NEWPORT BEACH, Calif., July 16, 2001 (PRIMEZONE) -- PIMCO announced today that it has launched three new closed-end mutual funds, all of them investing in municipal bonds.
The new funds -- PIMCO California Municipal Income, PIMCO New York Municipal Income and PIMCO Municipal Income -- provide income exempt from federal taxes; the first two also provide income free of taxes in their respective states. All of the funds must invest at least 90 percent of their total assets in municipal bonds and will attempt to avoid bonds generating interest that might subject investors to the alternative minimum tax (AMT). All three funds trade on the New York Stock Exchange, under the ticker symbols: (NYSE:PMF) (Municipal Income); (NYSE:PCQ) (California); and (NYSE:PNF) (New York).
The three new funds have already proven a popular investment choice; during the initial public offering phase, PIMCO and its selling syndicate raised about $745 million from investors inclusive of an over-allotment option of approximately $117 million.
"With so many disappointments in the stock market over the past year, people are looking for new investment opportunities with less volatility than equities," said Mark McCray, an executive vice president at PIMCO and portfolio manager of the company's municipal bond funds. "But they still want to earn a competitive return."
For the past year, PIMCO's existing municipal funds have offered exactly that "best of both worlds" scenario -- after-tax returns that exceed those of equities while having less return volatility and outperforming their respective Lipper groupings. As of June 30, 2001, PIMCO's open-end mutual funds had very favorable Lipper category rankings:
-- The New York Municipal Fund, which generated a one-year return of
14.18 percent, was rated best out of 102 peers for since-inception
performance by Lipper, the mutual fund ranking service.
-- The California Intermediate Municipal Fund, which returned 9.06
percent, was ranked best out of 27 peers for since-inception
performance by Lipper.
-- The Municipal Bond Fund, with a one-year return of 11.43 percent,
was ranked 15th out of 218 peers for since-inception performance.
-- The Short Duration Municipal Fund, which returned 6.54 percent,
was ranked third out of 31 peers for since-inception performance.
Refer to disclosures page for complete performance and ranking
statistics.
As closed-end funds, the three new PIMCO municipal offerings may provide somewhat leveraged exposure to an attractive asset class, McCray said. (Unlike open-end funds, which continually take in new money -- and face possible net redemptions -- closed-end funds collect money from investors through an initial public offering and use that money to invest in securities. Investors buy or sell shares on the open market, as they do shares of stock.)
And when the tax advantages of municipal investments are taken into account, the performance of PIMCO's muni funds relative to other investments have been even more impressive, McCray noted. The Securities and Exchange Commission estimates that taxes reduce stock-fund returns (in taxable accounts) by about 2.5 percentage points a year, while munis are managed closely for tax effects.
The advantages offered by municipal bond funds have become starkly apparent since April 16, when the SEC began requiring funds to disclose the impact of income taxes on their performance.
"At a glance, consumers are now able to see the actual amount of money a mutual fund leaves in their pocket at year's end, which is the number that really counts," McCray said. "The result may be heightened interest in munis among all sorts of investors -- particularly since many analysts expect the stock market to return far less in coming years than it has during the past two decades."
Before coming to PIMCO, McCray formerly served as vice president and co-head of municipal bond trading at Goldman Sachs & Co., with primary responsibility for that firm's proprietary municipal trading. McCray holds an MBA from The Wharton School at The University of Pennsylvania.
With more than $220 billion in fixed income assets under management, PIMCO is one of the world's leading fixed income fund management companies. The company, which now manages eight municipal bond funds as well as separate muni portfolios, was founded in 1971 and is based in Newport Beach, California. PIMCO is majority owned by Munich-based Allianz Group, a leading global insurance company with nearly $670 billion in assets and represented in 70 countries around the globe.
Disclosures and Data
Except for the historical information and discussions contained herein, statements contained in this news release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may involve a number of risks, uncertainties and other factors that could cause actual results to differ materially, including the performance of financial markets, the investment performance of PIMCO's sponsored investment products and separately managed accounts, general economic conditions, future acquisitions, competitive conditions and government regulations, including changes in tax laws. Readers should carefully consider such factors. Further, such forward-looking statements speak only on the date at which such statements are made. PIMCO undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.
Past performance is no guarantee of future results. Investment return and principal value will fluctuate so that Fund shares, when redeemed, may be worth more or less than their original cost. Returns are annualized and net of fees and other expenses for Institutional Class shares and includes reinvestment of dividends, income and capital gains, if any.
Income may be subject to state, local, and if applicable, Alternative Minimum Tax. Lipper rankings are based on changes in net asset value. Rankings are based on the institutional class shares and other share classes may vary. Past rankings are no guarantee of future rankings.
Performance and Lipper Data as of June 2001 Returns (less than) 1 year are Since annualized 1-Year 3-Years Inception ------------ ------------- --------------- --------------- Fund/Lipper Inception Lipper Lipper Lipper Category Month Return Ranking Return Ranking Return Ranking ------------ --------- ------ ------- ------ --------- ------ ------- California Intermediate Aug. 9.06 3 of N/A N/A 7.87 1 of Muni Bond 1999 32 27 Fund ------------ --------- ------ ------- ------ --------- ------ ------- California Intermediate ------------ --------- ------ ------- ------ --------- ------ ------- Muni Bond Dec. 11.43 6 of 4.97 12 of 4.97 15 of Fund 1997 271 233 218 ------------ --------- ------ ------- ------ --------- ------ ------- Municipal Debt ------------ --------- ------ ------- ------ --------- ------ ------- New York Aug. 14.18 1 of N/A N/A 9.53 1 of Muni Bond 1999 106 102 Fund ------------ --------- ------ ------- ------ --------- ------ ------- New York Municipal Debt ------------ --------- ------ ------- ------ --------- ------ ------- Short Duration Aug. 6.54 6 of N/A N/A 5.32 3 of Muni Income 1999 33 31 Fund ------------ --------- ------ ------- ------ --------- ------ ------- Short Term ------------ --------- ------ ------- ------ --------- ------ -------
Call or write for a current PIMCO Funds prospectus containing more complete information, including management fees and expenses. Please read it carefully before you invest or send money. PIMCO Funds Distributors LLC, 2187 Atlantic Street, Stamford, CT 06902, (800) 927-4648.