• Takes an innovative approach to small-cap investing by investing in Russell 2000® Index futures and/or swaps collateralized by a "total return" bond portfolio.
• Offers broad participation in the growth potential of small-cap stocks while harnessing PIMCO's expertise in seeking positive excess return.
• Avoids liquidity concerns and asset management capacity constraints typical of small-cap investing by normally invests in index-based derivatives rather than individual stocks.
• Low correlation of excess returns with the excess returns of other small-cap strategies and low correlation of excess returns with the small-cap 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 Small Cap StocksPLUS TR Fund seeks to outperform the index it follows by employing PIMCO's innovative StocksPLUS strategy.

Specifically, the Fund invests in derivatives linked to the Russell 2000 Index-a widely used measure of small-cap stock performance. 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 more than 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.

PIMCO Small Cap StocksPLUS® TR Fund backs a non-leveraged position in Russell 2000 Index-linked derivative instruments (index-linked 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 meshed with the top-down strategies in seeking to add value. The result will be a portfolio with a higher 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.