• Takes an innovative approach to international stock investing, combining passive exposure to the MSCI EAFE Index with PIMCO's active bond management capabilities.
• Provides unhedged exposure to developed non-U.S. stock market- such exposure is generally expected to enhance portfolio diversification in conjunction with U.S. stock and bond investments.
• Potential diversification benefits include: low correlation of excess returns with the excess returns of other international equity strategies and low correlation of excess returns with the international equity market, particularly during bear equity markets.

More Than an Index Fund
A traditional index fund invests in all, or a representative sample, of the stocks in an index in an effort to match the returns of the index. PIMCO International StocksPLUS TR Fund (Unhedged) seeks to outperform the index it follows by employing PIMCO's innovative StocksPLUS strategy.

Specifically, the Fund used equity derivatives in addition to or in place of stocks to attempt to equal or exceed the performance of the MSCI EAFE Net Dividend Index-a widely used measure of developed market equity performance, excluding the U.S. and Canada. In addition to the fundamental exposure to the international equity market, this equity exposure is not hedged into U.S. dollars, so that the Fund will tend to gain value when the U.S. dollar falls and lose value when it rises. It then fully collateralizes this exposure with an actively managed portfolio of high-quality, low- to intermediate-duration bonds. The derivatives capture the price return of the Index, while PIMCO's active management of the fixed-income collateral seeks to add incremental return above the Index. Notably, PIMCO has been managing portfolios according to the StocksPLUS approach for over 18 years.

Expert Management
As measured by assets under management, PIMCO is one of the country's largest investment advisors with a client list that includes many of the largest U.S. corporations. PIMCO was one of the first investment managers to specialize in active fixed-income management and pioneered a total return approach to bond investing-one that focuses on both income and capital appreciation-more than 30 years ago.

The Fund employs PIMCO's renowned Total Return strategy in managing the underlying bond portfolio. Central to PIMCO's success in employing this approach is the belief that no single strategy should dominate performance. By drawing on multiple sources of value that arise from a diversified bond portfolio, PIMCO believes it can generate attractive risk-adjusted total returns.

Why Choose an Unhedged Fund?
Like all currencies, the U.S. dollar experiences periods of weakness and strength. Exposure to securities denominated in other currencies can therefore contribute to the diversification of an investor's portfolio. It is important to note, however, that unhedged foreign investments can entail significant volatility, and should only form part of a diversified portfolio.

PIMCO International StocksPLUS® TR Fund (Unhedged) backs an unhedged, non-leveraged position of equity derivative instruments with a low- to intermediate-duration portfolio of higher quality bonds. In managing the fixed-income collateral, the portfolio manager employs a Total Return bond strategy. This begins with PIMCO's 3- to 5-year outlook for the global economy and interest rates, developed at the firm's annual Secular Forum. This helps set basic portfolio parameters, including duration, yield-curve positioning, sector weightings and credit quality. Bottom-up strategies, such as credit analysis and quantitative research, are employed along with top-down strategies in seeking to add value. The result will be a portfolio with a relatively high average credit quality and a low to intermediate duration, actively managed within a one-to-six year range.

Bill Gross, CFA, is a founder and Managing Director of PIMCO. He began his investment career in 1969 and is widely regarded as the world's foremost fixed income authority.

Newport Beach, California

Led by Founder and Co-Chief Investment Officer Bill Gross, PIMCO is widely recognized as one of the premier bond managers in the world. PIMCO applies this expertise to a range of core and specialized investment portfolios.