhibit to this letter. A written response to the remainder of the Staff’s comments will be provided soon under separate cover. Please call the undersigned at (202) 261-3464 if you wish to discuss this correspondence further.
Sincerely,
/s/ Adam T. Teufel
Adam T. Teufel
cc: | J. Stephen King, Jr., Pacific Investment Management Company LLC Ryan Leshaw, Pacific Investment Management Company LLC Douglas P. Dick, Dechert LLP |
US Austin Boston Charlotte Hartford Los Angeles New York Orange County Philadelphia Princeton San Francisco
Silicon Valley Washington DC EUROPE Brussels Dublin London Luxembourg Moscow Munich Paris ASIA Beijing Hong Kong
EXHIBIT
INVESTMENT OBJECTIVE |
The Fund seeks maximum total return, consistent with prudent investment management.
FEESAND EXPENSESOFTHE FUND |
This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund: |
Shareholder Fees (fees paid directly from your investment):None
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment):
Institutional Class | Class P | Administrative Class | Class D | |||||
Management Fees | 1.35% | 1.45% | 1.35% | 1.45% | ||||
Distribution and/or Service (12b-1) Fees | N/A | N/A | 0.25% | 0.25% | ||||
Acquired Fund Fees and Expenses | 0.90% | 0.90% | 0.90% | 0.90% | ||||
Total Annual Fund Operating Expenses(1) | 2.25% | 2.35% | 2.50% | 2.60% | ||||
Expense Reimbursement(2)(3) | (0.85%) | (0.85%) | (0.85%) | (0.85%) | ||||
Total Annual Fund Operating Expenses After Expense Reimbursement | 1.40% | 1.50% | 1.65% | 1.75% |
(1) | Total Annual Fund Operating Expenses do not match the Ratio of Expenses to Average Net Assets of the Fund, as set forth in the Financial Highlights table of the Fund’s prospectus, because the Ratio of Expenses to Average Net Assets reflects the operating expenses of the Fund and does not include Acquired Fund Fees and Expenses. | |
(2) | Pacific Investment Management Company LLC (“PIMCO”) has contractually agreed, through October 31, 2012, to waive, first, the advisory fee and, second, the supervisory and administrative fee it receives from the Fund in an amount equal to the expenses attributable to the Management Fees of Underlying PIMCO Funds indirectly incurred by the Fund in connection with its investments in Underlying PIMCO Funds, to the extent the Fund’s Management Fees are greater than or equal to the Management Fees of the Underlying PIMCO Funds. This waiver renews annually for a full year unless terminated by PIMCO upon at least 30 days’ notice prior to the end of the contract term. | |
(3) | PIMCO has contractually agreed to waive the Fund’s advisory fee and the supervisory and administrative fee in an amount equal to the management fee and administrative services fee, respectively, paid by the PIMCO Cayman Commodity Fund V, Ltd. (the “Subsidiary”) to PIMCO. The Subsidiary pays PIMCO a management fee and an administrative services fee at the annual rates of 0.49% and 0.20%, respectively, of its net assets. This waiver may not be terminated by PIMCO and will remain in effect for as long as PIMCO’s contract with the Subsidiary is in place. |
Example. The Example is intended to help you compare the cost of investing in Institutional Class, Class P, Administrative Class or Class D 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 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:
1 Year | 3 Years | |||||
Institutional Class | $143 | $443 | ||||
Class P | $153 | $474 | ||||
Administrative Class | $168 | $520 | ||||
Class D | $178 | $551 |
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 0% of the average value of its portfolio.
PRINCIPAL INVESTMENT STRATEGIES |
The Fund is designed to provide concurrent exposure to a broad spectrum of emerging market asset classes, such as equity, fixed income and currencies, and other investments, including commodities. PIMCO uses a three-step active management approach in seeking to achieve the Fund’s investment objective: 1) develop a target asset allocation to implement across the eligible investments; 2) identify relative value strategies designed to add value beyond the target asset allocation; and 3) utilize hedging techniques to reduce the Fund’s exposure to certain severe, unanticipated market events that could significantly detract from returns. This active management approach is driven by PIMCO’s global macroeconomic views, emerging markets expertise and experience across a wide range of investment instruments. The Fund’s assets are allocated in a manner that reflects PIMCO’s views regarding the attractiveness of key investment risk factors, considering both return potential and volatility, and includes an assessment of aggregate country, issuer and currency exposures.
PIMCO evaluates these three steps daily and uses varying combinations of Acquired Funds (defined below) and/or direct investments in efforts to achieve the most efficient execution of PIMCO’s investment views. Specifically, “Acquired Funds” refers to the following: funds of the Trust and funds of PIMCO Funds, an affiliated open-end investment company, except certain funds of funds such as the PIMCO All Asset, PIMCO All Asset All Authority, PIMCO Global Multi-Asset and PIMCO RealRetirement® Funds (“Underlying PIMCO Funds”) and other affiliated funds, including funds of PIMCO ETF Trust, and unaffiliated funds in which the Fund may invest. Acquired Funds may or may not be registered under the Investment Company Act of 1940 (the “1940 Act”). To the extent Underlying PIMCO Funds are held, Institutional Class or Class M shares will be held. The Fund’s investments may also include equity securities, Fixed Income Instruments of varying maturities, or related derivatives on such securities. “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 invest in such funds, securities, instruments and other investments to the extent permitted under the 1940 Act, or any exemptive relief therefrom. The Fund is non-diversified, which means that it may invest its assets in a smaller number of issuers than a diversified fund.
1 |
INVESTMENT OBJECTIVE |
The Fund seeks capital appreciation.
FEESAND EXPENSESOFTHE FUND |
This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund: |
Shareholder Fees (fees paid directly from your investment):None
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment):
Institutional Class | Class P | Administrative Class | Class D | |||||
Management Fees | 1.45% | 1.55% | 1.45% | 1.55% | ||||
Distribution and/or Service (12b-1) Fees | N/A | N/A | 0.25% | 0.25% | ||||
Acquired Fund Fees and Expenses | 0.04% | 0.04% | 0.04% | 0.04% | ||||
Total Annual Fund Operating Expenses(1) | 1.49% | 1.59% | 1.74% | 1.84% | ||||
Expense Reimbursement(2) | (0.20%) | (0.20%) | (0.20%) | (0.20%) | ||||
Total Annual Fund Operating Expenses After Expense Reimbursement | 1.29% | 1.39% | 1.54% | 1.64% |
(1) | Total Annual Fund Operating Expenses do not match the Ratio of Expenses to Average Net Assets of the Fund, as set forth in the Financial Highlights table of the Fund’s prospectus, because the Ratio of Expenses to Average Net Assets reflects the operating expenses of the Fund and does not include Acquired Fund Fees and Expenses. | |
(2) | Pacific Investment Management Company LLC (“PIMCO”) has contractually agreed, through October 31, 2012, to reduce its advisory fee by 0.20% of the average daily net assets of the Fund. This Fee Limitation Agreement renews annually unless terminated by PIMCO upon at least 30 days’ prior notice to the end of the contract term. Under certain conditions, PIMCO may recoup amounts reduced in future periods, not exceeding three years. |
Example. The Example is intended to help you compare the cost of investing in Institutional Class, Class P, Administrative Class or Class D 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 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:
1 Year | 3 Years | |||||||
Institutional Class | $131 | $409 | ||||||
Class P | $142 | $440 | ||||||
Administrative Class | $157 | �� | $486 | |||||
Class D | $167 | $517 |
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 41% 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 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 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-picking and attempts to identify investments that are undervalued by the market in comparison to PIMCO’s assessment of companies’ intrinsic value. Factors considered in the analysis include strong and improving cashflow generation, earnings profile, normalized profitability level and returns on capital. PIMCO 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, duration, 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
5 |
INVESTMENT OBJECTIVE |
The Fund seeks capital appreciation.
FEESAND EXPENSESOFTHE FUND |
This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund: |
Shareholder Fees (fees paid directly from your investment):None
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment):
Institutional Class | Class P | Administrative Class | Class D | |||||
Management Fees | 1.05% | 1.15% | 1.05% | 1.15% | ||||
Distribution and/or Service (12b-1) Fees | N/A | N/A | 0.25% | 0.25% | ||||
Other Expenses(1) | 0.03% | 0.03% | 0.03% | 0.03% | ||||
Acquired Fund Fees and Expenses | 0.03% | 0.03% | 0.03% | 0.03% | ||||
Total Annual Fund Operating Expenses(2) | 1.11% | 1.21% | 1.36% | 1.46% | ||||
Expense Reimbursement(3)(4) | (0.19%) | (0.19%) | (0.19%) | (0.19%) | ||||
Total Annual Fund Operating Expenses After Expense Reimbursement(5) | 0.92% | 1.02% | 1.17% | 1.27% |
(1) | “Other Expenses” reflect interest expense and dividends paid on borrowed securities. Interest expense results from the Fund’s use of certain investments such as reverse repurchase agreements. Dividends paid on borrowed securities are an expense of short sales. Such expenses are required to be treated as a Fund expense for accounting purposes and are not payable to Pacific Investment Management Company LLC (“PIMCO”). Any interest expense amount or dividends paid on securities sold short will vary based on the Fund’s use of those investments as an investment strategy best suited to seek the objective of the Fund. | |
(2) | Total Annual Fund Operating Expenses do not match the Ratio of Expenses to Average Net Assets of the Fund, as set forth in the Financial Highlights table of the Fund’s prospectus, because the Ratio of Expenses to Average Net Assets reflects the operating expenses of the Fund and does not include Acquired Fund Fees and Expenses. | |
(3) | PIMCO has contractually agreed, through October 31, 2012, to reduce its advisory fee by 0.16% of the average daily net assets of the Fund. This Fee Limitation Agreement renews annually unless terminated by PIMCO upon at least 30 days’ prior notice to the end of the contract term. Under certain conditions, PIMCO may recoup amounts reduced in future periods, not exceeding three years. | |
(4) | PIMCO has contractually agreed to waive the Fund’s advisory fee and the supervisory and administrative fee in an amount equal to the management fee and administrative services fee, respectively, paid by the PIMCO Cayman Commodity Fund VI, Ltd. (the “Subsidiary”) to PIMCO. The Subsidiary pays PIMCO a management fee and an administrative services fee at the annual rates of 0.49% and 0.20%, respectively, of its net assets. This waiver may not be terminated by PIMCO and will remain in effect for as long as PIMCO’s contract with the Subsidiary is in place. | |
(5) | Total Annual Fund Operating Expenses After Expense Reimbursement excluding interest expense and dividends paid on borrowed securities is 0.91%, 1.01%, 1.16% and 1.26% for Institutional Class, Class P, Administrative Class and Class D shares, respectively. |
Example. The Example is intended to help you compare the cost of investing in Institutional Class, Class P, Administrative Class or Class D 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 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:
1 Year | 3 Years | 5 Years | 10 Years | |||||||||||||
Institutional Class | $94 | $293 | $509 | $1,131 | ||||||||||||
Class P | $104 | $325 | $563 | $1,248 | ||||||||||||
Administrative Class | $119 | $372 | $644 | $1,420 | ||||||||||||
Class D | $129 | $403 | $697 | $1,534 |
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 35% of the average value of its portfolio.
PRINCIPAL INVESTMENT STRATEGIES |
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 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.
8 |
INVESTMENT OBJECTIVE |
The Fund seeks maximum total return, consistent with prudent investment management.
FEESAND EXPENSESOFTHE FUND |
This table describes 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 offered by PIMCO Equity Series and PIMCO Funds. More information about these and other discounts is available in the “Classes of Shares—Class A, C and R Shares” section on page 24 of the Fund’s prospectus or from your financial advisor. |
Shareholder Fees (fees paid directly from your investment)
Class A | Class C | Class R | ||||
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) | 5.50% | None | None | |||
Maximum Deferred Sales Charge (Load) (as a percentage of the lower of the original purchase price or redemption price) | 1.00% | 1.00% | None |
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment):
Class A | Class C | Class R | ||||
Management Fees | 1.45% | 1.45% | 1.45% | |||
Distribution and/or Service (12b-1) Fees | 0.25% | 1.00% | 0.50% | |||
Acquired Fund Fees and Expenses | 0.90% | 0.90% | 0.90% | |||
Total Annual Fund Operating Expenses(1) | 2.60% | 3.35% | 2.85% | |||
Expense Reimbursement(2)(3) | (0.85%) | (0.85%) | (0.85%) | |||
Total Annual Fund Operating Expenses After Expense Reimbursement | 1.75% | 2.50% | 2.00% |
(1) | Total Annual Fund Operating Expenses do not match the Ratio of Expenses to Average Net Assets of the Fund, as set forth in the Financial Highlights table of the Fund’s prospectus, because the Ratio of Expenses to Average Net Assets reflects the operating expenses of the Fund and does not include Acquired Fund Fees and Expenses. | |
(2) | Pacific Investment Management Company LLC (“PIMCO”) has contractually agreed, through October 31, 2012, to waive, first, the advisory fee and, second, the supervisory and administrative fee it receives from the Fund in an amount equal to the expenses attributable to the Management Fees of Underlying PIMCO Funds indirectly incurred by the Fund in connection with its investments in Underlying PIMCO Funds, to the extent the Fund’s Management Fees are greater than or equal to the Management Fees of the Underlying PIMCO Funds. This waiver renews annually for a full year unless terminated by PIMCO upon at least 30 days’ notice prior to the end of the contract term. | |
(3) | PIMCO has contractually agreed to waive the Fund’s advisory fee and the supervisory and administrative fee in an amount equal to the management fee and administrative services fee, respectively, paid by the PIMCO Cayman Commodity Fund V, Ltd. (the “Subsidiary”) to PIMCO. The Subsidiary pays PIMCO a management fee and an administrative services fee at the annual rates of 0.49% and 0.20%, respectively, of its net assets. This waiver may not be terminated by PIMCO and will remain in effect for as long as PIMCO’s contract with the Subsidiary is in place. |
Example. The Example is intended to help you compare the cost of investing in Class A, Class C or Class R 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 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 | |||||||
Class A | $718 | $1,071 | ||||||
Class C | $353 | $779 | ||||||
Class R | $203 | $627 |
If you do not redeem your shares:
1 Year | 3 Years | |||||||
Class A | $718 | $1,071 | ||||||
Class C | $253 | $779 | ||||||
Class R | $203 | $627 |
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 0% of the average value of its portfolio. |
PRINCIPAL INVESTMENT STRATEGIES |
The Fund is designed to provide concurrent exposure to a broad spectrum of emerging market asset classes, such as equity, fixed income and currencies, and other investments, including commodities. PIMCO uses a three-step active management approach in seeking to achieve the Fund’s investment objective: 1) develop a target asset allocation to implement across the eligible investments; 2) identify relative value strategies designed to add value beyond the target asset allocation; and 3) utilize hedging techniques to reduce the Fund’s exposure to certain severe, unanticipated market events that could significantly detract from returns. This active management approach is driven by PIMCO’s global macroeconomic views, emerging markets expertise and experience across a wide range of investment instruments. The Fund’s assets are allocated in a manner that reflects PIMCO’s views regarding the attractiveness of key investment risk factors, considering both return potential and volatility, and includes an assessment of aggregate country, issuer and currency exposures. |
PIMCO evaluates these three steps daily and uses varying combinations of Acquired Funds (defined below) and/or direct investments in efforts to achieve the most efficient execution of PIMCO’s investment views. Specifically, “Acquired Funds” refers to the following: funds of the Trust and funds of PIMCO Funds, an affiliated open-end investment company, except certain funds of funds such as the PIMCO All Asset, PIMCO All Asset All Authority, PIMCO Global Multi-Asset and PIMCO RealRetirement® Funds (“Underlying PIMCO Funds”) and other affiliated funds, including funds of PIMCO ETF Trust, and unaffiliated funds in which the Fund
1 |
INVESTMENT OBJECTIVE |
The Fund seeks capital appreciation.
FEESAND EXPENSESOFTHE FUND |
This table describes 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 offered by PIMCO Equity Series and PIMCO Funds. More information about these and other discounts is available in the “Classes of Shares—Class A, C and R Shares” section on page 24 of the Fund’s prospectus or from your financial advisor. |
Shareholder Fees (fees paid directly from your investment)
Class A | Class C | Class R | ||||
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) | 5.50% | None | None | |||
Maximum Deferred Sales Charge (Load) (as a percentage of the lower of the original purchase price or redemption price) | 1.00% | 1.00% | None |
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment):
Class A | Class C | Class R | ||||
Management Fees | 1.55% | 1.55% | 1.55% | |||
Distribution and/or Service (12b-1) Fees | 0.25% | 1.00% | 0.50% | |||
Acquired Fund Fees and Expenses | 0.04% | 0.04% | 0.04% | |||
Total Annual Fund Operating Expenses(1) | 1.84% | 2.59% | 2.09% | |||
Expense Reimbursement(2) | (0.20%) | (0.20%) | (0.20%) | |||
Total Annual Fund Operating Expenses After Expense Reimbursement | 1.64% | 2.39% | 1.89% |
(1) | Total Annual Fund Operating Expenses do not match the Ratio of Expenses to Average Net Assets of the Fund, as set forth in the Financial Highlights table of the Fund’s prospectus, because the Ratio of Expenses to Average Net Assets reflects the operating expenses of the Fund and does not include Acquired Fund Fees and Expenses. | |
(2) | Pacific Investment Management Company LLC (“PIMCO”) has contractually agreed, through October 31, 2012, to reduce its advisory fee by 0.20% of the average daily net assets of the Fund. This Fee Limitation Agreement renews annually unless terminated by PIMCO upon at least 30 days’ prior notice to the end of the contract term. Under certain conditions, PIMCO may recoup amounts reduced in future periods, not exceeding three years. |
Example. The Example is intended to help you compare the cost of investing in Class A, Class C or Class R 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 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 | |||||||
Class A | $708 | $1,039 | ||||||
Class C | $342 | $745 | ||||||
Class R | $192 | $594 |
If you do not redeem your shares:
1 Year | 3 Years | |||||||
Class A | $708 | $1,039 | ||||||
Class C | $242 | $745 | ||||||
Class R | $192 | $594 |
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 41% 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 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 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-picking and attempts to identify investments that are undervalued by the market in comparison to PIMCO’s assessment of companies’ intrinsic value. Factors considered in the analysis include strong and improving cashflow generation, earnings profile, normalized profitability level and returns on capital. PIMCO 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, duration, or industry classification of the Fund’s investments. The Fund may invest in securities issued by
5 |
INVESTMENT OBJECTIVE |
The Fund seeks capital appreciation.
FEESAND EXPENSESOFTHE FUND |
This table describes 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 offered by PIMCO Equity Series and PIMCO Funds. More information about these and other discounts is available in the “Classes of Shares—Class A, C and R Shares” section on page 24 of the Fund’s prospectus or from your financial advisor. |
Shareholder Fees (fees paid directly from your investment)
Class A | Class C | Class R | ||||
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) | 5.50% | None | None | |||
Maximum Deferred Sales Charge (Load) (as a percentage of the lower of the original purchase price or redemption price) | 1.00% | 1.00% | None |
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment):
Class A | Class C | Class R | ||||
Management Fees | 1.15% | 1.15% | 1.15% | |||
Distribution and/or Service (12b-1) Fees | 0.25% | 1.00% | 0.50% | |||
Other Expenses(1) | 0.03% | 0.03% | 0.03% | |||
Acquired Fund Fees and Expenses | 0.03% | 0.03% | 0.03% | |||
Total Annual Fund Operating Expenses(2) | 1.46% | 2.21% | 1.71% | |||
Expense Reimbursement(3)(4) | (0.19%) | (0.19%) | (0.19%) | |||
Total Annual Fund Operating Expenses After Expense Reimbursement(5) | 1.27% | 2.02% | 1.52% |
(1) | “Other Expenses” reflect interest expense and dividends paid on borrowed securities. Interest expense results from the Fund’s use of certain investments such as reverse repurchase agreements. Dividends paid on borrowed securities are an expense of short sales. Such expenses are required to be treated as a Fund expense for accounting purposes and are not payable to Pacific Investment Management Company LLC (“PIMCO”). Any interest expense amount or dividends paid on securities sold short will vary based on the Fund’s use of those investments as an investment strategy best suited to seek the objective of the Fund. | |
(2) | Total Annual Fund Operating Expenses do not match the Ratio of Expenses to Average Net Assets of the Fund, as set forth in the Financial Highlights table of the Fund’s prospectus, because the Ratio of Expenses to Average Net Assets reflects the operating expenses of the Fund and does not include Acquired Fund Fees and Expenses. | |
(3) | PIMCO has contractually agreed, through October 31, 2012, to reduce its advisory fee by 0.16% of the average daily net assets of the Fund. This Fee Limitation Agreement renews annually unless terminated by PIMCO upon at least 30 days’ prior notice to the end of the contract term. Under certain conditions, PIMCO may recoup amounts reduced in future periods, not exceeding three years. | |
(4) | PIMCO has contractually agreed to waive the Fund’s advisory fee and the supervisory and administrative fee in an amount equal to the management fee and administrative services fee, respectively, paid by the PIMCO Cayman Commodity Fund VI, Ltd. (the “Subsidiary”) to PIMCO. The Subsidiary pays PIMCO a management fee and an administrative services fee at the annual rates of 0.49% and 0.20%, respectively, of its net assets. This waiver may not be terminated by PIMCO and will remain in effect for as long as PIMCO’s contract with the Subsidiary is in place. |
(5) | Total Annual Operating Expenses After Expense Reimbursement excluding interest expense and dividends paid on borrowed securities is 1.26%, 2.01% and 1.51% for the Class A, Class C and Class R shares, respectively. |
Example. The Example is intended to help you compare the cost of investing in Class A, Class C or Class R 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 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 | |||||||||||||
Class A | $672 | $931 | $1,209 | $2,000 | ||||||||||||
Class C | $305 | $634 | $1,088 | $2,348 | ||||||||||||
Class R | $155 | $480 | $829 | $1,813 |
If you do not redeem your shares:
1 Year | 3 Years | 5 Years | 10 Years | |||||||||||||
Class A | $672 | $931 | $1,209 | $2,000 | ||||||||||||
Class C | $205 | $634 | $1,088 | $2,348 | ||||||||||||
Class R | $155 | $480 | $829 | $1,813 |
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 35% of the average value of its portfolio. |
PRINCIPAL INVESTMENT STRATEGIES |
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 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
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