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PIMCO FUNDS PROFILE 
All data as of 06.30.10, unless otherwise indicated. 
PIMCO RealEstateRealReturn Strategy Fund D (PETDX)
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Fund Overview
Highlights
  • Takes an enhanced index approach to real estate investing, combining exposure to the broad real estate investment trust (REIT) market with active bond management.
  • May enhance portfolio diversification, since real estate has shown a lower correlation to stock and bond returns over time.
  • Offers real (after inflation) return potential.
  • Aims to capitalize on PIMCO's extensive experience managing both index-linked securities and inflation-indexed bonds.
Investment Process

How does this Fund work?

Rather than invest directly in REITs, the Fund employs an "enhanced-index" strategy. Specifically, it uses REIT-index-linked derivative instruments, such as REIT swap agreements, to gain 100% exposure to the investment return of the Dow Jones Wilshire REIT Index-a widely followed measure of REIT prices. The Fund fully collateralizes the REIT-index-linked derivative instruments by investing its assets in an actively-managed portfolio of inflation-indexed bonds and other fixed-income securities. Inflation-indexed bonds offer a return that is linked to changes in the rate of inflation. As a result, the Fund attempts to employ a Double RealTM strategy, seeking to capitalize on the inflation-hedging properties of both REITS and inflation-indexed bonds. PIMCO has extensive experience in managing both index-linked securities and the collateral backing this type of exposure.

 

Investors should note that the Fund’s investment objective is maximum real return (total return after inflation). While the Fund will pay interest income on a quarterly basis—which will derive largely from the collateral backing the REIT exposure and may be unpredictable—it is not primarily an income-producing vehicle.

 

 
Why Invest in this Fund

Real estate has long been considered a sensible investment for pursuing “real” long-term growth—returns with the potential to exceed the rate of inflation.  Real estate tends to have a low correlation (tendency to move in tandem) with stock and bond returns yet a high correlation with changes in inflation. It has also been historically less volatile than other growth-oriented asset classes, such as stocks and commodities. That is why including real estate investments in a diversified portfolio can enhance return potential and help to lower portfolio risk while acting as a hedge against inflation. Because of the complexity of buying, selling and managing individual properties, many investors choose to access the real estate market through Real Estate Investment Trusts (REITs). These securities are publicly traded and typically represent large real estate portfolios, providing liquidity and diversification.

 

PIMCO RealEstateRealReturn Strategy Fund takes an innovative approach to this asset class, employing an index-based strategy to access the real estate market while fully collateralizing this exposure with an actively managed portfolio of, primarily, inflation-indexed bonds. The resulting portfolio can offer a unique double hedge against inflation and a diversification tool.

 

By purchasing instruments that are linked to the performance of a broad REIT index, the Fund retains the potential to add value and outperform the benchmark index through active management of the fixed income collateral, primarily inflation-indexed bonds. Finally, the Fund benefits from the fixed-income expertise of PIMCO, one of the premier bond managers in the world. PIMCO has extensive experience in managing index-linked instruments as well as the collateral backing this type of exposure.
At A Glance
Symbol Lookup
 
Symbol
CUSIP
D Shares
PETDX
72200Q265
Objective
Seeks maximum real return consistent with prudent investment management

Primary Portfolio
Real estate-linked derivatives backed by a portfolio of inflation indexed and other fixed income securities

Total Fund Assets (in millions)
$441.0

Inception Date
Oct 30, 2003

Dividend Frequency
Quarterly

Net Expense Ratio
-

Gross Expense Ratio
1.230%

> Share Class Pricing

Manager
Mihir Worah

Mr. Worah is a managing director, portfolio manager, and member of the government and derivatives desk. He joined PIMCO in 2001 as a member of the analytics team and worked on term structure modeling and options pricing. He has a Ph.D. in theoretical physics from the University of Chicago and is the author of numerous scientific papers.

 

Management Firm
Pacific Investment Management Company LLC (PIMCO)

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.



> Management Commentary

Investors should consider the investment objectives, risks, charges and expenses of this Fund carefully before investing. This and other information is contained in the Fund´s prospectus and summary prospectus, if available, which may be obtained by contacting your financial advisor, or by calling 888-877-4626. Click here for the Fund´s prospectus or summary prospectus. Please read them carefully before you invest or send money.

Past performance is no guarantee of future results. This is not an offer or solicitation for the purchase or sale of any financial instrument. It is presented only to provide information on investment strategies and opportunities. The material contains the current opinions of the author, which are subject to change without notice. Statements concerning financial market trends are based on current market conditions, which will fluctuate. References to specific securities and issuers are for illustrative purposes only and are not intended to be, and should not be interpreted as, recommendations to purchase or sell such securities.

 

In an environment where interest rates may trend upward, rising rates will negatively impact most bond funds, and fixed income securities held by a fund are likely to decrease in value. Bond funds and individual bonds with a longer duration (a measure of the expected life of a security) tend to be more sensitive to changes in interest rates, usually making them more volatile than securities with shorter durations.

 

Treasury Inflation Protected Securities (TIPS) issued by the U.S. Government are guaranteed by the U.S. government and, if held to maturity, offer a fixed rate of return and a fixed principal value. Shares of the investment product are not guaranteed. The guarantee on the repayment of interest and principal at the time of maturity applies only to Inflation Protected Securities issued by the U.S. Government and not to any securities issued by any other entity. The Wilshire REIT Index measures U.S. publicly traded Real Estate Investment Trusts. It is a subset of the Wilshire Real Estate Securities Index (WRESI). Companies included in the index must derive at least 75% of total revenue from the ownership and operation of real estate assets and have real estate assets of at least $100 million, as well as a market capitalization of at least $100 million.

 

The PIMCO RealEstateRealReturn Strategy Fund may invest substantially all of its assets in real estate-linked derivatives backed by a portfolio of inflation indexed bonds and other fixed income securities. The use of derivative instruments may involve certain costs and risks such as liquidity risk, interest rate risk, market risk, credit risk, management risk and the risk that a fund could not close out a position when it would be most advantageous to do so. Portfolios investing in derivatives could lose more than the principal amount invested in those instruments. The value of real estate and the funds that invest in real estate may fluctuate due to losses from casualty or condemnation, changes in local and general economic conditions, supply and demand, interest rates, property tax rates, regulatory limitations on rents, zoning laws and operating expenses.

 

The Fund may also invest directly in real estate investment trusts (REIT), common and preferred stocks, convertible securities of issuers in real estate-related industries, and in foreign securities. REITs and the portfolios that invest in them are subject to risk, such as poor performance by the manager of the REIT, adverse changes to the tax laws or failure by the REIT to qualify for tax-free pass-through of income under the Code. In addition, some REITs have limited diversification because they invest in a limited number of properties, a narrow geographic area, or a single type of property. Also, the organizational documents of a REIT may contain provisions that make changes in control of the REIT difficult and time-consuming. The Funds that invest in convertibles may have to convert before otherwise beneficial, which may have an adverse effect on the Fund's ability to achieve its investment objective. Investing in foreign securities may entail risk due to foreign economic and political developments; this risk may be enhanced when investing in emerging markets.

 

PIMCO Funds and Allianz Funds are distributed by Allianz Global Investors Distributors LLC, 1345 Avenue of the Americas, New York, NY 10105-4800, www.allianzinvestors.com , 1-888-877-4626.

Investment Products: NOT FDIC INSURED | MAY LOSE VALUE | NOT BANK GUARANTEED

 

Click here to view the Fund's current sector weightings.

All holdings are subject to change.

 

Click here to view the Fund's current standardized performance.
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