Mortgage Opportunities Fund

PMZIX

Updated November 20, 2017

Objective

Seeks maximum long-term return, consistent with prudent investment management

Primary Portfolio

Mortgage-related assets, including Agency residential and commercial mortgage-backed securities (MBS) and private label residential and commercial MBS

Overview

Fund Overview

An unconstrained approach to the mortgage market

This fund seeks to generate consistent, absolute returns across full market cycles by investing in a broad array of mortgage-related securities, though it may not fully participate in strong (positive) market rallies.

Why Invest In This Fund

Flexibility to pursue the most attractive opportunities

Untethered to a traditional benchmark, the fund has the ability to tactically allocate across various subsectors of the global mortgage-backed securities (MBS) market, including U.S. and European, residential and commercial and Agency and private label MBS.

Targeting long-term absolute returns

Seeking attractive absolute returns across full market cycles, the fund’s flexibility and wide duration band (-1 to 8 years) allows for active management of its exposure to a variety of risk factors, including interest-rate risk and credit risk.

PIMCO’s deep resources

PIMCO has been investing in the mortgage-backed securities market for over thirty years and is one of the largest, most sophisticated investors in this space. With one of the deepest mortgage investment teams in the industry, PIMCO’s sector-specific specialists cover the entire spectrum of mortgage-related assets.

Our Expertise

Each of the fund’s three portfolio managers brings unique skills and expertise to the portfolio. Daniel Hyman is a managing director concentrating on Agency mortgage-backed securities; Alfred Murata is a managing director who serves on our mortgage credit team; and Joshua Anderson is a managing director focusing on global structured credit investments.

PRIMARY BENCHMARK

3 Month USD LIBOR Index

PRIMARY BENCHMARK DESCRIPTION

The 3 Month USD LIBOR (London Interbank Offered Rate) Index is an average interest rate, determined by the ICE Benchmark Administration, that banks charge one another for the use of short-term money (3 months) in England's Eurodollar market. It is not possible to invest in an unmanaged index.

DIVIDEND FREQUENCY

Monthly with Daily Accrual

SHARE CLASS INCEPTION

10/22/2012

CUSIP

72201U638

Managers

Joshua Anderson

Portfolio Manager, Opportunistic Mortgage and Real Estate

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Alfred T. Murata

Portfolio Manager, Mortgage Credit

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Daniel H. Hyman

Co-head, Agency MBS Portfolio Management

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Yields & Distributions

Historical Prices & Distributions

Distribution Yield (At Nav) 1 as of 10/31/2017 3.17%
1 - Day Distribution Yield as of 11/20/2017 -
30 - Day SEC Yield2 as of 10/31/2017 3.70%
30 - Day SEC Yield2 as of 11/20/2017 -
Latest Dividend Distribution ($ Share)3 as of 10/31/2017 $0.029116440
Dividend Distribution (YTD) 4 as of 10/31/2017 $0.293240840
Yields & Distributions Footnotes & Disclosures

disclosures

1The distribution yield for monthly paying Funds is calculated by annualizing actual dividends distributed for the monthly period ended on the date shown and dividing by the net asset value on the last business day for the same period. The distribution yield for quarterly paying Funds is calculated by taking the average of the prior four quarterly distribution yields. The quarterly distribution yields are calculated by annualizing actual dividends distributed for the quarterly period ended on the most recent quarterly distribution date and dividing by the net asset value for the same date. The distribution yield for annual paying Funds is calculated by taking the annual distribution divided by the Fund’s net asset value on ex-date. The yield is annualized if the Fund incepted less than a year ago. The yield does not include long- or short-term capital gains distributions.
2The 30-Day SEC yield is an annualized yield based on the most recent 30 day period.
3Data does not include special cash dividends.
4Data is based on distributions since the most recent calendar year end and does not include special cash dividends.
Unless stated, the Fund does not have an unsubsidized yield.

Fees & Expenses

Total Annual Operating Expenses 0.78%

Prices & Performance

Daily Statistics

All data as of 11/20/2017

NAV $11.16 One Day Return 0.01%
Daily Change $0.00 Daily YTD Return 5.41%
Click here to view Historical Prices
  • Average Annual Returns
  • Cumulative Returns

All data as of

  • Daily
  • Month End
  • Quarter End

All data as of

  • Daily
  • Month End
  • Quarter End
Performance quoted represents past performance and is not a guarantee or a reliable indicator of future results. Investment return and the principal value of an investment will fluctuate. Shares may be worth more or less than original cost when redeemed. Current performance may be lower or higher than average annual returns shown. Performance quoted does not reflect any sales charges, if applicable, and performance would be lower if it did.

Differences in the Fund’s performance versus the index and related attribution information with respect to particular categories of securities or individual positions may be attributable, in part, to differences in the pricing methodologies used by the Fund and the index.

No assurance is being made that any fund that may have experienced high or unusual performance for one or more periods will continue to experience such performance. High performance is defined as an unusual growth in alpha between reporting periods or total return when measured to historical returns. Unusual performance is defined as an unusual change in performance (+/-) between reporting periods and the portfolio experienced unusual performance for one or more periods.

Calendar Year Returns %

All data as of

Growth of $10,000 (hypothetical)

Morningstar and Lipper

  • Morningstar Ratings
  • Lipper Rankings
Prices & Performance Footnotes & Disclosures

disclosures

Performance figures presented reflect the total return performance after fees and reflect changes in share price and reinvestment of dividend and capital gain distributions on the payable date. All periods longer than one year are annualized.
Daily YTD return is from the most recent calendar year end.
Growth of $10,000 is calculated at NAV and assumes that all dividend and capital gain distributions were reinvested. It does not take into account sales charges or the effect of taxes. Results are not indicative of future performance.
A rating is not a recommendation to buy, sell or hold a fund. © 2017 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.Past performance is not a guarantee or a reliable indicator of future results.
Morningstar Rating™ for funds, or "star rating", is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods. Morningstar, Inc.® 2017. All rights reserved. The information contained herein: (1) is proprietary to Morningstar (2) may not be copied or distributed and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.
The Lipper Category returns and rankings are calculated by Lipper Inc., a Reuters Company, which is a nationally recognized organization that compares the performance of mutual funds with similar investment objectives. The Category returns represent the average performance of included funds, while rankings compare an individual fund's returns to those of the other funds in its category. Both are based on total return performance, with capital gains and dividends reinvested, with annual operating expenses deducted, but without including front- or back-end sales charges. Rankings begin with the actual share class inception. Rankings are relative to a peer group and do not necessarily mean that the fund had high total returns.

Portfolio Composition

All data as of unless otherwise stated

Maturity %

Effective Maturity (yrs) 4.17

Duration in Years

Effective Duration (yrs) 2.18

Sector Allocation
Market Value %

GNMA MBS 2.07
FNMA MBS 18.82
FHLMC MBS 8.26
Other Agency MBS 0.00
Non-Agency MBS 14.43
Home Equity ABS 16.03
CMBS 12.61
Other MBS 4.15
US Government Related5 -38.07
Other6 2.26
Net Other Short Duration Instruments7 59.44
Portfolio Composition Footnotes & Disclosures

disclosures

5May include nominal and inflation-protected Treasuries, Treasury futures and options, agencies, FDIC-guaranteed and government-guaranteed corporate securities, and interest rate swaps.
6May include municipals, convertibles, preferreds, and yankee bonds.
7Net Other Short Duration Instruments includes securities and other instruments (except instruments tied to emerging markets by country of risk) with an effective duration less than one year and rated investment grade or higher or, if unrated, determined by PIMCO to be of comparable quality, commingled liquidity funds, uninvested cash, interest receivables, net unsettled trades, broker money, short duration derivatives (for example Eurodollar futures) and derivatives offsets. With respect to certain categories of short duration securities, the Adviser reserves the discretion to require a minimum credit rating higher than investment grade for inclusion in this category. Derivatives Offsets includes offsets associated with investments in futures, swaps and other derivatives. Such offsets may be taken at the notional value of the derivative position which in certain instances may exceed the actual amount owed on such positions.
Portfolio information in the charts is based on the fund's net assets. These percentages may differ from those used for the fund's compliance calculations, including the fund's prospectus, regulatory, and other investment limitations and policies, which may be based on total assets of the fund or other measurements, may include or exclude various categories of investments from those covered in the portfolio allocation categories shown in this report, and may be based on different classifications and measurements of the fund’s investments and other criteria.
References to specific sectors, securities or issuers are for illustrative purposes only. All holdings are subject to change daily. All share classes have the same portfolio but different expenses.
Duration is a measure of a portfolio’s price sensitivity expressed in years. Effective duration is the duration for a bond with an embedded option when the value is calculated to include the expected change in cash flow caused by the option as interest rates change.

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Disclosures

Investors should consider the investment objectives, risks, charges and expenses of the funds carefully before investing. This and other information are contained in the fund’s prospectus and summary prospectus, if available, which may be obtained by contacting your investment professional or PIMCO representative.  Please read them carefully before you invest or send money.

A word about risk:

Absolute return portfolios may not fully participate in strong positive market rallies. Investing in the bond market is subject to risks, including market, interest rate, issuer, credit, inflation risk, and liquidity risk. The value of most bonds and bond strategies are impacted by changes in interest rates. Bonds and bond strategies with longer durations tend to be more sensitive and volatile than those with shorter durations; bond prices generally fall as interest rates rise, and the current low interest rate environment increases this risk. Current reductions in bond counterparty capacity may contribute to decreased market liquidity and increased price volatility. Bond investments may be worth more or less than the original cost when redeemed. Investing in foreign denominated and/or domiciled securities may involve heightened risk due to currency fluctuations, and economic and political risks, which may be enhanced in emerging markets. Mortgage and asset-backed securities may be sensitive to changes in interest rates, subject to early repayment risk, and their value may fluctuate in response to the market’s perception of issuer creditworthiness; while generally supported by some form of government or private guarantee there is no assurance that private guarantors will meet their obligations. High-yield, lower-rated, securities involve greater risk than higher-rated securities; portfolios that invest in them may be subject to greater levels of credit and liquidity risk than portfolios that do not. Equities may decline in value due to both real and perceived general market, economic and industry conditions. Derivatives may involve certain costs and risks such as liquidity, interest rate, market, credit, management and the risk that a position could not be closed when most advantageous. Investing in derivatives could lose more than the amount invested. The Fund is non-diversified, which means that it may invest its assets in a smaller number of issuers than a diversified fund.
Although the Fund may seek to maintain stable distributions, the Fund’s distribution rates may be affected by numerous factors, including but not limited to changes in realized and projected market returns, fluctuations in market interest rates, Fund performance, and other factors. There can be no assurance that a change in market conditions or other factors will not result in a change in the Fund’s distribution rate or that the rate will be sustainable in the future.

For instance, during periods of low or declining interest rates, the Fund’s distributable income and dividend levels may decline for many reasons. For example, the Fund may have to deploy uninvested assets (whether from purchases of Fund shares, proceeds from matured, traded or called debt obligations or other sources) in new, lower yielding instruments. Additionally, payments from certain instruments that may be held by the Fund (such as variable and floating rate securities) may be negatively impacted by declining interest rates, which may also lead to a decline in the Fund’s distributable income and dividend levels.

It is important to note that differences exist between the fund’s daily internal accounting records, the fund’s financial statements prepared in accordance with U.S. GAAP, and recordkeeping practices under income tax regulations. It is possible that the fund may not issue a Section 19 Notice in situations where the fund’s financial statements prepared later and in accordance with U.S. GAAP or the final tax character of those distributions might later report that the sources of those distributions included capital gains and/or a return of capital. Please see the fund’s most recent shareholder report for more details.
Investments made by a Fund and the results achieved by a Fund are not expected to be the same as those made by any other PIMCO-advised Fund, including those with a similar name, investment objective or policies. A new or smaller Fund’s performance may not represent how the Fund is expected to or may perform in the long-term. New Funds have limited operating histories for investors to evaluate and new and smaller Funds may not attract sufficient assets to achieve investment and trading efficiencies. A Fund may be forced to sell a comparatively large portion of its portfolio to meet significant shareholder redemptions for cash, or hold a comparatively large portion of its portfolio in cash due to significant share purchases for cash, in each case when the Fund otherwise would not seek to do so, which may adversely affect performance.
This material has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission.
PIMCO Investments LLC, distributor, 1633 Broadway, New York, NY 10019, is a company of PIMCO.