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PIMCO Long Duration Total Return Fund
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SUMMARY PROSPECTUS
July 31, 2013
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Share Class:
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Inst
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P
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Admin
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A
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Ticker:
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PLRIX
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PLRPX
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–
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–
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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 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 pimcoteam@bfdsmidwest.com. The Fund's prospectus and Statement of
Additional Information, both dated July 31, 2013, as supplemented, along with the financial statements included in the Fund's most recent annual report to shareholders dated March 31, 2013, are incorporated by reference into this Summary
Prospectus.
Investment Objective
The Fund seeks maximum total
return, consistent with prudent investment management.
Fees and Expenses of the 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 $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 49 of the Fund's prospectus or from your financial advisor.
Shareholder Fees (fees paid directly from your investment):
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Inst
Class
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Class P
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Admin Class
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Class A
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Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price)
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None
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None
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None
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3.75%
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Maximum Deferred Sales Charge (Load) (as a percentage of the lower of the original purchase price or redemption price)
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None
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None
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None
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1.00%
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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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Inst
Class
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Class P
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Admin
Class
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Class A
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Management Fees
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0.50%
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0.60%
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0.50%
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0.65%
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Distribution and/or Service (12b-1) Fees
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N/A
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N/A
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0.25%
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0.25%
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Other Expenses
1
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0.03%
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0.03%
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0.03%
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0.03%
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Total Annual Fund Operating Expenses
2
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0.53%
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0.63%
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0.78%
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0.93%
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1
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"Other Expenses" reflect interest expense. Interest expense results from the Fund's use of certain investments such as reverse repurchase agreements. Such expense is required to be treated
as a Fund expense for accounting purposes and is not payable to PIMCO. Any interest expense amount will vary based on the Fund's use of those investments as an investment strategy best suited to seek the objective of the Fund.
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2
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Total Annual Fund Operating Expenses excluding interest expense is 0.50%, 0.60%, 0.75% and 0.90% for Institutional Class, Class P, Administrative Class and Class A shares,
respectively.
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Example.
The Example is intended to help you compare the cost of investing
in Institutional Class, Class P, Administrative Class 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
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:
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1 Year
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3 Years
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5 Years
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10 Years
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Institutional Class
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$54
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$170
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$296
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$665
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Class P
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$64
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$202
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$351
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$786
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Administrative Class
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$80
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$249
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$433
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$966
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Class A
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$466
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$660
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$870
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$1,475
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If you do not redeem your
shares:
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1 Year
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3 Years
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5 Years
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10 Years
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Institutional Class
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$54
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$170
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$296
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$665
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Class P
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$64
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$202
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$351
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$786
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Administrative Class
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$80
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$249
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$433
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$966
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Class A
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$466
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$660
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$870
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$1,475
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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. 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 81% 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 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
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
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 a broad-based securities market index and an index of similar funds. 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 Class P shares (September 11, 2008), performance information shown in the table for that class is based on the performance of the Fund's Institutional Class shares, adjusted to reflect the actual distribution
and/or service (12b-1) fees and other expenses paid by that class of shares. The Administrative Class and Class A 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.
The Barclays Long-Term
Government/Credit Index is an unmanaged index of U.S. Government or Investment Grade Credit Securities having a maturity of 10 years or more. The Lipper Corporate Debt Funds BBB-Rated Funds Average consists of funds that invest at least 65% of their
assets in corporate and government debt issues rated in the top four grades.
Performance for the Fund is updated
daily and quarterly and may be obtained as follows: daily updates on the net asset value and performance page at http://investments.pimco.com/DailyPerformance and quarterly updates at http://investments.pimco.com/QuarterlyPerformance.
Calendar Year Total Returns — Institutional Class*
*The year-to-date return as of June 30, 2013 is -7.77%. For the periods shown in the bar chart,
the highest quarterly return was 16.10% in the Q4 2008, and the lowest quarterly return was -5.92% in the Q1 2009.
Average Annual Total Returns (for periods ended 12/31/12)
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1 Year
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5 Years
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Since Inception (08/31/2006)
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Institutional Class Return Before Taxes
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10.28
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%
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11.62
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%
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10.82
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%
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Institutional Class Return After Taxes on Distributions
(1)
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7.96
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%
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8.89
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%
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8.27
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%
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Institutional Class Return After Taxes on Distributions and Sales of Fund Shares
(1)
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7.14
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%
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8.47
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%
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7.89
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%
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Class P Return Before Taxes
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10.17
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%
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11.52
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%
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10.72
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%
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Barclays Long-Term Government/Credit Index (reflects no deductions for fees, expenses or taxes)
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8.78
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%
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10.16
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%
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9.50
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%
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Lipper Corporate Debt Funds BBB-Rated Funds Average (reflects no deductions for taxes)
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9.98
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%
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7.33
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%
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6.91
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%
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(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 Manager
PIMCO serves as the investment adviser for the Fund. The Fund's portfolio is managed by Stephen Rodosky. Mr. Rodosky is a Managing Director of PIMCO, and he has managed the Fund since July 2007.
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 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, Class P and Administrative Class
The minimum initial investment for Institutional Class, Class P or
Administrative Class 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, Class P and Administrative Class 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 Form, you may sell by:
■
Sending a written request by mail to:
PIMCO Funds c/o BFDS Midwest
330 W. 9th Street, Kansas City, MO 64105
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Calling us
at 888.87.PIMCO and a Shareholder Services associate will assist you
■
Sending a fax to our Shareholder Services department at 816.421.2861
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Sending an
e-mail to pimcoteam@bfdsmidwest.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 55060, Boston, MA 02205-5060 or overnight mail to PIMCO Funds, c/o Boston Financial Data Services, Inc., 30 Dan Road, Canton,
MA 02021-2809. 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. Distributions paid by the Fund that are
properly designated as "exempt interest dividends" normally will be exempt from federal income taxes, but may not be exempt from the federal alternative minimum tax.
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 Web site for more
information.
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