PIMCO Managed
Accounts Trust
Prospectus
Fixed Income SHares
(FISH)
|
Fixed
Income SHares: Series C (“FISH: Series C”) |
FXICX
|
|
Fixed
Income SHares: Series M (“FISH: Series M”) |
FXIMX
|
|
Fixed
Income SHares: Series R (“FISH: Series R”) |
FXIRX
|
|
Fixed
Income SHares: Series TE (“FISH: Series TE”) |
FXIEX
|
|
Fixed
Income SHares: Series LD (“FISH: Series LD”) |
FXIDX
|
Neither
the U.S. Securities and Exchange Commission nor the U.S. Commodity Futures
Trading Commission has approved or
disapproved these securities, or determined if this prospectus is truthful or
complete. Any representation to the contrary is a criminal offense.
Fixed
Income SHares: Series C
|
|
|
|
|
FISH:
Series C |
|
Advisory
Fees (1)
|
|
|
Other
Expenses (2)
|
|
|
Total
Annual Portfolio Operating Expenses |
|
1
2
|
|
1
Year |
3
Years |
5
Years |
10
Years |
|
FISH:
Series C |
$
|
$
|
$
|
$
|
PIMCO
Managed Accounts Trust | Prospectus
1
Fixed
Income SHares: Series C
2 Prospectus | PIMCO Managed Accounts Trust
Prospectus
May
1, 2024 | Prospectus
3
Fixed
Income SHares: Series C
Please see
“Description of Principal Risks” for more information regarding the risks
associated with investing in the Portfolio. An
investment in
the Portfolio is not a bank deposit and is not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other government agency.
|
|
|
|
|
|
|
|
|
|
1
Year |
5
Years |
10
Years |
|
Fixed
Income SHares: Series C - Before Taxes |
|
|
|
|
Fixed
Income SHares: Series C - After Taxes on
Distributions
(1)
|
|
|
-
|
|
Fixed
Income SHares: Series C - After Taxes on
Distributions
and Sale of Portfolio Shares (1)
|
|
|
|
|
Bloomberg
U.S. Intermediate Credit Index (reflects no
deductions
for fees, expenses or taxes) |
|
|
|
1
Investment
Adviser/Portfolio Managers
PIMCO
serves as the investment
adviser and administrator for the Portfolio. The Portfolio is jointly and
primarily managed by David Braun, Mike Cudzil and Vinayak Seshasayee. Mr. Braun
is a Managing Director in PIMCO’s New York office and head of the U.S. financial
institutions group and stable value portfolio management teams. Mr. Cudzil is a
Managing Director in PIMCO’s Newport Beach office and Mr. Seshasayee is an
Executive Vice President in PIMCO’s New York office. Mr. Braun has managed the
Portfolio since May 2016 and Messrs. Cudzil and Seshasayee have managed the
Portfolio since October 2022.
Other
Important Information Regarding Portfolio Shares
For important
information about purchase and sale of Portfolio shares and tax information,
please turn to the “Summary of Other Important Information Regarding Portfolio
Shares” section on page 21 of this prospectus.
4 Prospectus | PIMCO Managed Accounts Trust
Fixed
Income SHares: Series M
|
|
|
|
|
FISH:
Series M |
|
Advisory
Fees (1)
|
|
|
Other
Expenses (2)
|
|
|
Total
Annual Portfolio Operating Expenses |
|
1
2
|
|
1
Year |
3
Years |
5
Years |
10
Years |
|
FISH:
Series M |
$
|
$
|
$
|
$
|
PIMCO
Managed Accounts Trust | Prospectus
5
Fixed
Income SHares: Series M
6 Prospectus | PIMCO Managed Accounts Trust
Prospectus
Please see
“Description of Principal Risks” for more information regarding the risks
associated with investing in the Portfolio. An
investment in
the Portfolio is not a bank deposit and is not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other government agency.
May
1, 2024 | Prospectus
7
Fixed
Income SHares: Series M
|
|
|
|
|
|
|
|
|
|
1
Year |
5
Years |
10
Years |
|
Fixed
Income SHares: Series M - Before Taxes |
|
|
|
|
Fixed
Income SHares: Series M - After Taxes on
Distributions
(1)
|
|
-
|
|
|
Fixed
Income SHares: Series M - After Taxes on
Distributions
and Sale of Portfolio Shares (1)
|
|
|
|
|
Bloomberg
U.S. MBS Fixed-Rate Index (reflects no
deductions
for fees, expenses or taxes) |
|
|
|
1
Investment
Adviser/Portfolio Managers
PIMCO
serves as the investment
adviser and administrator for the Portfolio. The Portfolio is jointly and
primarily managed by David Braun, Mike Cudzil and Vinayak Seshasayee. Mr. Braun
is a Managing Director in PIMCO’s New York office and head of the U.S. financial
institutions group and stable value portfolio management teams. Mr. Cudzil is a
Managing Director in PIMCO’s Newport Beach office and Mr. Seshasayee is an
Executive Vice President in PIMCO’s New York office. Mr. Braun has managed the
Portfolio since May 2016 and Messrs. Cudzil and Seshasayee have managed the
Portfolio since October 2022.
Other
Important Information Regarding Portfolio Shares
For important
information about purchase and sale of Portfolio shares and tax information,
please turn to the “Summary of Other Important Information Regarding Portfolio
Shares” section on page 21 of this prospectus.
8 Prospectus | PIMCO Managed Accounts Trust
Fixed
Income SHares: Series R
|
|
|
|
|
FISH:
Series R |
|
Advisory
Fees (1)
|
|
|
Other
Expenses (2)
|
|
|
Total
Annual Portfolio Operating Expenses |
|
1
2
|
|
1
Year |
3
Years |
5
Years |
10
Years |
|
FISH:
Series R |
$
|
$
|
$
|
$
|
PIMCO
Managed Accounts Trust | Prospectus
9
Fixed
Income SHares: Series R
10 Prospectus | PIMCO Managed Accounts Trust
Prospectus
Please see
“Description of Principal Risks” for more information regarding the risks
associated with investing in the Portfolio. An
investment in
the Portfolio is not a bank deposit and is not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other government agency.
May
1, 2024 | Prospectus
11
Fixed
Income SHares: Series R
|
|
|
|
|
|
|
|
|
|
1
Year |
5
Years |
10
Years |
|
Fixed
Income SHares: Series R - Before Taxes |
|
|
|
|
Fixed
Income SHares: Series R - After Taxes on
Distributions
(1)
|
|
|
|
|
Fixed
Income SHares: Series R - After Taxes on
Distributions
and Sale of Portfolio Shares (1)
|
|
|
|
|
Bloomberg
U.S. TIPS Index (reflects no deductions for
fees,
expenses or taxes) |
|
|
|
1
Investment
Adviser/Portfolio Managers
PIMCO
serves as the investment adviser and
administrator for the Portfolio. The Portfolio is jointly and primarily managed
by Steve Rodosky and Daniel He. Mr. Rodosky is a Managing Director and portfolio
manager in PIMCO’s Newport Beach office. Mr. He is an Executive Vice President
and portfolio manager in PIMCO’s Newport Beach office. Mr. Rodosky has managed
the Portfolio since January 2019. Mr. He has managed the Portfolio since
December 2019.
Other
Important Information Regarding Portfolio Shares
For important
information about purchase and sale of Portfolio shares and tax information,
please turn to the “Summary of Other Important Information Regarding Portfolio
Shares” section on page 21 of this prospectus.
12 Prospectus | PIMCO Managed Accounts Trust
Fixed
Income SHares: Series TE
|
|
|
|
|
FISH:
Series TE |
|
Advisory
Fees (1)
|
|
|
Other
Expenses (2)
|
|
|
Total
Annual Portfolio Operating Expenses |
|
1
2
|
|
1
Year |
3
Years |
5
Years |
10
Years |
|
FISH:
Series TE |
$
|
$
|
$
|
$
|
PIMCO
Managed Accounts Trust | Prospectus
13
Fixed
Income SHares: Series TE
14 Prospectus | PIMCO Managed Accounts Trust
Prospectus
Please see
“Description of Principal Risks” for more information regarding the risks
associated with investing in the Portfolio. An
investment in
the Portfolio is not a bank deposit and is not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other government agency.
May
1, 2024 | Prospectus
15
Fixed
Income SHares: Series TE
|
|
|
|
|
|
|
|
|
|
1
Year |
5
Years |
10
Years |
|
Fixed
Income SHares: Series TE - Before Taxes |
|
|
|
|
Fixed
Income SHares: Series TE - After Taxes on
Distributions
(1)
|
|
|
|
|
Fixed
Income SHares: Series TE - After Taxes on
Distributions
and Sale of Portfolio Shares (1)
|
|
|
|
|
Bloomberg
1-Year Municipal Bond Index (reflects no
deductions
for fees, expenses or taxes) |
|
|
|
1
Investment
Adviser/Portfolio Managers
PIMCO
serves as the investment adviser and
administrator for the Portfolio. The Portfolio is jointly and primarily managed
by David Hammer and Kyle Christine. Mr. Hammer is a Managing Director and head
of municipal bond portfolio management in PIMCO’s Newport Beach office. Mr.
Christine is a Senior Vice President and municipal bond portfolio manager in
PIMCO’s Newport Beach office. Mr. Hammer has managed the Portfolio since August
2015. Mr. Christine has managed the Portfolio since April 2023.
Other
Important Information Regarding Portfolio Shares
For important
information about purchase and sale of Portfolio shares and tax information,
please turn to the “Summary of Other Important Information Regarding Portfolio
Shares” section on page 21 of this prospectus.
16 Prospectus | PIMCO Managed Accounts Trust
Fixed
Income SHares: Series LD
|
|
|
|
|
FISH:
Series LD |
|
Advisory
Fees (1)
|
|
|
Other
Expenses (2)
|
|
|
Total
Annual Portfolio Operating Expenses |
|
1
2
|
|
1
Year |
3
Years |
5
Years |
10
Years |
|
FISH:
Series LD |
$
|
$
|
$
|
$
|
PIMCO
Managed Accounts Trust | Prospectus
17
Fixed
Income SHares: Series LD
18 Prospectus | PIMCO Managed Accounts Trust
Prospectus
Please see
“Description of Principal Risks” for more information regarding the risks
associated with investing in the Portfolio. An
investment in
the Portfolio is not a bank deposit and is not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other government agency.
May
1, 2024 | Prospectus
19
Fixed
Income SHares: Series LD
|
|
|
|
|
|
|
|
|
|
1
Year |
5
Years |
10
Years |
|
Fixed
Income SHares: Series LD - Before Taxes |
|
|
|
|
Fixed
Income SHares: Series LD - After Taxes on
Distributions
(1)
|
|
|
|
|
Fixed
Income SHares: Series LD - After Taxes on
Distributions
and Sale of Portfolio Shares (1)
|
|
|
|
|
ICE
BofAML 1-3 Year U.S. Treasury Index (reflects no
deductions
for fees, expenses or taxes) |
|
|
|
1
Investment
Adviser/Portfolio Managers
PIMCO
serves as the investment adviser and
administrator for the Portfolio. The Portfolio is jointly and primarily managed
by Jerome Schneider and Andrew Wittkop. Mr. Schneider is a Managing Director in
PIMCO’s Newport Beach office and head of the short-term portfolio management and
funding. Mr. Wittkop is an Executive Vice President and portfolio manager in
PIMCO’s Newport Beach office. They have managed the Portfolio since its
inception in December 2013.
Other
Important Information Regarding Portfolio Shares
For important
information about purchase and sale of Portfolio shares and tax information,
please turn to the “Summary of Other Important Information Regarding Portfolio
Shares” section on page 21 of this prospectus.
20 Prospectus | PIMCO Managed Accounts Trust
Summary
of Other Important Information Regarding Portfolio Shares
Purchase
and Sale of Portfolio Shares
Shares of the
Portfolio may be purchased only by or on behalf of “wrap” account clients where
PIMCO or Virtus Fund Advisers, LLC (each, as applicable, the “Wrap Program
Adviser”) has an agreement to serve as investment adviser or sub-adviser to the
account with the wrap program sponsor (typically a registered investment
adviser, bank or broker-dealer) or directly with the client. A client agreement
to open an account typically may be obtained by contacting the wrap program
sponsor. Minimum investment amounts for investing in a Portfolio can be found in
the wrap-fee brochure provided to you by the wrap program sponsor or your
investment adviser. Generally, purchase and redemption orders for Portfolio
shares are processed at the net asset value (“NAV”) next calculated after the
broker-dealer who executes trades for the applicable wrap account receives the
order on behalf of the account. Orders received by the broker-dealer prior to
the time the Portfolio’s NAV is determined on a business day will be processed
at that day’s NAV, even if the order is received by the transfer agent after the
Portfolio’s NAV has been calculated that day, as long as the order is received
by the transfer agent prior to such time as agreed upon by the transfer agent
and the broker-dealer.
Tax
Information
Except as
noted below, each Portfolio’s distributions are generally taxable to you as
ordinary income, capital gains or a combination of the two, unless you are
investing through a tax-advantaged arrangement, such as a 401(k) plan or an
individual retirement account, in which case distributions may be taxable upon
withdrawal.
FISH Series
TE Portfolio intends to make distributions that consist of exempt-interest
dividends, which are generally not taxable to shareholders for federal income
tax purposes, but a portion of its distributions may be subject to the federal
AMT. A portion of that Portfolio’s distributions may not qualify as
exempt-interest dividends; such distributions will generally be taxable to
shareholders as ordinary income or capital gains.
Additional
Information About the Portfolios
The
Portfolios’ investment adviser is PIMCO. Developed by PIMCO exclusively for use
within separately managed accounts, the Portfolios represent shares of
specialized bond portfolios. They are used in combination with selected
individual securities to effectively model institutional-level investment
strategies. The Portfolios can permit greater diversification than smaller
managed accounts might otherwise achieve. PIMCO uses these specialized bond
portfolios within the PIMCO Total Return, PIMCO Real Return, PIMCO National
Intermediate Municipal Bond, PIMCO Municipal Bond and PIMCO Low Duration managed
account portfolios as follows.
Within the
PIMCO Total Return managed account portfolio:
Fixed
Income SHares: Series C, normally
investing substantially all (and at least 80%) of its net assets (plus
borrowings made for investment purposes) in a portfolio of U.S. and foreign
fixed income instruments.
Fixed
Income SHares: Series M, normally
investing at least 80% of its net assets (plus borrowing made for investment
purposes) in a portfolio of U.S. and foreign fixed income instruments of varying
maturities.
Within the
PIMCO Real Return managed account portfolio:
Fixed
Income SHares: Series R, normally
investing at least 80% of its net assets (plus borrowing made for investment
purposes) in a portfolio of U.S. and foreign fixed income instruments.
Within the
PIMCO National Intermediate Municipal Bond and PIMCO Municipal Bond managed
account portfolios:
Fixed
Income SHares: Series TE, normally
investing at least 80% of its net assets (plus borrowings made for investment
purposes) in a portfolio of U.S. fixed income instruments comprised of debt
securities whose interest is, in the opinion of bond counsel for the issuer at
the time of issuance, exempt from federal income tax ( i.e.
, excluded
from gross income for federal income tax purposes but not necessarily exempt
from the federal alternative minimum tax).
Within the
PIMCO Low Duration managed account portfolio:
Fixed
Income SHares: Series LD, normally
investing at least 80% of its net assets (plus borrowings made for investment
purposes) in a diversified portfolio of U.S. and foreign fixed income securities
of varying maturities and normally maintaining an average portfolio duration
between zero and five years; however, the duration of the Portfolio will vary
based on PIMCO’s forecast for interest rates.
Descriptions
of different Portfolios should be read independently of one another. How or
whether a particular Portfolio utilizes an investment strategy, technique or
instrument should not be inferred from how or whether other Portfolios are
described as utilizing the same investment strategy, technique or instrument in
their descriptions.
May
1, 2024 | Prospectus
21
PIMCO
Managed Accounts Trust
Description
of Principal Risks
The value of
your investment in a Portfolio changes with the values of the Portfolio’s
investments. Many factors can affect those values. The factors that are most
likely to have a material effect on a particular Portfolio are called “principal
risks.” The principal risks of each Portfolio identified in the Portfolio
Summaries and in the table below are described further in this section. Each
Portfolio may be subject to additional risks other than those identified and
described below because the types of investments made by a Portfolio can change
over time. Securities and investment techniques mentioned in this summary that
appear in bold
type are described
in greater detail under “Characteristics and Risks of Securities and Investment
Techniques” or in the Statement of Additional Information (“SAI”). That section
and “Investment Objectives and Policies” in the SAI also include more
information about the Portfolios, their investments and the related risks. There
is no guarantee that a Portfolio will be able to achieve its investment
objective. It is possible to lose money by investing in a Portfolio.
|
Principal
Risk |
FISH:
Series C |
FISH:
Series M |
FISH:
Series R |
FISH:
Series TE |
FISH:
Series LD |
|
Small
Portfolio |
—
|
—
|
—
|
x
|
x
|
|
Interest
Rate |
x
|
x
|
x
|
x
|
x
|
|
Credit
|
x
|
x
|
x
|
x
|
x
|
|
Market
|
x
|
x
|
x
|
x
|
x
|
|
Foreign
(Non-U.S.) Investment |
x
|
x
|
x
|
—
|
x
|
|
Mortgage-Related
and Other Asset-Backed Securities |
x
|
x
|
x
|
—
|
x
|
|
Emerging
Markets |
x
|
x
|
x
|
—
|
x
|
|
Focused
Investment |
x
|
x
|
x
|
x
|
x
|
|
Derivatives
|
x
|
x
|
x
|
x
|
x
|
|
Liquidity
|
x
|
x
|
x
|
x
|
x
|
|
Management
|
x
|
x
|
x
|
x
|
x
|
|
High
Yield |
x
|
x
|
x
|
x
|
x
|
|
Currency
|
x
|
x
|
x
|
—
|
x
|
|
Leveraging
|
x
|
x
|
x
|
x
|
x
|
|
Issuer
|
x
|
x
|
x
|
x
|
x
|
|
Turnover
|
x
|
x
|
x
|
—
|
x
|
|
Municipal
Securities |
x
|
x
|
x
|
x
|
x
|
|
Municipal
Project-Specific |
—
|
—
|
—
|
x
|
—
|
|
Municipal
Bond Market |
—
|
—
|
—
|
x
|
—
|
|
California
State Specific |
—
|
—
|
—
|
x
|
—
|
|
New
York State-Specific |
—
|
—
|
—
|
x
|
—
|
|
Puerto
Rico-Specific |
—
|
—
|
—
|
x
|
—
|
|
Sovereign
Debt |
—
|
—
|
x
|
—
|
—
|
|
Inflation/Deflation
|
x
|
x
|
x
|
x
|
x
|
|
Contingent
Convertible Securities |
x
|
x
|
—
|
—
|
—
|
|
LIBOR
Transition |
x
|
x
|
—
|
—
|
x
|
|
Collateralized
Loan Obligations |
x
|
x
|
—
|
—
|
x
|
|
AMT
Bonds |
—
|
—
|
—
|
x
|
—
|
AMT
Bonds Risk
To the extent
that a Portfolio may invest in “AMT Bonds,” which are municipal securities that
pay interest that is taxable under the federal alternative minimum tax
applicable to noncorporate taxpayers, such investments may expose the Portfolio
to certain risks in addition to those typically associated with municipal bonds.
Interest or principal on AMT Bonds paid out of current or anticipated revenues
from a specific project or specific asset may be adversely impacted by declines
in revenue from the project or asset. Declines in general business activity
could also affect the economic viability of facilities that are the sole source
of revenue to support AMT Bonds. In this regard, AMT Bonds may entail greater
risks than general obligation municipal bonds. For shareholders subject to the
federal alternative minimum tax, a portion of the Portfolio’s distributions may
not be exempt from gross federal income, which may give rise to alternative
minimum tax liability.
22 Prospectus | PIMCO Managed Accounts Trust
Prospectus
California
State-Specific Risk
To the extent
a Portfolio concentrates its investments in California Municipal Bonds, the
Portfolio may be affected significantly by political, economic, regulatory,
social, environmental, or public health developments affecting the ability of
California tax exempt issuers to pay interest or repay principal. Certain
issuers of California Municipal Bonds have experienced serious financial
difficulties in the past and reoccurrence of these difficulties may impair the
ability of certain California issuers to pay principal or interest on their
obligations. Provisions of the California Constitution and state statutes that
limit the taxing and spending authority of California governmental entities may
impair the ability of California issuers to pay principal and/or interest on
their obligations. While California’s economy is broad, it does have major
concentrations in advanced technology, aerospace and defense-related
manufacturing, trade, entertainment, real estate and financial services, and may
be sensitive to economic problems affecting those industries. Future California
political and economic developments, constitutional amendments, legislative
measures, executive orders, administrative regulations, litigation and voter
initiatives, as well as environmental events, natural disasters, pandemics,
epidemics or social unrest, could have an adverse effect on the debt obligations
of California issuers.
Collateralized
Loan Obligations Risk
Certain
Portfolios may invest in collateralized loan obligation (“CLOs”) and other
similarly structured investments. A CLO is a trust typically collateralized by a
pool of loans, which may include, among others, domestic and foreign senior
secured loans, senior unsecured loans and subordinate corporate loans, including
loans that may be rated below investment grade or equivalent unrated loans. In
addition to the risks associated with investment in such underlying assets, the
structure and characteristics of a CLO present certain additional risks. A
Portfolio’s investments in CLOs and other similarly structured investments may
expose the Portfolio to heightened credit risk, interest rate risk, liquidity
risk, market risk and prepayment and extension risk, as well as the risk of
default on the underlying asset. In addition, investments in CLOs carry
additional risks including, but not limited to: (i) the possibility that
distributions from collateral securities will not be adequate to make interest
or other payments; (ii) the quality of the collateral may decline in value or
default; (iii) risks related to the capability of the servicer of the
securitized assets; (iv) the risk
that a Portfolio may invest in tranches of CLOs that are subordinate to other
tranches; (v) the structure and complexity of the transaction and the legal
documents may not be fully understood at the time of investment and could lead
to disputes with the issuer or among investors regarding the characterization of
proceeds or unexpected investment results; and (vi) the CLO’s manager may
perform poorly. CLOs may charge management and other administrative fees, which
are in addition to those of a Portfolio.
The cash
flows from a CLO are split into two or more portions, called tranches, varying
in risk and yield. The riskiest portion is the “equity” tranche which bears the
first loss of any defaults from the bonds or loans in the trust, although more
senior tranches may also bear losses. Since they are partially protected from
defaults, senior tranches from a CLO typically have higher ratings and lower
yields than their underlying securities, and can be rated investment grade.
Despite the protection from the equity tranche, CLO tranches can experience
substantial losses due to actual defaults, increased sensitivity to defaults due
to collateral default and disappearance of protecting tranches, market
anticipation of defaults, as well as aversion to CLO securities as a class. The
risks of an investment in a CLO depend largely on the type of the collateral
securities and the class of the instrument in which a Portfolio invests.
Typically, CLOs are privately offered and sold, and thus, are not registered
under the securities laws.
Contingent
Convertible Securities Risk
Contingent
convertible securities (“CoCos”) have no stated maturity, have fully
discretionary coupons and are typically issued in the form of subordinated debt
instruments. CoCos generally either convert into equity or have their principal
written down (including potentially to zero) upon the occurrence of certain
triggering events (“triggers”) linked to regulatory capital thresholds or
regulatory actions relating to the issuer’s continued viability. As a result, an
investment by the Portfolio in CoCos is subject to the risk that coupon (
i.e.
, interest)
payments may be cancelled by the issuer or a regulatory authority in order to
help the issuer absorb losses and the risk of total loss. An investment by the
Portfolio in CoCos is also subject to the risk that, in the event of the
liquidation, dissolution or winding-up of an issuer prior to a trigger event,
the Portfolio’s rights and claims will generally rank junior to the claims of
holders of the issuer’s other debt obligations and CoCos may also be treated as
junior to an issuer’s other obligations and securities. In addition, if CoCos
held by the Portfolio are converted into the issuer’s underlying equity
securities following a trigger event, the Portfolio’s holding may be further
subordinated due to the conversion from a debt to equity instrument. Further,
the value of an investment in CoCos is unpredictable and will be influenced by
many factors and risks, including interest rate risk, credit risk, market risk
and liquidity risk. An investment by the Portfolio in CoCos may result in losses
to the Portfolio.
Credit
Risk
A Portfolio
could lose money if the issuer or guarantor of a fixed income security
(including a security purchased with securities lending collateral), or the
counterparty to a derivatives
contract,
repurchase agreement or a loan
of portfolio securities , or the
issuer or guarantor of collateral, is unable or unwilling, or is perceived
(whether by market participants, rating agencies, pricing services or otherwise)
as unable or unwilling, to make timely principal and/or interest payments, or to
otherwise honor its obligations. The risk that such issuer, guarantor or
counterparty is less willing or able to do so is heightened in market
environments where interest rates are rising. The downgrade of the credit rating
of a security or of the issuer of
May
1, 2024 | Prospectus
23
PIMCO
Managed Accounts Trust
a security
held by a Portfolio may decrease its value. Securities are subject to varying
degrees of credit risk, which are often reflected in credit
ratings . Measures
such as average credit quality may not accurately reflect the true credit risk
of a Portfolio. This is especially the case if the Portfolio consists of
securities with widely varying credit ratings. Therefore, if a Portfolio has an
average credit rating that suggests a certain credit quality, the Portfolio may
in fact be subject to greater credit risk than the average would suggest. Credit
risk is greater to the extent the Portfolio uses leverage or derivatives.
Municipal bonds are subject to the risk that litigation, legislation or other
political events, local business or economic conditions, or the bankruptcy of
the issuer could have a significant effect on an issuer’s ability to make
payments of principal and/or interest. Rising or high interest rates may
deteriorate the credit quality of an issuer or counterparty, particularly if an
issuer or counterparty faces challenges rolling or refinancing its obligations.
Currency
Risk
If a
Portfolio invests directly in foreign
(non-U.S.) currencies or in
securities that trade in, and receive revenues in, foreign
(non-U.S.) currencies , or in
derivatives
or other
instruments that provide exposure to foreign
(non-U.S.) currencies , it will be
subject to the risk that those currencies will decline in value relative to the
U.S. dollar or, in the case of hedging positions, that the U.S. dollar, will
decline in value relative to the currency being hedged. Although a Portfolio may
attempt to hedge its currency exposure into the U.S. dollar, it may not be
successful in reducing the effects of currency fluctuations. A Portfolio may
also hedge from one foreign currency to another. In addition, a Portfolio’s use
of currency hedging may not be successful and the use of such strategies may
lower a Portfolio’s potential returns.
Currency
rates in foreign (non-U.S.) countries may fluctuate significantly over short
periods of time for a number of reasons, including changes in interest rates,
rates of inflation, balance of payments and governmental surpluses or deficits,
intervention (or the failure to intervene) by U.S. or foreign (non-U.S.)
governments, central banks or supranational entities such as the International
Monetary Fund, or by the imposition of currency controls or other political
developments in the United States or abroad. As a result, a Portfolio’s
investments in or exposure to foreign
(non-U.S.) currencies and/or
foreign (non-U.S.) currency-denominated securities may reduce the returns of the
Portfolio.
Currency risk
may be particularly high to the extent that a Portfolio invests in foreign
(non-U.S.) currencies or engages in
foreign
currency transactions that are
economically tied to emerging market countries. These currency transactions may
present market, credit, currency, liquidity, legal, political and other risks
different from, or greater than, the risks of investing in developed
foreign
(non-U.S.) currencies or engaging
in foreign
currency transactions that are
economically tied to developed foreign countries.
Derivatives
Risk
Derivatives
and other
similar instruments (referred to collectively as “derivatives”) are financial
contracts whose value depends on, or is derived from, the value of an underlying
asset, reference rate or index. The various derivative instruments that the
Portfolios may use are referenced under “Characteristics and Risks of Securities
and Investment Techniques — Derivatives” in this prospectus and described in
more detail under “Investment Objectives and Policies” in the SAI. The
Portfolios typically use derivatives as a substitute for taking a position in
the underlying asset, as part of strategies designed to gain exposure to, for
example, issuers, portions of the yield curve, indexes, sectors, currencies,
and/or geographic regions, and/or to reduce exposure to other risks, such as
interest rate, credit or currency risk. The Portfolios may also use derivatives
for leverage, in which case their use would involve leveraging risk, and in some
cases, may subject a Portfolio to the potential for unlimited loss. The use of
derivatives may cause a Portfolio’s investment returns to be impacted by the
performance of securities the Portfolio does not own and result in the
Portfolio’s total investment exposure exceeding the value of its portfolio.
A Portfolio’s
use of derivative instruments involves risks different from, or possibly greater
than, the risks associated with investing directly in securities and other
traditional investments. Derivatives are subject to a number of risks described
elsewhere in this section, such as liquidity risk (which may be heightened for
highly-customized derivatives), interest rate risk, market risk, leverage risk,
counterparty (including credit) risk, operational risk (such as documentation
issues, settlement issues and systems failures), legal risk (such as
insufficient capacity or authority of a counterparty, and issues with the
legality or enforceability of a contract), and management risk, as well as risks
arising from changes in applicable requirements, risks arising from margin
requirements and risks arising from mispricing or valuation complexity. They
also involve the risk of unfavorable or ambiguous documentation and the risk
that changes in the value of a derivative instrument may not correlate perfectly
with the underlying asset, rate or index. By investing in a derivative
instrument, a Portfolio could lose more than the initial amount invested and
derivatives may increase the volatility of the Portfolio, especially in unusual
or extreme market conditions. Certain derivatives have the potential for
unlimited loss, regardless of the size of the initial investment. The 1940 Act
and related rules no longer require asset segregation for derivatives
transactions, however asset segregation and posting of collateral may still be
utilized for risk management or other purposes. A Portfolio may be required to
hold additional cash or sell other investments in order to obtain cash to close
out a position and changes in the value of a derivative may also create margin
delivery or settlement payment obligations for the Portfolio. Also, suitable
derivative transactions may not be available in all circumstances and there can
be no assurance that a Portfolio will engage in these transactions to reduce
exposure to other risks when that would be beneficial or that, if used, such
strategies will be successful. In addition, a Portfolio’s use of derivatives may
increase or accelerate the amount of taxes payable by shareholders.
Non-centrally-cleared over-the-counter (“OTC”) derivatives are also subject to
the risk that a counterparty to the transaction will not
24 Prospectus | PIMCO Managed Accounts Trust
Prospectus
fulfill its
contractual obligations to the other party, as many of the protections afforded
to centrally-cleared derivative transactions might not be available for
non-centrally-cleared OTC derivatives. The primary credit risk on derivatives
that are exchange-traded or traded through a central clearing counterparty
resides with the Portfolio's clearing broker or the clearinghouse.
Participation
in the markets for derivative instruments involves investment risks and
transaction costs to which a Portfolio may not be subject absent the use of
these strategies. The skills needed to successfully execute derivative
strategies may be different from those needed for other types of transactions.
If a Portfolio incorrectly forecasts the value and/or creditworthiness of
securities, currencies, interest rates, counterparties or other economic factors
involved in a derivative transaction, the Portfolio might have been in a better
position if the Portfolio had not entered into such derivative transaction. In
evaluating the risks and contractual obligations associated with particular
derivative instruments, it is important to consider that certain derivative
transactions may be modified or terminated only by mutual consent of a Portfolio
and its counterparty. Therefore, it may not be possible for a Portfolio to
modify, terminate, or offset the Portfolio’s obligations or the Portfolio’s
exposure to the risks associated with a derivative transaction prior to its
scheduled termination or maturity date, which may create a possibility of
increased volatility and/or decreased liquidity to the Portfolio. In such case,
a Portfolio may lose money.
Because the
markets for certain derivative instruments (including markets located in foreign
countries) are relatively new and still developing, appropriate derivative
transactions may not be available in all circumstances for risk management or
other purposes. Upon the expiration of a particular contract, a Portfolio may
wish to retain its position in the derivative instrument by entering into a
similar contract, but may be unable to do so if the counterparty to the original
contract is unwilling to enter into the new contract and no other appropriate
counterparty can be found. When such markets are unavailable, a Portfolio will
be subject to increased liquidity and investment risk.
The
Portfolios may invest in commodity-linked derivative instruments to the extent
that the Portfolios’ exposure to commodities through these instruments is 5% or
less of the Portfolio’s total assets at the time of investment (although the
Portfolios may invest directly in other commodity-related investments
independent of this restriction). The Portfolios’ investments in
commodity-linked derivative instruments may subject the Portfolios to greater
volatility than investments in traditional securities. The value of
commodity-linked derivative instruments may be affected by changes in overall
market movements, commodity index volatility, changes in interest rates, or
factors affecting a particular industry or commodity, such as drought, floods,
weather, livestock disease, embargoes, tariffs and international economic,
political and regulatory developments.
The
Portfolios may invest in real-estate linked derivative instruments to the extent
that a Portfolio’s exposure to real estate through these instruments is 5% or
less of the Portfolios’ total assets at the time of investment (although the
Portfolio may invest directly in other real estate-related investments
independent of this restriction). To the extent the Portfolios invest in real
estate-linked derivative instruments, they are subject to risks similar to those
associated with direct ownership of real estate, including losses from casualty
or condemnation, and changes in local and general economic conditions, supply
and demand, interest rates, zoning laws, regulatory limitations on rents,
property taxes and operating expenses.
When a
derivative is used as a hedge against a position that a Portfolio holds, any
loss generated by the derivative generally should be substantially offset by
gains on the hedged investment, and vice versa. Although hedging can reduce or
eliminate losses, it can also reduce or eliminate gains. Hedges are sometimes
subject to imperfect matching between the derivative and the underlying
instrument, and there can be no assurance that a Portfolio’s hedging
transactions will be effective. Derivatives used for hedging or risk management
may not operate as intended or may expose a Portfolio to additional risks. In
addition, derivatives used for hedging may partially protect a Portfolio from
the risks they were intended to hedge yet not fully mitigate the impact of such
risks.
The
regulation of the derivatives markets has increased over the past several years,
and additional future regulation of the derivatives markets may make derivatives
more costly, may limit the availability or reduce the liquidity of derivatives,
or may otherwise adversely affect the value or performance of derivatives. Any
such adverse future developments could impair the effectiveness or raise the
costs of a Portfolio’s derivative transactions, impede the employment of the
Portfolio’s derivatives strategies, or adversely affect the Portfolio’s
performance.
Emerging
Markets Risk
Foreign
(non-U.S.) investment risk may be particularly high to the extent the Portfolio
invests in emerging
market securities .
Emerging
market securities may present
market, credit, currency, liquidity, volatility, legal, political, technical and
other risks different from, and potentially greater than, the risks of investing
in securities and instruments economically tied to developed foreign countries.
To the extent the Portfolio invests in emerging
market securities that are
economically tied to a particular region, country or group of countries, the
Portfolio may be more sensitive to adverse political or social events affecting
that region, country or group of countries. Economic, business, political, or
social instability may affect emerging
market securities differently,
and often more severely, than developed market securities. A Portfolio that
focuses its investments in multiple asset classes of emerging
market securities may have a
limited ability to mitigate losses in an environment that is adverse to
emerging
market securities in general.
Emerging
market securities may also be
more volatile, less liquid (particularly during market closures due to local
holidays or other reasons) and more difficult to value than securities
economically tied to developed foreign countries. The systems and procedures for
trading and settlement of securities in emerging markets are less developed and
less transparent and transactions may take longer to settle. Emerging market
countries typically have less established regulatory, disclosure, legal,
accounting, recordkeeping
and financial reporting systems than those in
May
1, 2024 | Prospectus
25
PIMCO
Managed Accounts Trust
more
developed markets, which may reduce the scope or quality of financial
information available to investors. Governments in emerging market countries are
often less stable and more likely to take extra-legal action with respect to
companies, industries, assets, or foreign ownership than those in more developed
markets. Moreover, it can be more difficult for investors to bring litigation or
enforce judgments, or to obtain
information needed to pursue or enforce such judgments, against issuers in
emerging markets or for U.S. regulators to bring enforcement actions against
such issuers. In addition, foreign companies with securities listed on U.S.
exchanges may be delisted if they do not meet U.S. accounting standards and
auditor oversight requirements, which may decrease the liquidity and value of
the securities.
A
Portfolio may
also be subject to Emerging Markets Risk if it invests in derivatives or other
securities or instruments whose value or return are related to the value or
returns of emerging
markets securities . Rising
interest rates, combined with widening credit spreads, could negatively impact
the value of emerging market debt and increase funding costs for foreign
issuers. In such a scenario, foreign issuers might not be able to service their
debt obligations, the market for emerging market debt could suffer from reduced
liquidity, and any investing Portfolio could lose money. The economy of some
emerging markets may be particularly exposed to or affected by a certain
industry or sector, and therefore issuers and/or securities of such emerging
markets may be more affected by the performance of such industries or sectors.
Focused
Investment Risk
To the extent
that a Portfolio focuses its investments in a particular sector, it may be
susceptible to loss due to adverse developments affecting that sector. These
developments include, but are not limited to: governmental regulation;
inflation; rising interest rates; cost increases in raw materials, fuel and
other operating expenses; technological innovations that may render existing
products and equipment obsolete; competition from new entrants; high research
and development costs; increased costs associated with compliance with
environmental or other governmental regulations; and other economic, business or
political developments specific to that sector. Furthermore, a Portfolio may
invest a substantial portion of its assets in companies in related sectors that
may share common characteristics, are often subject to similar business risks
and regulatory burdens, and whose securities may react similarly to the types of
developments described above, which will subject the Portfolio to greater risk.
A Portfolio also will be subject to focused investment risk to the extent that
it invests a substantial portion of its assets in a particular issuer, market,
asset class, country or geographic region.
Foreign
(Non-U.S.) Investment Risk
Foreign
(non-U.S.) securities may
experience more rapid and extreme changes in value than securities of U.S.
issuers or securities that trade exclusively in U.S. markets. The securities
markets of many foreign (non-U.S.) countries are relatively small, with a
limited number of companies representing a small number of industries.
Additionally, issuers of foreign (non-U.S.) securities are usually not subject
to the same degree of regulation as U.S. issuers. Reporting, legal, accounting
and auditing standards of foreign countries differ, in some cases significantly,
from U.S. standards. Global economies and financial markets are becoming
increasingly interconnected, and conditions and events in one country, region or
financial market may adversely impact issuers in a different country, region or
financial market. Foreign (non-U.S.) market trading hours, clearance and
settlement procedures, and holiday schedules may limit a Portfolio’s ability to
buy and sell securities. Investments in foreign (non-U.S.) markets may also be
adversely affected by governmental actions such as the imposition of capital
controls, nationalization of companies or industries, expropriation of assets or
the imposition of punitive taxes. The governments of certain countries may
prohibit or impose substantial restrictions on foreign (non-U.S.) investing in
their capital markets or in certain sectors or industries. In addition, a
foreign (non-U.S.) government may limit or cause delay in the convertibility or
repatriation of its currency which would adversely affect the U.S. dollar value
and/or liquidity of investments denominated in that currency. Certain foreign
(non-U.S.) investments may become less liquid in response to market developments
or adverse investor perceptions, or become illiquid after purchase by a
Portfolio, particularly during periods of market turmoil. A reduction in trading
in securities of issuers located in countries whose economies are heavily
dependent upon trading with key partners may have an adverse impact on a
Portfolio's investments. Also, nationalization, expropriation or confiscatory
taxation, unstable governments, decreased market liquidity, currency blockage,
market disruptions, political changes, security suspensions, diplomatic
developments or the imposition of sanctions or other similar measures could
adversely affect a Portfolio’s investments in a foreign (non-U.S.) country. In
the event of nationalization, expropriation or other confiscation, a Portfolio
could lose its entire investment in foreign (non-U.S.) securities. The type and
severity of sanctions and other similar measures, including counter sanctions
and other retaliatory actions, that may be imposed could vary broadly in scope,
and their impact is difficult to ascertain. These types of measures may include,
but are not limited to, banning a sanctioned country or certain persons or
entities associated with such country from global payment systems that
facilitate cross-border payments, restricting the settlement of securities
transactions by certain investors, and freezing the assets of particular
countries, entities or persons. The imposition of sanctions and other similar
measures could, among other things, result in a decline in the value and/or
liquidity of securities issued by the sanctioned country or companies located in
or economically tied to the sanctioned country, downgrades in the credit ratings
of the sanctioned country's securities or those of companies located in or
economically tied to the sanctioned country, currency devaluation or volatility,
and increased market volatility and disruption in the sanctioned country and
throughout the world. Sanctions and other similar measures could directly or
indirectly limit or prevent a Portfolio from buying and selling securities (in
the sanctioned country and other markets), significantly delay or prevent the
settlement of securities transactions and adversely impact a Portfolio's
liquidity and performance. Adverse conditions in a certain region can adversely
affect securities of other countries whose economies appear to be unrelated. To
the extent that a Portfolio
26 Prospectus | PIMCO Managed Accounts Trust
Prospectus
invests a
significant portion of its assets in a specific geographic region or in
securities denominated in a particular foreign (non-U.S.) currency, the
Portfolio will generally have more exposure to regional economic risks,
including weather emergencies and natural disasters, associated with foreign
(non-U.S.) investments. Foreign (non-U.S.) securities may also be less liquid
(particularly during market closures due to local holidays or other reasons)
and more
difficult to value than securities of U.S. issuers.
High
Yield Risk
Portfolios
that invest in high
yield securities and
unrated
securities of similar
credit quality (commonly known as “high yield securities” or “junk bonds”) may
be subject to greater levels of credit risk, call risk and liquidity risk than
portfolios that do not invest in such securities. These securities are
considered predominantly speculative with respect to an issuer’s continuing
ability to make principal and interest payments, and may be more volatile than
other types of securities. An economic downturn or individual corporate
developments could adversely affect the market for these securities and reduce a
Portfolio’s ability to sell these securities at an advantageous time or price.
An economic downturn would generally lead to a higher non-payment rate and, a
high
yield security may lose
significant market value before a default occurs. High
yield securities structured as
zero-coupon bonds or pay-in-kind securities tend to be especially volatile as
they are particularly sensitive to downward pricing pressures from rising
interest rates or widening spreads and may require a Portfolio to make taxable
distributions of imputed income without receiving the actual cash currency.
Issuers of high
yield securities may have the
right to “call” or redeem the issue prior to maturity, which may result in a
Portfolio having to reinvest the proceeds in other high
yield securities or similar
instruments that may pay lower interest rates. A Portfolio may also be subject
to greater levels of liquidity risk than portfolios that do not invest in
high
yield securities . In
addition, the high
yield securities in which a
Portfolio invests may not be listed on any exchange and a secondary market for
such securities may be comparatively illiquid relative to markets for other more
liquid fixed income securities. Consequently, transactions in high
yield securities may involve
greater costs than transactions in more actively traded securities. A lack of
publicly-available information, irregular trading activity and wide bid/ask
spreads among other factors, may, in certain circumstances, make high yield debt
more difficult to sell at an advantageous time or price than other types of
securities or instruments. These factors may result in a Portfolio being unable
to realize full value for these securities and/or may result in a Portfolio not
receiving the proceeds from a sale of a high
yield security for an
extended period after such sale, each of which could result in losses to a
Portfolio. In addition, adverse publicity and investor perceptions, whether or
not based on fundamental analysis, may decrease the values and liquidity of high
yield securities, especially in thinly-traded markets. When secondary markets
for high yield securities are less liquid than the market for other types of
securities, it may be more difficult to value the securities because such
valuation may require more research, and elements of judgments may play a
greater role in the valuation because there is less reliable, objective data
available. Because of the risks involved in investing in high
yield securities , an
investment in Portfolios that invest in such securities should be considered
speculative.
Inflation/Deflation
Risk
Inflation
risk is the risk that the value of assets or income from a Portfolio's
investments will be worth less in the future as inflation decreases the value of
payments at future dates. As inflation increases, the real value of a
Portfolio's investments could decline. Inflation has recently increased and it
cannot be predicted whether it may decline. Deflation risk is the risk that
prices throughout the economy decline over time. Deflation may have an adverse
effect on the creditworthiness of issuers and may make issuer default more
likely, which may result in a decline in the value of a Portfolio's investments.
Interest
Rate Risk
Interest rate
risk is the risk that fixed income securities, dividend-paying equity securities
and other instruments in a Portfolio’s portfolio will fluctuate in value because
of a change in interest rates. For example, as nominal interest rates rise, the
value of certain fixed income securities held by a Portfolio is likely to
decrease. A nominal interest rate can be described as the sum of a real interest
rate and an expected inflation rate. Interest rate changes can be sudden and
unpredictable, and a Portfolio may lose money as a result of movements in
interest rates. A Portfolio may not be able to hedge against changes in interest
rates or may choose not to do so for cost or other reasons. In addition, any
hedges may not work as intended. Fixed income securities with longer durations
tend to be more sensitive to changes in interest rates, usually making them more
volatile than securities with shorter durations. The values of equity and other
non-fixed income securities may also decline due to fluctuations in interest
rates.
Inflation-indexed
bonds , including
Treasury Inflation-Protected Securities (“TIPS”), decline in value when real
interest rates rise. In certain interest rate environments, such as when real
interest rates are rising faster than nominal interest rates, inflation-indexed
bonds may experience greater losses than other fixed income securities with
similar durations.
Dividend-paying
equity securities, particularly those whose market price is closely related to
their yield, may be more sensitive to changes in interest rates. During periods
of rising interest rates, the values of such securities may decline and may
result in losses to the Portfolio.
Variable
and floating rate securities generally are
less sensitive to interest rate changes but may decline in value if their
interest rates do not rise as much, or as quickly, as interest rates in general.
Conversely, floating rate securities will not generally increase in value if
interest rates decline. Inverse floating rate securities may decrease in value
if interest rates increase. Inverse floating rate securities may also exhibit
greater price volatility
May
1, 2024 | Prospectus
27
PIMCO
Managed Accounts Trust
than a fixed
rate obligation with similar credit quality. When a Portfolio holds variable or
floating rate securities, a decrease (or, in the case of inverse floating rate
securities, an increase) in market interest rates will adversely affect the
income received from such securities and the NAV of the Portfolio’s shares.
Dividend-paying equity securities, particularly those whose market price is
closely related to their yield, may be more sensitive to changes in interest
rates. During periods of rising interest rates, the values of such securities
may decline, which may result in losses to the Portfolio.
A wide
variety of factors can cause interest rates or yields of U.S. Treasury
securities (or yields of other types of bonds) to rise including but not limited
to central bank monetary policies, changing inflation or real growth rates,
general economic conditions, increasing bond issuances or reduced market demand
for low yielding investments. Risks associated with rising interest rates are
heightened under recent market conditions, including
because the U.S. Federal Reserve (the “Federal Reserve”) has raised interest
rates from historically low levels and the U.S. and other
governments have increased, and are likely to continue increasing, their debt
issuances. There is the risk that the income generated by investments may not
keep pace with inflation. Actions by governments and central banking authorities
can result in increases or decreases in interest rates. Periods of higher
inflation could cause such authorities to raise interest rates, which may
adversely affect a Portfolio and its investments. In addition, changes in
monetary policy may exacerbate the risks associated with changing interest
rates. Further, in market environments where interest rates are rising, issuers
may be less willing or able to make principal and interest payments on fixed
income investments when due.
Rising
interest rates may result in a decline in value of a Portfolio’s fixed income
investments and in periods of volatility. Further, while U.S. bond markets have
steadily grown over the past three decades, dealer “market making” ability has
remained relatively stagnant. As a result, dealer inventories of certain types
of bonds and similar instruments, which provide a core indication of the ability
of financial intermediaries to “make markets,” are at or near historic lows in
relation to market size. Because market makers provide stability to a market
through their intermediary services, the significant reduction in dealer
inventories could potentially lead to decreased liquidity and increased
volatility in the fixed income markets. Such issues may be exacerbated during
periods of economic uncertainty. All of these factors, collectively and/or
individually, could cause a Portfolio to lose value.
During
periods of very low or negative interest rates, a Portfolio may be unable to
maintain positive returns. Certain European countries have previously
experienced negative interest rates on certain fixed income instruments. Very
low or negative interest rates may magnify interest rate risk. Changing interest
rates, including rates that fall below zero, may have unpredictable effects on
markets, may result in heightened market volatility and may detract from
Portfolio performance to the extent a Portfolio is exposed to such interest
rates.
Measures such
as average duration may not accurately reflect the true interest rate
sensitivity of a Portfolio. This is especially the case if a Portfolio consists
of securities with widely varying durations. Therefore, if a Portfolio has an
average duration that suggests a certain level of interest rate risk, the
Portfolio may in fact be subject to greater interest rate risk than the average
would suggest. This risk is greater to the extent the Portfolio uses leverage or
derivatives in connection with the management of the Portfolio.
Convexity is
an additional measure used to understand a security’s or Portfolio’s interest
rate sensitivity. Convexity measures the rate of change of duration in response
to changes in interest rates. With respect to a security’s price, a larger
convexity (positive or negative) may imply more dramatic price changes in
response to changing interest rates. Convexity may be positive or negative.
Negative convexity implies that interest rate increases result in increased
duration, meaning increased sensitivity in prices in response to rising interest
rates. Thus, securities with negative convexity, which may include bonds with
traditional call features and certain mortgage-backed securities, may experience
greater losses in periods of rising interest rates. Accordingly, if a Portfolio
holds such securities, the Portfolio may be subject to a greater risk of losses
in periods of rising interest rates.
Issuer
Risk
The value of
a security may decline for a number of reasons that directly relate to the
issuer, such as management performance, major litigation, investigations or
other controversies, changes in the issuer’s financial condition or credit
rating, changes in government regulations affecting the issuer or its
competitive environment and strategic initiatives such as mergers, acquisitions
or dispositions and the market response to any such initiatives, financial
leverage, reputation or
reduced demand for the issuer’s goods or services, as well as the historical and
prospective earnings of the issuer and the value of its assets. A change in the
financial condition of a single issuer may affect one or more other issuers or
securities markets as a whole.
Leveraging
Risk
Certain
transactions may give rise to a form of leverage. Such transactions may include,
among others, reverse
repurchase agreements, loans of portfolio securities , and the use
of when-issued,
delayed delivery or forward commitment transactions . The use of
derivatives
may also
create leveraging risk. A Portfolio also may be exposed to leveraging risk by
borrowing
money for
investment purposes. Leverage may cause a Portfolio to liquidate portfolio
positions to satisfy its obligations when it may not be advantageous to do so.
Leverage, including borrowing
, may cause a
Portfolio to be more volatile than if a Portfolio had not been leveraged. This
is because leverage tends to exaggerate the effect of any increase or decrease
in the value of the Portfolio’s portfolio securities. Certain types of
leveraging transactions, such as short
sales that are not
“against the box” ( i.e
., short
sales where a Portfolio does not hold the security or have the right to acquire
it without payment of further consideration), could
28 Prospectus | PIMCO Managed Accounts Trust
Prospectus
theoretically
be subject to unlimited losses in cases where a Portfolio, for any reason, is
unable to close out the transaction. In addition, to the extent a Portfolio
borrows money, interest costs on such borrowings may not be recovered by any
appreciation of the securities purchased with the borrowed amounts and could
exceed a Portfolio’s investment returns, resulting in greater losses. Moreover,
to make payments of interest and other loan costs, a Portfolio may be forced to
sell portfolio securities when it is not otherwise advantageous to do so.
Leveraging transactions pursued by a Portfolio may increase its duration
and
sensitivity to interest rate environments.
LIBOR
Transition Risk
Certain
instruments in which a Portfolio may invest have relied or continue to rely in
some fashion upon the London Interbank Offered Rate (“LIBOR”). LIBOR was
traditionally an average interest rate, determined by the ICE Benchmark
Administration, that banks charge one another for the use of short-term money.
On March 5, 2021, the Financial Conduct Authority (“FCA”), the United Kingdom's
financial regulatory body and regulator of LIBOR, publicly announced that all
U.S. Dollar LIBOR settings will either cease to be provided by any administrator
or will no longer be representative (i) immediately after December 31, 2021 for
one-week and two-month U.S. Dollar LIBOR settings and (ii) immediately after
June 30, 2023 for the remaining U.S. Dollar LIBOR settings. As of January 1,
2022, as a result of supervisory guidance from U.S. regulators, U.S. regulated
entities have generally ceased entering into new LIBOR contracts with limited
exceptions. Publication of all Japanese yen and the one- and six-month sterling
LIBOR settings have ceased, and while publication of the three-month Sterling
LIBOR setting will continue through at least the end of March 2024 on the basis
of a changed methodology (known as “synthetic LIBOR”), this rate has been
designated by the FCA as unrepresentative of the underlying market that it seeks
to measure and is solely available for use in legacy transactions. Certain
bank-sponsored committees in other jurisdictions, including Europe, the United
Kingdom, Japan and Switzerland, have selected alternative reference rates
denominated in other currencies. Although the transition process away from LIBOR
for many instruments has been completed, some LIBOR use is continuing and there
are potential effects related to the transition away from LIBOR or continued use
of LIBOR on a Portfolio, or on certain instruments in which a Portfolio invests,
which can be difficult to ascertain, and may vary depending on factors that
include, but are not limited to: (i) existing fallback or termination provisions
in individual contracts and (ii) whether, how, and when industry participants
adopt new reference rates for affected instruments. So called “tough legacy”
contracts have LIBOR interest rate provisions with no fallback provisions
contemplating a permanent discontinuation of LIBOR, inadequate fallback
provisions or fallback provisions which may not effectively result in a
transition away from LIBOR prior to LIBOR's planned replacement date. On March
15, 2022, the Adjustable Interest Rate (LIBOR) Act was signed into law. This law
provides a statutory fallback mechanism on a nationwide basis to replace LIBOR
with a benchmark rate that is selected by the Board of Governors of the Federal
Reserve System based on the Secured Overnight Financing Rate (“SOFR”) for tough
legacy contracts. On February 27, 2023, the Federal Reserve System's final rule
in connection with this law became effective, establishing benchmark
replacements based on SOFR and Term SOFR (a forward-looking measurement of
market expectations of SOFR implied from certain derivatives markets) for
applicable tough legacy contracts governed by U.S. law. In addition, the FCA has
announced that it will require the publication of synthetic LIBOR for the
one-month, three-month and six-month U.S. Dollar LIBOR settings after June 30,
2023 through at least September 30, 2024. Certain of the Portfolio's investments
may involve individual tough legacy contracts which may be subject to the
Adjustable Interest Rate (LIBOR) Act or synthetic LIBOR and no assurances can be
given that these measures will have had the intended effects. Moreover, certain
aspects of the transition from LIBOR have relied or will continue to rely on the
actions of third-party market participants, such as clearing houses, trustees,
administrative agents, asset servicers and certain service providers; PIMCO
cannot guarantee the performance of such market participants and any failure on
the part of such market participants to manage their part of the LIBOR
transition could impact the Portfolios. The transition of investments from LIBOR
to a replacement rate as a result of amendment, application of existing
fallbacks, statutory requirements or otherwise may also result in a reduction in
the value of certain instruments held by a Portfolio or a reduction in the
effectiveness of related Portfolio transactions such as hedges. In addition, an
instrument’s transition to a replacement rate could result in variations in the
reported yields of a Portfolio that holds such instrument. Any such effects of
the transition away from LIBOR, as well as other unforeseen effects, could
result in losses to a Portfolio.
Liquidity
Risk
The
Securities and Exchange Commission (“SEC”) defines liquidity risk as the risk
that a Portfolio could not meet requests to redeem shares issued by the
Portfolio without significant dilution of remaining investors’ interests in a
Portfolio. Liquidity risk exists when particular investments are difficult to
purchase or sell. Illiquid
investments are
investments that a Portfolio reasonably expects cannot be sold or disposed of in
current market conditions in seven calendar days or less without the sale or
disposition significantly changing the market value of the investment.
Illiquid
investments may become
harder to value, especially in changing markets. A Portfolio’s investments in
illiquid
investments may reduce
the returns of the Portfolio because it may be unable to sell the illiquid
investments at an
advantageous time or price or possibly require a Portfolio to dispose of other
investments at unfavorable times or prices in order to satisfy its obligations,
which could prevent the Portfolio from taking advantage of other investment
opportunities. Additionally, the market for certain investments may become
illiquid under adverse market or economic conditions independent of any specific
adverse changes in the conditions of a particular issuer. Bond markets have
consistently grown over the past three decades while the capacity for
traditional dealer counterparties to engage in fixed income trading has not kept
pace and in some cases has decreased. As a result, dealer inventories of
corporate bonds, which provide a core indication of the ability of financial
intermediaries to “make
May
1, 2024 | Prospectus
29
PIMCO
Managed Accounts Trust
markets,” are
at or near historic lows in relation to market size. Because market makers seek
to provide stability to a market through their intermediary services, the
significant reduction in dealer inventories could potentially lead to decreased
liquidity and increased volatility in the fixed income markets. Such issues may
be exacerbated during periods of economic uncertainty.
In such
cases, a Portfolio, due to regulatory limitations on investments in illiquid
investments and the
difficulty in purchasing and selling such securities or instruments, may be
unable to achieve its desired level of exposure to a certain sector. To the
extent that a Portfolio’s principal investment strategies involve securities of
companies with smaller market capitalizations, foreign
(non-U.S.) securities , Rule 144A
securities, illiquid sectors of
fixed
income securities ,
derivatives
or securities
with substantial market and/or credit risk, the Portfolio will tend to have the
greatest exposure to liquidity risk. Further, fixed
income securities with longer
durations until maturity face heightened levels of liquidity risk as compared to
fixed
income securities with shorter
durations until maturity. Finally, liquidity risk also refers to the risk of
unusually high redemption requests, redemption requests by certain large
shareholders such as institutional investors or asset allocators, or other
unusual market conditions that may make it difficult for a Portfolio to sell
investments within the allowable time period to meet redemptions. Meeting such
redemption requests could require a Portfolio to sell securities at reduced
prices or under unfavorable conditions, which would reduce the value of the
Portfolio. It may also be the case that other market participants may be
attempting to liquidate fixed income holdings at the same time as a Portfolio,
causing increased supply in the market and contributing to liquidity risk and
downward pricing pressure.
Certain
accounts or PIMCO affiliates may from time to time own (beneficially or of
record) or control a significant percentage of a Portfolio’s shares. Redemptions
by these shareholders of their holdings in a Portfolio may impact the
Portfolio’s liquidity and NAV. These redemptions may also force a Portfolio to
sell securities, which may negatively impact the Portfolio’s brokerage costs.
Liquidity
risk also refers to the risk that a Portfolio may be required to hold additional
cash or sell other investments in order to obtain cash to close out derivatives
or meet the
liquidity demands that derivatives
can create to
make payments of margin, collateral, or settlement payments to counterparties. A
Portfolio may have to sell a security at a disadvantageous time or price to meet
such obligations. Actions by governments and regulators may have the effect of
reducing market liquidity, market resiliency and money supply, such as through
higher rates, tighter financial regulations and proposals related to open-end
fund liquidity that may prevent mutual funds and exchange-traded funds from
participating in certain markets.
Management
Risk
Each
Portfolio is subject to management risk because it is an actively managed
investment portfolio. PIMCO and each individual portfolio manager will apply
investment techniques and risk analysis in making investment decisions for the
Portfolios, or may determine that certain factors are more significant than
others. There can be no guarantee that these decisions will produce the desired
results or that the due diligence conducted by PIMCO, or such other investment
adviser or sub-adviser, as applicable, and individual portfolio managers will
expose all material risks associated with an investment. Additionally, PIMCO, or
such other investment adviser or sub-adviser, as applicable, and individual
portfolio managers may not be able to identify suitable investment opportunities
and may face competition from other investment managers when identifying and
consummating certain investments. Certain securities or other instruments in
which a Portfolio seeks to invest may not be available in the quantities
desired, including in circumstances where other funds for which PIMCO acts as
investment adviser, including funds with names, investment objectives and
policies, and/or portfolio management teams, similar to a Portfolio, are seeking
to invest in the same or similar securities or instruments. In addition,
regulatory restrictions, actual or potential conflicts of interest or other
considerations may cause PIMCO to restrict or prohibit participation in certain
investments. In such circumstances, PIMCO or the individual portfolio managers
may determine to purchase other securities or instruments as substitutes. Such
substitute securities or instruments may not perform as intended, which could
result in losses to the Portfolio. To the extent a Portfolio employs strategies
targeting perceived pricing inefficiencies, arbitrage strategies or similar
strategies, it is subject to the risk that the pricing or valuation of the
securities and instruments involved in such strategies may change unexpectedly,
which may result in reduced returns or losses to the Portfolio. Each Portfolio
is also subject to the risk that deficiencies in the internal systems or
controls of PIMCO or another service provider will cause losses for the
Portfolio or hinder Portfolio operations. For example, trading delays or errors
(both human and systemic) could prevent a Portfolio from purchasing a security
expected to appreciate in value. Please refer to “Portfolio Managers – Conflicts
of Interest” in the SAI for further information. Additionally, legislative,
regulatory, or tax restrictions, policies or developments may affect the
investment techniques available to PIMCO and each individual portfolio manager
in connection with managing the Portfolios and may also adversely affect the
ability of the Portfolios to achieve their investment objectives. There also can
be no assurance that all of the personnel of PIMCO will continue to be
associated with PIMCO for any length of time. The loss of services of one or
more key employees of PIMCO could have an adverse impact on a Portfolio’s
ability to realize its investment objective.
In addition,
a Portfolio may rely on various third-party sources to calculate its NAV. As a
result, a Portfolio is subject to certain operational risks associated with
reliance on service providers and service providers’ data sources. In
particular, errors or systems failures and other technological issues may
adversely impact the Portfolio’s calculations of its NAV, and such NAV
calculation issues may result in inaccurately calculated NAVs, delays in NAV
calculation and/or the inability to calculate NAVs over extended periods. A
Portfolio may be unable to recover any losses associated with such failures.
30 Prospectus | PIMCO Managed Accounts Trust
Prospectus
Market
Risk
The market
price of securities owned by a Portfolio may go up or down, sometimes rapidly or
unpredictably. Securities may decline in value due to factors affecting
securities markets generally or particular industries or issuers represented in
the securities markets. The value of a security may decline due to general
market conditions that are not specifically related to a particular company,
such as real or perceived adverse economic conditions, changes in the general
outlook for corporate earnings, changes in interest or currency rates, adverse
changes to credit markets or adverse investor sentiment generally. The value of
a security may also decline due to factors that affect a particular industry or
industries, such as labor shortages or increased production costs and
competitive conditions within an industry. During a general downturn in the
securities markets, multiple asset classes may decline in value simultaneously
even if the performance of those asset classes is not otherwise historically
correlated. Investments may also be negatively impacted by market disruptions
and by attempts by other market participants to manipulate the prices of
particular investments. Equity
securities generally
have greater price volatility than fixed
income securities .
Credit
ratings downgrades
may also negatively affect securities held by a Portfolio. Even when markets
perform well, there is no assurance that the investments held by a Portfolio
will increase in value along with the broader market.
In addition,
market risk includes the risk that geopolitical and other events will disrupt
the economy on a national or global level. For instance, war, terrorism, social
unrest, recessions, supply chain disruptions, market manipulation, government
defaults, government shutdowns, political changes, diplomatic developments or
the imposition of sanctions and other similar measures, public health
emergencies (such as the spread of infectious diseases, pandemics and epidemics)
and natural/environmental disasters can all negatively impact the securities
markets, which could cause the Portfolios to lose value. These events could
reduce consumer demand or economic output, result in market closures, changes in
interest rates, inflation/deflation, travel restrictions or quarantines, and
significantly adversely impact the economy. The current contentious domestic
political environment, as well as political and diplomatic events within the
United States and abroad, such as presidential elections in the U.S. or abroad
or the U.S. government’s inability at times to agree on a long-term budget and
deficit reduction plan, has in the past resulted, and may in the future result,
in a government shutdown or otherwise adversely affect the U.S. regulatory
landscape, the general market environment and/or investor sentiment, which could
have an adverse impact on a Portfolio’s investments and operations. Additional
and/or prolonged U.S. federal government shutdowns may affect investor and
consumer confidence and may adversely impact financial markets and the broader
economy, perhaps suddenly and to a significant degree. Governmental and
quasi-governmental authorities and regulators throughout the world have
previously responded to serious economic disruptions with a variety of
significant fiscal and monetary policy changes, including but not limited to,
direct capital infusions into companies, new monetary programs and dramatically
lower interest rates. An unexpected or sudden reversal of these policies, or the
ineffectiveness of these policies, could increase volatility in securities
markets, which could adversely affect a Portfolio’s investments. Any market
disruptions could also prevent a Portfolio from executing advantageous
investment decisions in a timely manner. Portfolios that have focused their
investments in a region enduring geopolitical market disruption will face higher
risks of loss, although the increasing interconnectivity between global
economies and financial markets can lead to events or conditions in one country,
region or financial market adversely impacting a different country, region or
financial market. Thus, investors should closely monitor current market
conditions to determine whether a Portfolio meets their individual financial
needs and tolerance for risk.
Current
market conditions may pose heightened risks with respect to a Portfolio that may
invest in fixed income securities. As discussed more under “Interest Rate Risk,”
the Federal Reserve has raised interest rates from historically low levels.
In addition,
changes in
monetary policy may exacerbate the risks associated
with changing interest rates. Any additional interest rate increases in the
future could cause the value of any Portfolio that invests in fixed income
securities to decrease. As such, fixed income securities markets may experience
heightened levels of interest rate, volatility and liquidity risk. If rising
interest rates cause a Portfolio to lose enough value, the Portfolio could also
face increased shareholder redemptions, which could force the Portfolio to
liquidate investments at disadvantageous times or prices, therefore adversely
affecting the Portfolio and its shareholders.
Although
interest rates have significantly increased since 2022 through the date of this
prospectus, the prices of real estate-related assets generally have not
decreased as much as may be expected based on historical correlations between
interest rates and prices of real estate-related assets. This presents an
increased risk of a correction or severe downturn in real estate-related asset
prices, which could adversely impact the value of other investments as well
(such as loans, securitized debt and other fixed income securities). This risk
is particularly present with respect to commercial real estate-related asset
prices, and the value of other investments with a connection to the commercial
real estate sector. As examples of the current risks faced by real
estate-related assets; tenant vacancy rates, tenant turnover and tenant
concentration have increased; owners of real estate have faced headwinds,
delinquencies and difficulties in collecting rents and other payments (which
increases the risk of owners being unable to pay or otherwise defaulting on
their own borrowings and obligations); property values have declined; inflation,
upkeep costs and other expenses have increased; and rents have declined for many
properties.
Exchanges and
securities markets may close early, close late or issue trading halts on
specific securities, or generally which may result in, among other things, a
Portfolio being unable to buy or sell certain securities or financial
instruments at an advantageous time or accurately price its portfolio
investments.
May
1, 2024 | Prospectus
31
PIMCO
Managed Accounts Trust
Mortgage-Related
and Other Asset-Backed Securities Risk
Mortgage-related
and other asset-backed securities represent
interests in “pools” of mortgages or other assets such as consumer loans or
receivables held in trust and often involve risks that are different from or
possibly more acute than risks associated with other types of debt instruments.
Generally, rising interest rates tend to extend the duration of fixed rate
mortgage-related securities, making them more sensitive to changes in interest
rates. Compared to other fixed income investments with similar maturity and
credit, mortgage-related
securities may increase
in value to a lesser extent when interest rates decline and may decline in value
to a similar or greater extent when interest rates rise. As a result, in a
period of rising interest rates, if a Portfolio holds mortgage-related
securities, it may exhibit additional volatility since individual mortgage
holders are less likely to exercise prepayment options, thereby putting
additional downward pressure on the value of these securities and potentially
causing a Portfolio to lose money. This is known as extension risk.
Mortgage-backed securities can be highly sensitive to rising interest rates,
such that even small movements can cause an investing Portfolio to lose value.
Mortgage-backed securities, and in particular those not backed by a government
guarantee, are subject to credit risk. In addition, adjustable and fixed rate
mortgage-related securities are subject to prepayment risk. When interest rates
decline, borrowers may pay off their mortgages sooner than expected. This can
reduce the returns of a Portfolio because the Portfolio may have to reinvest
that money at the lower prevailing interest rates. In addition, the
creditworthiness, servicing practices, and financial viability of the servicers
of the underlying mortgage pools present significant risks. For instance, a
servicer may be required to make advances in respect of delinquent loans
underlying the mortgage-related
securities ; however,
servicers experiencing financial difficulties may not be able to perform these
obligations. Additionally, both mortgage-related
securities and
asset-backed
securities are subject
to risks associated with fraud or negligence by, or defalcation of, their
servicers. These securities are also subject to the risks of the underlying
loans. In some circumstances, a servicer’s or originator’s mishandling of
documentation related to the underlying collateral (e.g., failure to properly
document a security interest in the underlying collateral) may affect the rights
of security holders in and to the underlying collateral. In addition, the
underlying loans may have been extended pursuant to inappropriate underwriting
guidelines, to no underwriting guidelines at all, or to fraudulent origination
practices. The owner of a mortgage-backed security’s ability to recover against
the sponsor, servicer or originator is uncertain and is often limited. A
Portfolio’s investments in other asset-backed securities are subject to risks
similar to those associated with mortgage-related securities, as well as
additional risks associated with the nature of the assets and the servicing of
those assets. FISH: Series M is particularly sensitive to mortgage risk because
the Portfolio normally invests substantially in mortgage-related securities.
Payment of principal and interest on asset-backed securities may be largely
dependent upon the cash flows generated by the assets backing the securities,
and asset-backed securities may not have the benefit of any security interest in
the related assets. A Portfolio may
invest in a tranche of mortgage-related or other asset-backed securities,
including junior and/or equity tranches (to the
extent consistent with other of the Portfolio's guidelines), which
generally carry higher levels of the
foregoing risks.
Additionally,
investments in subordinate mortgage-backed and other asset-backed securities
will be subject to risks arising from delinquencies and foreclosures, thereby
exposing a Portfolio’s investment portfolio to potential losses. Subordinate
securities of mortgage-backed and other asset-backed securities are also subject
to greater credit risk than those mortgage-backed or other asset-backed
securities that are more highly rated.
Municipal
Bond Market Risk
A Portfolio
that invests in the municipal bond market is subject to certain risks. The
amount of public information available about the municipal bonds held by a
Portfolio is generally less than that for corporate equities or bonds, and the
investment performance of the Portfolio may therefore be more dependent on the
analytical abilities of PIMCO than would be a stock fund or taxable bond fund.
The secondary market for municipal bonds, also tends to be less well-developed
or liquid than many other securities markets, which may adversely affect a
Portfolio’s ability to sell its bonds at attractive prices.
The ability
of municipal issuers to make timely payments of interest and principal may be
diminished during general economic downturns and as governmental cost burdens
are reallocated among federal, state and local governments. In addition, laws
enacted in the future by Congress or state legislatures or referenda could
extend the time for payment of principal and/or interest, or impose other
constraints on enforcement of such obligations or on the ability of municipal
issuers to levy taxes. Issuers of municipal securities might seek protection
under the bankruptcy laws. In the event of bankruptcy of such an issuer, a
Portfolio investing in the issuer’s securities could experience delays in
collecting principal and interest and the Portfolio may not, in all
circumstances, be able to collect all principal and interest to which it is
entitled. To enforce its rights in the event of a default in the payment of
interest or repayment of principal, or both, a Portfolio may take possession of,
and manage, the assets securing the issuer’s obligations on such securities,
which may increase the Portfolio’s operating expenses. Any income derived from
the Portfolio’s ownership or operation of such assets may not be tax-exempt.
More generally, the Portfolios other than FISH: Series TE do not expect to be
eligible to pass through to shareholders the tax-exempt character of interest
earned on municipal bonds.
Municipal
Project-Specific Risk
A Portfolio
may be more sensitive to adverse economic, business or political developments if
it invests a substantial portion of its assets in the bonds of specific projects
(such as those relating to education, health care, housing, transportation and
utilities), industrial development bonds, or in general obligation bonds,
particularly if there is a large concentration from issuers in a single state.
This is because the value of municipal securities can be
32 Prospectus | PIMCO Managed Accounts Trust
Prospectus
significantly
affected by the political, economic, legal and legislative realities of the
particular issuer’s locality or municipal sector events. In addition, a
significant restructuring of federal income tax rates or even serious discussion
on the topic in Congress could cause municipal bond prices to fall. The demand
for municipal securities is strongly influenced by the value of tax-exempt
income to investors. Lower income tax rates could reduce the advantage of owning
municipal securities. Similarly, changes to state or federal regulation tied to
a specific sector, such as the hospital sector, could have an impact on the
revenue stream for a given subset of the market.
Municipal
Securities Risk
Municipal
securities are debt obligations generally issued to obtain funds for various
public purposes, including general financing for state and local governments, or
financing for a specific project or public facility. Municipal securities may be
fully or partially backed by the taxing authority of the local government, by
the credit of a private issuer, by the current or anticipated revenues from a
specific project or specific assets or by domestic or foreign entities providing
credit support, such as letters of credit, guarantees or insurance, and are
generally classified into general obligation bonds and special revenue
obligations. General obligation bonds are backed by an issuer’s taxing authority
and may be vulnerable to limits on a government’s power or ability to raise
revenue or increase taxes. They may also depend for payment on legislative
appropriation and/or funding or other support from other governmental bodies.
Revenue obligations are payable from revenues generated by a particular project
or other revenue source, and are typically subject to greater risk of default
than general obligation bonds because investors can look only to the revenue
generated by the project or other revenue source backing the project, rather
than to the general taxing authority of the state or local government issuer of
the obligations. Because many municipal securities are issued to finance
projects in sectors such as education, health care, transportation and
utilities, conditions in those sectors can affect the overall municipal market.
Municipal securities generally pay interest that, in the opinion of bond
counsel, is free from U.S. federal income tax (and, in some cases, the federal
alternative minimum tax). There is no assurance that the Internal Revenue
Service (“IRS”) will agree with this opinion. In the event the IRS determines
that the issuer does not comply with relevant tax requirements, interest
payments from a security could become federally taxable, possibly retroactively
to the date the security was issued, and the value of the security would likely
fall. As a shareholder of FISH: Series TE, you may be required to file an
amended tax return and pay additional taxes as a result.
Municipal
securities are also subject to interest rate, credit and liquidity risk.
Interest
Rate risk: The value of
municipal securities, similar to other fixed income securities, will likely drop
as interest rates rise in the general market. Conversely, when rates decline,
bond prices generally rise.
Credit
Risk: The risk that
a borrower may be unable to make interest or principal payments when they are
due. Portfolios that invest in municipal securities rely on the ability of the
issuer to service its debt. This subjects a Portfolio to credit risk in that the
municipal issuer may be fiscally unstable or exposed to large liabilities that
could impair its ability to honor its obligations. Municipal issuers with
significant debt service requirements, in the near-to mid-term, unrated issuers
and those with less capital and liquidity to absorb additional expenses may be
most at risk. A Portfolio that invests in lower quality or high yield municipal
securities may be more sensitive to the adverse credit events in the municipal
market. The treatment of municipalities in bankruptcy is more uncertain, and
potentially more adverse to debt holders, than for corporate issues.
Liquidity
Risk: The risk that
investors may have difficulty finding a buyer when they seek to sell, and
therefore, may be forced to sell at a discount to the market value. Liquidity
may sometimes be impaired in the municipal market and Portfolios that primarily
invest in municipal securities may find it difficult to purchase or sell such
securities at opportune times. Liquidity can be impaired due to interest rate
concerns, credit events, or general supply and demand imbalances. These adverse
developments sometimes cause a Portfolio to endure higher redemption rates.
Depending on the particular issuer and current economic conditions, municipal
securities could be deemed more volatile investments.
In addition
to general municipal market risks, different municipal sectors may face
different risks. For instance, general obligation bonds are secured by the full
faith, credit and taxing power of the municipality issuing the obligation. As
such, timely payment depends on the municipality’s ability to raise tax revenue
and maintain a fiscally sound budget. The timely payments may also be influenced
by any unfunded pension liabilities or other post-employee benefit plan
liabilities.
Revenue bonds
are secured by special tax revenues or other revenue sources. If the specified
revenues do not materialize, then the bonds may not be repaid.
Private
activity bonds are yet another type of municipal security. Municipalities use
private activity bonds to finance the development of industrial facilities for
use by private enterprise. Principal and interest payments are to be made by the
private enterprise benefiting from the development, which means the holder of
the bond is exposed to the risk that the private issuer may default on the bond.
Moral
obligation bonds are usually issued by special purpose public entities. If the
public entity defaults, repayment becomes a “moral obligation” instead of a
legal one. The lack of a legally enforceable right to payment in the event of
default poses a special risk for a holder of the bond because it has little or
no ability to seek recourse in the event of default.
Municipal
notes are similar to general municipal debt obligations, but they generally
possess shorter terms. Municipal notes can be used to provide interim financing
and may not be repaid if anticipated revenues are not realized.
May
1, 2024 | Prospectus
33
PIMCO
Managed Accounts Trust
New
York State-Specific Risk
To the extent
a Portfolio concentrates its investments in New
York Municipal Bonds , the
Portfolio may be affected significantly by economic, regulatory or political
developments affecting the ability of New York issuers to pay interest or repay
principal. Certain issuers of New York Municipal Bonds have experienced serious
financial difficulties in the past and reoccurrence of these difficulties may
impair the ability of certain New York issuers to pay principal or interest on
their obligations. Provisions of the New York Constitution and State statutes
which limit the taxing and spending authority of New York governmental entities
may impair the ability of New York issuers to pay principal and/or interest on
their obligations. While New York’s economy is broad, it does have major
concentrations in certain industries, such as financial services, and may be
sensitive to economic problems affecting those industries. Future New York
political and economic developments, constitutional amendments, legislative
measures, executive orders, administrative regulations, litigation and voter
initiatives as well as environmental events, natural disasters, pandemics,
epidemics or social unrest could have an adverse effect on the debt obligations
of New York issuers to pay principal or interest on their obligations. The
financial health of New York City affects that of the State, and when New York
City experiences financial difficulty it may have an adverse effect on New York
Municipal Bonds held by the Portfolio. The growth rate of New York has at times
been somewhat slower than the nation overall. The economic and financial
condition of New York also may be affected by various financial, social,
economic and political factors.
Puerto
Rico-Specific Risk
A Portfolio
that invests in Municipal Bonds issued by Puerto Rico or its instrumentalities
may be affected by certain developments, such as political, economic,
environmental, social, regulatory or debt restructuring developments, that
impact the ability or obligation of Puerto Rico municipal issuers to pay
interest or repay principal. Certain issuers of Puerto
Rico Municipal Bonds have
experienced significant financial difficulties and the continuation or
reoccurrence of these difficulties may impair their ability to pay principal or
interest on their obligations. Provisions of the Puerto Rico Constitution and
Commonwealth laws, including a federally-appointed oversight board to oversee
the Commonwealth’s financial operations, which limit the taxing and spending
authority of Puerto Rico governmental entities, may impair the ability of Puerto
Rico issuers to pay principal and/or interest on their obligations. Puerto
Rico’s economy has sizable concentrations in certain industries, such as the
manufacturing and service industries, and may be sensitive to economic problems
affecting those industries. Future Puerto Rico-related developments, such as
political and economic developments, constitutional amendments, legislative
measures, executive orders, administrative regulations, litigation, debt
restructuring, and voter initiatives as well as environmental events, natural
disasters, pandemics, epidemics or social unrest could have an adverse effect on
the debt obligations of Puerto Rico issuers.
Small
Portfolio Risk
A smaller
portfolio may not grow to or maintain an economically viable size to achieve
investment or trading efficiencies, which may negatively impact performance
and/or force the portfolio to liquidate. Additionally, a smaller portfolio may
be more adversely affected by large purchases or redemptions of portfolio
shares, which can occur at any time and may impact the portfolio in the same
manner as a high volume of purchases or redemptions.
Sovereign
Debt Risk
Sovereign
debt risk is the risk that fixed income instruments issued by sovereign entities
may decline in value as a result of default or other adverse credit event
resulting from an issuer’s inability or unwillingness to make principal or
interest payments in a timely fashion. A sovereign entity’s failure to make
timely payments on its debt can result from many factors, including, without
limitation, insufficient foreign (non-U.S.) currency reserves or an inability to
sufficiently manage fluctuations in relative currency valuations, an inability
or unwillingness to satisfy the demands of creditors and/or relevant
supranational entities regarding debt service or economic reforms, the size of
the debt burden relative to economic output and tax revenues, cash flow
difficulties, and other political and social considerations. The risk of loss to
a Portfolio in the event of a sovereign debt default or other adverse credit
event is heightened by the unlikelihood of any formal recourse or means to
enforce its rights as a holder of the sovereign debt. In addition, sovereign
debt restructurings, which may be shaped by entities and factors beyond a
Portfolio’s control, may result in a loss in value of the Portfolio’s sovereign
debt holdings.
Turnover
Risk
A change in
the securities held by a Portfolio is known as “portfolio turnover.” Higher
portfolio turnover involves correspondingly greater expenses to a Portfolio,
including brokerage commissions or dealer mark-ups and other transaction costs
on the sale of securities and reinvestments in other securities. Such sales may
also result in realization of taxable capital gains, including short-term
capital gains (which are generally taxed as ordinary income when distributed to
individual shareholders), and may adversely impact a Portfolio’s after-tax
returns. The trading costs and tax effects associated with portfolio turnover
may adversely affect a Portfolio’s performance.
34 Prospectus | PIMCO Managed Accounts Trust
Prospectus
Disclosure
of Portfolio Holdings
Please see
“Disclosure of Portfolio Holdings” in the SAI for information about the
availability of the complete schedule of each Portfolio’s holdings.
May
1, 2024 | Prospectus
35
PIMCO
Managed Accounts Trust
Management
of the Portfolios
Investment
Adviser and Administrator
PIMCO serves
as the investment adviser and administrator to the Portfolios. Subject to the
supervision of the Board of Trustees, PIMCO is responsible for managing the
investment activities of the Portfolios. PIMCO, in its role as administrator, is
also responsible for managing the Portfolios’ business affairs and other
administrative matters. Effective as of the close of business on September 5,
2014, PIMCO replaced its affiliate Allianz Global Investors Fund Management LLC
as the investment adviser and administrator to the Portfolios. Prior thereto
PIMCO was responsible for day-to-day portfolio management services it provided
to each Portfolio as its sub-adviser.
PIMCO is
located at 650 Newport Center Drive, Newport Beach, CA 92660. Organized in 1971,
PIMCO provides investment management and advisory services to private accounts
of institutional and individual clients and to registered investment companies.
PIMCO is a majority-owned indirect subsidiary of Allianz SE, a publicly traded
European insurance and financial services company. As of December 31, 2023,
PIMCO had approximately $1.86 trillion in assets under management.
Advisory
and Other Fees
The
Portfolios do not pay any fees, including an advisory or administrative fee, to
PIMCO under the Investment Advisory Contract or the Supervision and
Administrative Agreement between the Trust and PIMCO. However, each Portfolio is
an integral part of “wrap-fee” programs, including those sponsored by investment
advisers and broker-dealers unaffiliated with the Portfolio or PIMCO.
Participants in these programs pay a “wrap” fee to the sponsor of the program.
You should read carefully the wrap-fee brochure provided to you by the sponsor
or your investment adviser for additional information on the “wrap” fee program.
The brochure is required to include information about the fees charged to you by
the sponsor and the fees paid by the sponsor to PIMCO and its affiliates. You
pay no additional fees or expenses to purchase shares of the Portfolios.
Pursuant to
an Expense Limitation Agreement between the Trust and PIMCO, PIMCO has
contractually agreed to waive all fees and/or pay or reimburse all expenses of
the Portfolios, including organizational and offering expenses and expenses
associated with obtaining or maintaining a Legal Entity Identifier, but
excluding any brokerage fees and commissions and other portfolio transaction
expenses, costs, including interest expenses, of borrowing money or engaging in
other types of leverage financing including, without limitation, through reverse
repurchase agreements, tender option bonds, bank borrowings and credit
facilities, fees and expenses of any underlying funds or other pooled vehicles
in which the Portfolio invests, taxes, governmental fees, dividends and interest
on short positions, and extraordinary expenses, including extraordinary legal
expenses. The Expense Limitation Agreement will continue in effect, unless
sooner terminated by the Trust’s Board of Trustees, for so long as PIMCO serves
as the investment adviser to the Portfolios pursuant to the Investment Advisory
Contract. See “Fees and Expenses of the Portfolio” for more information on these
arrangements with respect to each Portfolio.
A discussion
regarding the basis for the Board of Trustees’ approval of the Investment
Advisory Contract is available in the Portfolios’ semi-annual report to
shareholders for the period ended June 30, 2023.
Individual
Portfolio Managers
The following
individuals have or share primary responsibility for managing each of the noted
Portfolios.
|
Portfolio
|
Portfolio
Manager(s) |
Since
|
Recent
Professional Experience |
|
FISH:
Series C
FISH:
Series M |
David
L. Braun |
5/16
5/16
|
Managing
Director, PIMCO. Mr. Braun joined PIMCO in 2009 and is head of the U.S.
financial
institutions
group and stable value portfolio management teams and a senior member of
the
liability
driven investment and U.S. core portfolio management teams.
|
|
FISH:
Series TE |
Kyle
Christine |
4/23
|
Senior
Vice President, PIMCO. Mr. Christine is a senior vice president and
municipal bond
portfolio
manager in the Newport Beach office. He has previously served as a
rotating
member
of PIMCO's Americas portfolio committee. Prior to joining PIMCO in 2017,
he was
an
institutional high yield and taxable municipal bond trader at Morgan
Stanley. He has
investment
and financial services experience since 2013 and holds an undergraduate
degree
from
Union College (NY). |
|
FISH:
Series C
FISH:
Series M |
Mike
Cudzil |
10/22
10/22
|
Managing
Director, PIMCO. Mr. Cudzil is a portfolio manager and mortgage
specialist. Prior
to
joining PIMCO in 2012, he worked as a managing director and head of
pass-through
trading
at Nomura. |
|
FISH:
Series TE |
David
Hammer |
8/15
|
Managing
Director, PIMCO. Mr. Hammer is a managing director in the Newport Beach
office
and
head of municipal bond portfolio management, with oversight of the firm’s
municipal
investment
grade, high yield, taxable, and separately managed accounts. He is the
lead
portfolio
manager on PIMCO’s municipal bond fund complex, including investment
grade,
high
yield, state-specific, closed-end funds, and interval funds. Prior to
rejoining PIMCO in
2015,
he was a managing director at Morgan Stanley, where he was head of
municipal
trading,
risk management, and research. He has investment experience since 2002 and
holds
an
undergraduate degree from Syracuse University. |
36 Prospectus | PIMCO Managed Accounts Trust
Prospectus
|
Portfolio
|
Portfolio
Manager(s) |
Since
|
Recent
Professional Experience |
|
FISH:
Series R |
Daniel
He |
12/19
|
Executive
Vice President, PIMCO. Mr. He is a member of the liquid products group
specializing
in real return and mortgage-backed securities. Prior to joining PIMCO in
2011,
he
structured and traded derivative strategies for a global macro hedge fund.
He previously
developed
trading strategies at a hedge fund that focused on foreign exchange
volatility. He
has
investment experience since 2005 and holds an MBA from the University of
Chicago
Booth
School of Business. He also holds a master’s degree in financial
engineering and an
undergraduate
degree in computer science from the National University of Singapore.
|
|
FISH:
Series R |
Steve
Rodosky |
1/19
|
Managing
Director, PIMCO. Mr. Rodosky is a portfolio manager for real return and
U.S. long
duration
strategies. He leads the rates liquid products team and also leads talent
management
for portfolio management in the U.S. Prior to joining PIMCO in 2001, Mr.
Rodosky
was vice president of institutional sales with Merrill Lynch. He has 29
years of
investment
experience and holds a master's degree in financial markets from Illinois
Institute
of
Technology. He received an undergraduate degree from Villanova University.
|
|
FISH:
Series LD |
Jerome
Schneider |
12/13
|
Managing
Director, PIMCO. Mr. Schneider joined PIMCO in 2008. Prior to joining
PIMCO, he
served
as Senior Managing Director with Bear Stearns, specializing in credit and
mortgage-related
funding transactions. Mr. Schneider joined Bear Sterns in 1995.
|
|
FISH:
Series C
FISH:
Series M |
Vinayak
Seshasayee |
10/22
10/22
|
Executive
Vice President, PIMCO. Mr. Seshasayee is a generalist portfolio manager in
the
New
York office, leading Canadian portfolio management. He is a member of
PIMCO’s
Americas
portfolio committee. Previously, he was a portfolio manager on the MBS and
investment
grade credit desks and a member of PIMCO’s diversified income portfolio
management
team. Prior to joining PIMCO in 2013, he was a member of the fixed income
research
group at Morgan Stanley. He has 13 years of investment experience and
holds an
MBA
from the University of Chicago Booth School of Business. He received an
undergraduate
degree from the Indian Institute of Technology, Mumbai.
|
|
FISH:
Series LD |
Andrew
Wittkop |
12/13
|
Executive
Vice President, PIMCO. Mr. Wittkop is a portfolio manager focusing on
Treasury
bonds,
agencies and interest rate derivatives. He previously worked on the real
return desk.
Prior
to that, he was a portfolio analyst with the global portfolio management
team and a
product
manager for absolute return strategies. He has investment experience since
2001
and
holds an MBA from Stern School of Business at New York University and an
undergraduate
degree from the University of California, Los Angeles.
|
Please see
the SAI for additional information about other accounts managed by the portfolio
managers, the portfolio managers' compensation and the portfolio managers'
ownership of shares of the Portfolios.
Distributor
The Trust’s
Distributor is PIMCO Investments LLC (“Distributor”). The Distributor, located
at 1633 Broadway, New York, NY 10019, is a broker-dealer registered with the
SEC. Effective as of the close of business on September 5, 2014, PIMCO
Investments LLC replaced Allianz Global Investors Distributors LLC as the
distributor of the Portfolios.
Additional
Information
The Trustees
are responsible generally for overseeing the management of the Trust. The
Trustees authorize the Trust to enter into service agreements with the
Investment Adviser, the Distributor, the Administrator and other service
providers in order to provide, and in some cases authorize service providers to
procure through other parties, necessary or desirable services on behalf of the
Trust and the Portfolios. Shareholders are not parties to or third-party
beneficiaries of such service agreements.
Neither this
prospectus, any summary prospectus, the Trust’s SAI, any contracts filed as
exhibits to the Trust’s registration statement, nor any other communications,
disclosure documents or regulatory filings from or on behalf of the Trust or a
Portfolio creates a contract between or among any shareholder of a Portfolio, on
the one hand, and the Trust, a Portfolio, a service provider to the Trust or a
Portfolio, and/or the Trustees or officers of the Trust, on the other hand. The
Trustees (or the Trust and its officers, service providers or other delegates
acting under authority of the Trustees) may amend this, or use a new prospectus,
summary prospectus or SAI with respect to a Portfolio or the Trust, and/or
amend, file and/or issue any other communications, disclosure documents or
regulatory filings, and may amend or enter into any contracts to which the Trust
or a Portfolio is a party, and interpret the investment objective(s), policies,
restrictions and contractual provisions applicable to any Portfolio without
shareholder input or approval, except in circumstances in which shareholder
approval is specifically required by law (such as changes to fundamental
investment policies) or where a shareholder approval requirement is specifically
disclosed in the Trust’s then-current prospectus or SAI.
May
1, 2024 | Prospectus
37
PIMCO
Managed Accounts Trust
Purchases and
Redemptions
Eligible
Investors and Opening an Account
Shares of the
Portfolios may be purchased only by or on behalf of “wrap” account clients where
PIMCO or Virtus Fund Advisers, LLC (each, as applicable, the “Wrap Program
Adviser”) has an agreement to serve as investment adviser or sub-adviser to the
account with the wrap program sponsor (typically a registered investment
adviser, bank or broker-dealer) or directly with the client. A client agreement
to open an account typically may be obtained by contacting the wrap program
sponsor.
The
Portfolios intend to redeem shares held by or on behalf of a shareholder who
ceases to be an eligible investor as described above and each investor, by
purchasing shares, agrees to any such redemption.
There are no
maximum or minimum initial investment requirements imposed by the Portfolios.
Minimum investment amounts for investing in a Portfolio may be imposed by wrap
program sponsors, and can be found in the wrap-fee brochure provided to you by
the wrap program sponsor or your investment adviser. The broker-dealer acting on
behalf of an eligible client must submit a purchase or redemption order to the
Portfolios’ transfer agent, SS&C Global Investor & Distribution
Solutions, Inc., 330 West 9th Street, 5th Floor, Kansas City, Missouri 64105,
either directly or through an appropriate clearing agency (e.g., the National
Securities Clearing Corporation — Fund/SERV). The broker-dealer submitting an
initial or subsequent order to purchase Portfolio shares must arrange to have
federal funds wired to the transfer agent. Wiring instructions may be obtained
by calling 1-800-927-4648.
■
Other
Purchase Information Purchases of
Portfolio shares will normally be made only in full shares, but may be made in
fractional shares under certain circumstances. Certificates for shares will not
be issued.
Each
Portfolio reserves the right, in its sole discretion, to suspend the offering of
shares of the Portfolio or to reject any purchase order. Each Portfolio may do
so in consultation with the Wrap Program Adviser.
The Trust
typically does not offer or sell its shares to non-U.S. residents. For purposes
of this policy, a U.S. resident is defined as an account with (i) a U.S. address
of record and (ii) all account owners residing in the U.S. at the time of the
sale.
Other
Redemption Information
Redemption
proceeds will ordinarily be sent by wire. Redemption proceeds will normally be
wired within one to three business days after the redemption request, but may
take up to seven days. Shareholders who are no longer eligible to invest in the
Portfolios may receive their redemption proceeds by check. See “Eligible
Investors and Opening an Account” above.
Redemptions
of Portfolio shares may be made on any day the New York Stock Exchange (“NYSE”)
is open, but may be suspended when trading on the NYSE is restricted or during
an emergency which makes it impracticable for the applicable Portfolio to
dispose of its securities or to determine fairly the value of its net assets, or
during any other period as
permitted by
the SEC for the protection of investors. Under these and other unusual
circumstances, the Trust may suspend redemptions or postpone payments for more
than seven days, as permitted by law.
In order to
meet redemption requests, the Portfolios typically expect to use a combination
of sales of portfolio assets, holdings of cash and cash equivalents (including
cash flows into the Portfolios) and financing transactions (such as reverse
repurchase agreements). These methods of meeting redemption requests are
expected to be used regularly. The Portfolios reserve the right to use other
types of borrowings and interfund lending. The use of borrowings (such as a line
of credit) and interfund lending in order to meet redemption requests is
typically expected to be used only during stressed market conditions, if at all.
See “Characteristics and Risks of Securities and Investment Techniques—Reverse
Repurchase Agreements, Dollar Rolls and Other Borrowings” and the SAI for more
information.
It is highly
unlikely that shares would ever be redeemed in kind. However, in consideration
of the best interests of the remaining investors, and to the extent permitted by
law, each Portfolio reserves the right to pay any redemption proceeds in whole
or in part by a distribution in kind of securities held by the Portfolio in lieu
of cash. When shares are redeemed in kind, the investor should expect to incur
transaction costs upon the disposition of the securities received in the
distribution.
Calculation
of Share Price and Redemption Payments
When
Portfolio shares are purchased or redeemed, the price that is paid or received
is equal to the net asset value (“NAV”) of the shares, without any sales charges
or other fees. NAVs are ordinarily determined as of the close of regular trading
on the New York Stock Exchange (normally 4:00 p.m., Eastern time) (the “NYSE
Close”) on each day the New York Stock Exchange is open. See “How Portfolio
Shares are Priced.”
On any day
that the New York Stock Exchange (“NYSE”) closes earlier than 4:00 pm, Eastern
time (scheduled or unscheduled), the Portfolio reserves the right to: (i)
advance the time the NAV is calculated and, therefore, also the time by which
purchase and redemption orders must be received in order to receive that day’s
NAV or (ii) accept purchase and redemption orders until, and calculate its NAV
as of, the normally scheduled close of regular trading on the NYSE for that day.
The Portfolio generally does not accept purchase and redemption orders (or
calculate its NAV) on days that the NYSE is closed for business (scheduled or
unscheduled). However, on any day that the NYSE is closed when it would normally
be open for business, the Portfolio may accept purchase and redemption orders
until (and calculate its NAV as of) the normally scheduled close of regular
trading on the NYSE or such other time that the Portfolio may determine.
In most
cases, purchase and redemption orders are made based on instructions from the
Wrap Program Adviser, in its capacity as investment adviser or sub-adviser to
the applicable wrap account, to the broker-dealer who executes trades for the
account. Purchases and redemption orders may also be made by wrap account
sponsors or their affiliates from time to time. Purchase and redemption orders
are
38 Prospectus | PIMCO Managed Accounts Trust
Prospectus
processed at
the NAV next calculated after the broker-dealer receives the order on behalf of
the account. Orders received by the broker-dealer prior to the time a
Portfolio’s NAV is determined on a business day will be processed at that day’s
NAV, even if the order is received by the transfer agent after the Portfolio’s
NAV has been calculated that day, as long as the order is received by the
transfer agent prior to such time as agreed upon by the transfer agent and the
broker-dealer.
The
Portfolios do not calculate NAVs or process purchase or redemption orders on
days when the NYSE is closed. If a purchase or redemption order is made on a day
when the NYSE is closed, it will be processed on the next succeeding day when
the NYSE is open (at the succeeding day’s NAV).
Market
Timing Policy
In general,
the practice of “market timing,” which includes short-term or excessive trading
of mutual fund shares and other abusive trading practices, may have a
detrimental effect on a mutual fund and its shareholders. Depending upon various
factors such as the mutual fund’s size and the amount of its assets maintained
in cash, market timing by fund shareholders may interfere with the efficient
management of the fund’s portfolio, increase transaction costs and taxes, and
harm the performance of the fund and its shareholders. Because the Portfolios
are designed to be components of “wrap” accounts that also invest, at the
direction of the applicable Wrap Program Adviser, in individual securities and
other investments, Portfolio shares may be purchased or redeemed on a frequent
basis for rebalancing purposes or in order to invest new monies (including
through dividend reinvestment) or to accommodate reductions in account size. The
Portfolios are managed in a manner that is consistent with their role in the
“wrap” accounts. Because all purchase and redemption orders are initiated by the
applicable Wrap Program Adviser, “wrap” account clients are not in a position to
effect purchase and redemption orders and are, therefore, unable to directly
trade in Portfolio shares. Accordingly, the Board of Trustees has not adopted a
market timing policy for the Portfolios. However, each Portfolio reserves the
right to refuse purchase orders.
How
Portfolio Shares are Priced
The price of
a Portfolio’s shares is based on the Portfolio’s NAV. The NAV of a Portfolio’s
shares is determined by dividing the total value of a Portfolio’s portfolio
investments and other assets attributable to that Portfolio or class, less any
liabilities, by the total number of shares outstanding of that Portfolio or
class.
On each day
that the NYSE is open, Portfolio shares are ordinarily valued as of the NYSE
Close. Information that becomes known to the Portfolios or their agents after
the time as of which NAV has been calculated on a particular day will not
generally be used to retroactively adjust the price of a security or the NAV
determined earlier that day. If regular trading on the NYSE closes earlier than
scheduled, each Portfolio reserves the right to either (i) calculate its NAV as
of the earlier closing time or (ii) calculate its NAV as of the normally
scheduled close of regular trading on the NYSE for that day. Each Portfolio
generally does not calculate its NAV on days during which the NYSE is closed.
However, if the NYSE is
closed on a
day it would normally be open for business, each Portfolio reserves the right to
calculate its NAV as of the normally scheduled close of regular trading on the
NYSE for that day or such other time that the Portfolio may determine.
For purposes
of calculating NAV, portfolio securities and other assets for which market
quotations are readily available are valued at market value. A market quotation
is readily available only when that quotation is a quoted price (unadjusted) in
active markets for identical investments that the Portfolio can access at the
measurement date, provided that a quotation will not be readily available if it
is not reliable. Market value is generally determined on the basis of official
closing prices or the last reported sales prices. The Portfolios will normally
use pricing data for domestic equity securities received shortly after the NYSE
Close and do not normally take into account trading, clearances or settlements
that take place after the NYSE Close. A foreign (non-U.S.) equity security
traded on a foreign exchange or on more than one exchange is typically valued
using pricing information from the exchange considered by PIMCO to be the
primary exchange. If market value pricing is used, a foreign (non-U.S.) equity
security will be valued as of the close of trading on the foreign exchange, or
the NYSE Close, if the NYSE Close occurs before the end of trading on the
foreign exchange. Investments for which market quotations are not readily
available are valued at fair value as determined in good faith pursuant to Rule
2a-5 under the 1940 Act. As a general principle, the fair value of a security or
asset is the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the
measurement date. Pursuant to Rule 2a-5, the Board of Trustees has designated
PIMCO as the valuation designee (“Valuation Designee”) for each Portfolio to
perform the fair value determination relating to all Portfolio investments.
PIMCO may carry out its designated responsibilities as Valuation Designee
through various teams and committees. The Valuation Designee’s policies and
procedures govern the Valuation Designee’s selection and application of
methodologies for determining and calculating the fair value of portfolio
investments. The Valuation Designee may value Portfolio securities for which
market quotations are not readily available and other Portfolio assets utilizing
inputs from pricing services, quotation reporting systems, valuation agents and
other third-party sources (together, “Pricing Sources”). Domestic and foreign
(non-U.S.) fixed income securities, non-exchange traded derivatives, and equity
options are normally valued on the basis of quotes obtained from brokers and
dealers or Pricing Sources using data reflecting the earlier closing of the
principal markets for those securities. Prices obtained from Pricing Sources may
be based on, among other things, information provided by market makers or
estimates of market values obtained from yield data relating to investments or
securities with similar characteristics. Certain fixed income securities
purchased on a delayed-delivery basis are marked to market daily until
settlement at the forward settlement date. Exchange-traded options, except
equity options, futures and options on futures are valued at the settlement
price determined by the relevant exchange. Swap agreements are valued on the
basis of bid quotes obtained from brokers and dealers or market-based prices
supplied by Pricing Sources. With respect to any portion of a Portfolio’s assets
that
May
1, 2024 | Prospectus
39
PIMCO
Managed Accounts Trust
are invested
in one or more open-end management investment companies, other than
exchange-traded funds (“ETFs”), a Portfolio’s NAV will be calculated based upon
the NAVs of such investments.
If a foreign
(non-U.S.) equity security’s value has materially changed after the close of the
security’s primary exchange or principal market but before the NYSE Close, the
security may be valued at fair value. Foreign (non-U.S.) equity securities that
do not trade when the NYSE is open are also valued at fair value. With respect
to foreign (non-U.S.) equity securities, a Portfolio may determine the fair
value of investments based on information provided by Pricing Sources, which may
recommend fair value or adjustments with reference to other securities, indexes
or assets. In considering whether fair valuation is required and in determining
fair values, the Valuation Designee may, among other things, consider
significant events (which may be considered to include changes in the value of
U.S. securities or securities indexes) that occur after the close of the
relevant market and before the NYSE Close. A Portfolio may utilize modeling
tools provided by third-party vendors to determine fair values of non-U.S.
securities. For these purposes, unless otherwise determined by the Valuation
Designee, any movement in the applicable reference index or instrument (“zero
trigger”) between the earlier close of the applicable foreign market and the
NYSE Close may be deemed to be a significant event, prompting the application of
the pricing model (effectively resulting in daily fair valuations). Foreign
(non-U.S.) exchanges may permit trading in foreign (non-U.S.) equity securities
on days when the Trust is not open for business, which may result in a
Portfolio’s portfolio investments being affected when you are unable to buy or
sell shares.
Senior
secured floating rate loans will generally be valued at the mean of bid/ask
prices in the market for such loans, as provided by Pricing Sources. Senior
secured floating rate loans for which vendor prices are not available will be
valued at fair value, which is intended to approximate market value. In valuing
a senior secured floating rate loan at fair value, the factors considered may
include, but are not limited to, the following: (a) the creditworthiness of the
borrower and any intermediate participants, (b) the terms of the loan, (c)
recent prices in the market for similar loans, if any, and (d) recent prices in
the market for instruments of similar quality, rate, period until next interest
rate reset and maturity.
Investments
valued in currencies other than the U.S. dollar are converted to the U.S. dollar
using exchange rates obtained from Pricing Sources. As a result, the value of
such investments and, in turn, the NAV of a Portfolio’s shares may be affected
by changes in the value of currencies in relation to the U.S. dollar. The value
of investments traded in markets outside the United States or denominated in
currencies other than the U.S. dollar may be affected significantly on a day
that the Trust is not open for business. As a result, to the extent that a
Portfolio holds foreign (non-U.S.) investments, the value of those investments
may change at times when shareholders are unable to buy or sell shares and the
value of such investments will be reflected in the Portfolio’s next calculated
NAV.
Fair
valuation may require subjective determinations about the value of a security.
While the Trust’s and Valuation Designee's policies and procedures are intended
to result in a calculation of a Portfolio’s NAV that fairly reflects security
values as of the time of pricing, the Trust cannot ensure that fair values
accurately reflect the price that a Portfolio could obtain for a security if it
were to dispose of that security as of the time of pricing (for instance, in a
forced or distressed sale). The prices used by a Portfolio may differ from the
value that would be realized if the securities were sold.
Portfolio
Distributions
Each
Portfolio distributes substantially all of its net investment income to
shareholders in the form of dividends. Generally, you begin earning dividends on
the shares the day after a Portfolio receives your purchase payment. Each
Portfolio intends to declare dividends daily and distribute them monthly to
shareholders of record on the last business day of the month.
In addition,
each Portfolio distributes any net capital gains it earns from the sale of
portfolio securities to shareholders investing in the Portfolio no less
frequently than annually. Net short-term capital gains may be paid more
frequently.
A Portfolio’s
dividend and capital gain distributions will be paid only in cash. Dividends and
capital gains will not be reinvested in additional Portfolio shares.
Tax
Consequences
Treatment
as RIC
This section
summarizes some of the U.S. federal income tax consequences to U.S. persons of
investing in the Portfolios; the consequences under other tax laws and to
non-U.S. shareholders may differ. Shareholders should consult their tax advisors
as to the possible application of federal, state, local or non-U.S. income tax
laws. This summary is based on the Code, U.S. Treasury regulations, and other
applicable authority, all as of the date of this prospectus. These authorities
are subject to change by legislative or administrative action, possibly with
retroactive effect. Please see the SAI for additional information regarding the
tax aspects of investing in the Portfolios.
Each
Portfolio has elected and intends each year to qualify and be eligible to be
treated as a regulated investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended (the “Code”). A regulated investment company is
not subject to U.S. federal income tax at the corporate level on income and
gains that are distributed to shareholders. A Portfolio’s failure to qualify as
a regulated investment company would result in corporate-level taxation, thereby
reducing the return on your investment.
Taxes
on Portfolio Distributions
A shareholder
subject to U.S. federal income tax will generally be subject to tax on Portfolio
distributions, unless, in the case of FISH: Series TE, the distribution is
properly reported as an “exempt-interest
40 Prospectus | PIMCO Managed Accounts Trust
Prospectus
dividend.”
For U.S. federal income tax purposes, Portfolio distributions other than
exempt-interest dividends will generally be taxable to a shareholder as either
ordinary income or capital gains.
Portfolio
dividends consisting of distributions of investment income generally are taxable
to shareholders as ordinary income. Federal taxes on Portfolio distributions of
capital gains are determined by how long the Portfolio owned or is deemed to
have owned the investments that generated the capital gains, rather than how
long a shareholder has owned the shares. Distributions of net capital gains
(that is, the excess of net long-term capital gains over net short-term capital
losses, in each case determined with reference to any loss carryforwards) that
are properly reported by a Portfolio as capital gain dividends generally will be
treated as long-term capital gains includible in a shareholder’s net capital
gains and taxed to individuals at reduced rates. The Portfolios do not expect a
significant portion of their distributions to be treated as long-term capital
gains. Distributions of net short-term capital gains in excess of net long-term
capital losses generally will be taxable to you as ordinary income.
■
A
Note on FISH: Series TE Distributions. Distributions
to shareholders that FISH: Series TE properly reports to shareholders as
“exempt-interest dividends” are generally not subject to U.S. federal income
taxation, but may be subject to state and local taxes. In addition, a portion of
FISH: Series TE distributions may be included in the computation of federal and
state alternative minimum tax liability for individuals. FISH: Series TE may
invest a portion of its assets in securities that generate income that is not
exempt from U.S. federal income tax. Dividends attributable to taxable interest
or capital gains will be subject to federal income tax.
The Code
generally imposes a 3.8% Medicare contribution tax on the net investment income
of certain individuals, trusts and estates to the extent their income exceeds
certain threshold amounts. Net investment income generally includes for this
purpose dividends (other than exempt-interest dividends) paid by a Portfolio,
including any capital gain dividends, and including net capital gains recognized
on the sale, redemption or exchange of shares of a Portfolio. Shareholders are
advised to consult their tax advisors regarding the possible implications of
this additional tax on their investment in a Portfolio.
The ultimate
tax characterization of a Portfolio’s distributions made in a taxable year
cannot be determined finally until after the end of that taxable year. As a
result, there is a possibility that a Portfolio may make total distributions
during a taxable year in an amount that exceeds such Portfolio’s current and
accumulated earnings and profits. In that case, the excess generally would be
treated as return of capital and would reduce the shareholders’ tax basis in the
applicable shares, with any amounts exceeding such basis treated as gain from
the sale of such shares. A return of capital is not taxable, but it reduces a
shareholder’s tax basis in the shares, thus reducing any loss or increasing any
gain on a subsequent taxable disposition by the shareholder of the shares.
Portfolio
distributions are taxable to shareholders as described above even if they are
paid from income or gains earned by a Portfolio before a shareholder’s
investment (and thus were included in the price the shareholder paid).
A Portfolio’s
transactions in derivatives, short sales or similar transactions could affect
the amount, timing and character of distributions from the Portfolio, and could
increase the amount or accelerate the timing for payment of taxes payable by
shareholders. A Portfolio’s investments in certain debt instruments could cause
the Portfolio to recognize taxable income in excess of the cash generated by
such investments (which may require the Portfolio to sell investments in order
to make required distributions).
Income
received by a Portfolio from sources within foreign countries may be subject to
withholding and other taxes imposed by such countries, which will reduce the
Portfolio’s return on those investments. If eligible, a Portfolio may elect to
pass through to you a deduction or credit for foreign taxes. If the Portfolio so
elects, shareholders will include in gross income from foreign sources their pro
rata shares of such taxes, if any, paid by the Portfolio. There can be no
assurance that a Portfolio will make such election, even if it is eligible to do
so. If the Portfolio does not qualify for or does not make such election,
shareholders will not be entitled separately to claim a credit or deduction with
respect to foreign taxes paid by the Portfolio; in that case the foreign tax
will nonetheless reduce the Portfolio’s taxable income. A Portfolio’s
investments in non-U.S. securities (other than equity securities) or foreign
currencies may increase or accelerate the Portfolio’s recognition of ordinary
income and may affect the timing or amount of the Portfolio’s distributions.
Taxes
When You Sell (Redeem) Your Shares
Any gain
resulting from the sale or redemption of Portfolio shares generally will be
taxable to shareholders as capital gains for U.S. federal income tax purposes.
Backup
Withholding
Each
Portfolio generally is required to withhold and remit to the U.S. Treasury a
percentage of the taxable distributions and redemption proceeds paid to any
shareholder who fails to properly furnish the Portfolio with a correct taxpayer
identification number, who has under-reported dividend or interest income, or
who fails to certify to the Portfolio that he, she or it is not subject to such
withholding. The backup withholding rules may also apply to distributions that
are properly reported as exempt-interest dividends.
Characteristics
and Risks of Securities and Investment Techniques
This section
provides additional information about some of the principal investments and
related risks of the Portfolios identified under “Portfolio Summaries” and
“Description of Principal Risks” above. It also describes characteristics and
risks of additional securities and investment techniques that may be used by the
Portfolios from time to time. Most of these securities and investment techniques
described
May
1, 2024 | Prospectus
41
PIMCO
Managed Accounts Trust
herein are
discretionary, which means that PIMCO can decide whether to use them or not.
This prospectus does not attempt to disclose all of the various types of
securities and investment techniques that may be used by the Portfolios. As with
any fund, investors in the Portfolios rely on the professional investment
judgment and skill of PIMCO and the individual portfolio managers. Please see
“Investment Objectives and Policies” in the SAI for more detailed information
about the securities and investment techniques described in this section and
about other strategies and techniques that may be used by the Portfolios.
Investors
should be aware that the investments made by a Portfolio and the results
achieved by a Portfolio at any given time, including for
the same or similar instruments, are not expected to be the same as those made
by other funds for which PIMCO acts as investment adviser, including funds with
names, investment objectives and policies and/or portfolio management teams,
similar to a Portfolio. This may be attributable to a wide variety of factors,
including, but not limited to, the use of a different strategy or portfolio
management team, the execution
venue(s) used for a given strategy or Portfolio, when a particular fund
commenced operations or the size of a particular fund, in each case as compared
to other similar funds. Significant shareholder purchases and redemptions may
adversely impact a Portfolio’s portfolio management. For example, a Portfolio
may be forced to sell a comparatively large portion of its portfolio to meet
significant shareholder redemptions, or hold a comparatively large portion of
its portfolio in cash due to significant shareholder purchases, in each case
when the Portfolio otherwise would not seek to do so. Such shareholder
transactions may cause the Portfolios to make investment decisions at
inopportune times or prices or miss attractive investment opportunities. Such
transactions may also increase a Portfolio’s transaction costs, accelerate the
realization of taxable income if sales of securities resulted in gains, or
otherwise cause a Portfolio to perform differently than intended. Similarly,
significant shareholder purchases may adversely affect a Portfolio’s performance
to the extent the Portfolio is delayed in investing new cash and, as a result,
holds a proportionally larger cash position than under ordinary circumstances.
While such risks may apply to a Portfolio of any size, such risks are heightened
in a Portfolio with fewer assets under management. In addition, new Portfolios
may not be able to fully implement their investment strategy immediately upon
commencing investment operations, which could reduce investment performance.
More
generally, a Portfolio may be adversely affected when a large shareholder
purchases or redeems large amounts of shares, which can occur at any time and
may impact the Portfolio in the same manner as a high volume of purchase or
redemption requests. Such large shareholders include, but are not limited to,
other portfolios, institutional investors, and asset allocators who make
investment decisions on behalf of underlying clients. Large shareholder
transactions may cause Portfolios to make investment decisions at inopportune
times or prices or miss attractive investment opportunities. In addition, such
transactions may also cause the Portfolio to sell certain assets in order to
meet purchase or redemption requests, which could indirectly affect the
liquidity of the Portfolio’s portfolio. Such transactions may also increase the
Portfolio’s transaction costs, decrease economies of scale,
accelerate
the realization of taxable income, or otherwise cause the Portfolio to perform
differently than intended. While large shareholder transactions may be more
frequent under certain circumstances, the Portfolio is generally subject to the
risk that a large shareholder can purchase or redeem a significant percentage of
Portfolio shares at any time. Moreover, the Portfolio is subject to the risk
that other shareholders may make investment decisions based on the choices of a
large shareholder, which could exacerbate any potential negative effects
experienced by the Portfolio.
Investment
Selection
FISH: Series
C, FISH: Series M and FISH: Series LD seek maximum total return, and FISH:
Series R seeks maximum real return, in each case consistent with preservation of
capital and prudent investment management. The total return sought by FISH:
Series C, FISH: Series M and FISH: Series LD consists of both income earned on
investments and capital appreciation, if any, arising from increases in the
market value of a Portfolio’s holdings. The real return sought by FISH: Series R
equals total return less the estimated cost of inflation, which is typically
measured by the change in an official inflation measure. FISH: Series TE seeks
high current income exempt from U.S. federal income tax consistent with prudent
investment management, and total return/capital appreciation is a secondary
objective. Capital appreciation of fixed income securities generally results
from decreases in market interest rates, foreign currency appreciation, or
improving credit fundamentals for a particular market sector or security.
In selecting
securities for a Portfolio, PIMCO develops an outlook for interest rates,
currency exchange rates and the economy, analyzes credit and call risks; and
uses other security selection techniques. The proportion of a Portfolio’s assets
committed to investment in securities with particular characteristics (such as
quality, sector, interest rate or maturity) varies based on PIMCO’s outlook for
the U.S. economy and the economies of other countries in the world, the
financial markets and other factors. In selecting investments for a Portfolio,
PIMCO may use proprietary quantitative models that are developed and maintained
by PIMCO, and which are subject to change over time without notice in PIMCO’s
discretion.
With respect
to fixed income investing, PIMCO attempts to identify areas of the bond market
that are undervalued relative to the rest of the market. PIMCO identifies these
areas by grouping Fixed Income Instruments into sectors such as money markets,
governments, corporates, mortgages, asset-backed and international. In seeking
to identify undervalued currencies, PIMCO may consider many factors, including
but not limited to longer-term analysis of relative interest rates, inflation
rates, real exchange rates, purchasing power parity, trade account balances and
current account balances, as well as other factors that influence exchange rates
such as flows, market technical trends and government policies. Sophisticated
proprietary software then assists in evaluating sectors and pricing specific
investments. Once investment opportunities are identified, PIMCO will shift
assets among sectors depending upon changes in relative valuations, credit
spreads and other factors. There is no guarantee that PIMCO’s investment
selection techniques will produce the desired results.
42 Prospectus | PIMCO Managed Accounts Trust
Prospectus
Fixed
Income Instruments
“Fixed Income
Instruments,” as used generally in this Prospectus, includes:
■
securities
issued or guaranteed by the U.S. Government, its agencies or
government-sponsored enterprises (“U.S. Government Securities”);
■
corporate
debt securities of U.S. and non-U.S. issuers, including convertible securities
and corporate commercial paper;
■
mortgage-backed
and other asset-backed securities;
■
inflation-indexed
bonds issued both by governments and corporations;
■
structured
notes, including hybrid or “indexed” securities and event-linked bonds;
■
bank capital
and trust preferred securities;
■
loans,
including
participations in and assignments thereof;
■
delayed
funding loans and revolving credit facilities;
■
bank
certificates of deposit, fixed time deposits and bankers’ acceptances;
■
repurchase
agreements and reverse repurchase agreements on Fixed Income Instruments;
■
debt
securities issued by states or local governments and their agencies, authorities
and other government-sponsored enterprises;
■
obligations
of non-U.S. governments or their subdivisions, agencies and government-sponsored
enterprises;
■
obligations
of international agencies or supranational entities; and
■
floating and
variable rate debt instruments.
Securities
issued by U.S. Government agencies or government-sponsored enterprises may not
be guaranteed by the U.S. Treasury.
The
Portfolios, to the extent permitted by the 1940 Act, the rules thereunder or
exemptive relief therefrom, may invest in derivatives based on Fixed Income
Instruments.
Duration
Duration is a
measure used to determine the sensitivity of a security’s price to changes in
interest rates that incorporates a security’s yield, coupon, final maturity and
call features, among other characteristics. The longer a security’s duration,
the more sensitive it will be to changes in interest rates. Similarly, a
portfolio with a longer average portfolio duration will be more sensitive to
changes in interest rates than a portfolio with a shorter average portfolio
duration. By way of example, the price of a bond fund with an average duration
of eight years would be expected to fall approximately 8% if interest rates rose
by one percentage point. Conversely,
the price of a bond fund with an average duration of negative three years would
be expected to rise approximately 3% if interest rates rose by one percentage
point. The maturity of a security, another commonly used measure of price
sensitivity, measures only the time until final payment is due, whereas duration
takes into account the pattern of all payments of interest and principal on a
security over time, including how these payments are
affected by
prepayments and by changes in interest rates, as well as the time until an
interest rate is reset (in the case of variable-rate securities). PIMCO uses an
internal model for calculating duration, which may result in a different value
for the duration of an index compared to the duration calculated by the index
provider or another third party.
U.S.
Government Securities
U.S.
Government Securities are obligations of, or guaranteed by, the U.S. Government,
its agencies or government-sponsored enterprises. The U.S. Government does not
guarantee the NAV of a Portfolio’s shares. U.S. Government Securities are
subject to market and interest rate risk, as well as varying degrees of credit
risk. Some U.S. Government Securities are issued or guaranteed by the U.S.
Treasury and are supported by the full faith and credit of the United States.
Other types of U.S. Government Securities are supported by the full faith and
credit of the United States (but not issued by the U.S. Treasury). These
securities may have less credit risk than U.S. Government Securities not
supported by the full faith and credit of the United States. Such other types of
U.S. Government Securities are: (1) supported by the ability of the issuer to
borrow from the U.S. Treasury; (2) supported only by the credit of the issuing
agency, instrumentality or government-sponsored corporation; or (3) supported by
the United States in some other way. These securities may be subject to greater
credit risk. U.S. Government Securities include zero coupon securities, which do
not distribute interest on a current basis and tend to be subject to greater
market risk than interest-paying securities of similar maturities. The U.S.
Government Securities in which a Portfolio may invest
may pay fixed, floating, variable, or adjustable interest rates. Investments in
zero-coupon securities generally require a Portfolio to accrue and distribute
income not yet received. As a result, in order to generate cash to make the
requisite distributions, the Portfolio may be required to sell securities in its
portfolio that it would otherwise have continued to hold. Please see “Taxation”
in the SAI for more information.
Securities
issued by U.S. Government agencies or government-sponsored enterprises may not
be guaranteed by the U.S. Treasury. Government National Mortgage Association
(“GNMA”), a wholly-owned U.S. Government corporation, is authorized to
guarantee, with the full faith and credit of the U.S. Government, the timely
payment of principal and interest on securities issued by institutions approved
by GNMA and backed by pools of mortgages insured by the Federal Housing
Administration or guaranteed by the Department of Veterans Affairs.
Government-related guarantors ( i.e.
, not backed
by the full faith and credit of the U.S. Government) include the Federal
National Mortgage Association (“FNMA”) and the Federal Home Loan Mortgage
Corporation (“FHLMC”). Pass-through securities issued by FNMA are guaranteed as
to timely payment of principal and interest by FNMA but are not backed by the
full faith and credit of the U.S. Government. FHLMC guarantees the timely
payment of interest and ultimate collection of principal, but its participation
certificates are not backed by the full faith and credit of the U.S. Government.
May
1, 2024 | Prospectus
43
PIMCO
Managed Accounts Trust
Corporate
Debt Securities
Corporate
debt securities are subject to the risk of the issuer’s inability to meet
principal and interest payments on the obligation and may also be subject to
price volatility due to such factors as interest rate sensitivity, market
perception of the creditworthiness of the issuer and general market liquidity.
When interest rates rise, the value of corporate debt securities can be expected
to decline. Debt securities with longer maturities tend to be more sensitive to
interest rate movements than those with shorter maturities. In addition, certain
corporate debt securities may be highly customized and as a result may be
subject to, among others, liquidity and pricing transparency risks.
Mortgage-Related
and Other Asset-Backed Securities
Each
Portfolio may invest in mortgage-related securities and in other asset-backed
securities. FISH: Series M invests principally in these securities and may
invest its assets without limit in these and other asset-backed securities.
FISH: Series C and FISH: Series LD may also invest their assets without limit in
these and other asset-backed securities. Mortgage-related securities include
mortgage pass-through securities, collateralized mortgage obligations (“CMOs”),
commercial mortgage-backed securities, mortgage dollar rolls, CMO residuals,
stripped mortgage-backed securities (“SMBSs”) and other securities that directly
or indirectly represent a participation in, or are secured by and payable from,
mortgage loans on real property. A to-be-announced (“TBA”) transaction is a
method of trading mortgage-backed securities. In a TBA transaction, the buyer
and seller agree upon general trade parameters such as agency, settlement date,
par amount and price. The actual pools delivered generally are determined two
days prior to the settlement date.
The value of
some mortgage-related and other asset-backed securities may be particularly
sensitive to changes in prevailing interest rates. Early repayment of principal
on some mortgage-related securities may expose a Portfolio to a lower rate of
return upon reinvestment of principal. When interest rates rise, the value of a
mortgage-related security generally will decline; however, when interest rates
are declining, the value of mortgage-related securities with prepayment features
may not increase as much as other fixed income securities. The rate of
prepayments on underlying mortgages will affect the price and volatility of a
mortgage-related security, and may shorten or extend the effective maturity of
the security beyond what was anticipated at the time of purchase. If
unanticipated rates of prepayment on underlying mortgages increase the effective
maturity of a mortgage-related security, the volatility of the security can be
expected to increase. See “Extension Risk” and “Prepayment Risk” below. The
value of these securities may fluctuate in response to the market’s perception
of the creditworthiness of the issuers. Additionally, although mortgages and
mortgage-related securities are generally supported by some form of government
or private guarantee and/or insurance, there is no assurance that guarantors or
insurers will meet their obligations.
FISH: Series
C, FISH: Series M, FISH: Series R and FISH: Series LD may also invest in in any
level of the capital structure of an issuer of mortgage-backed or asset-backed
securities, including the equity or
“first loss”
tranche, which may be referred to as subordinate mortgage-backed or asset-backed
securities and interest-only mortgage-backed or asset-backed securities, subject
to any other restrictions described in the Portfolios’ prospectus or SAI in
effect from time to time. Subordinate mortgage-backed or asset-backed securities
are paid interest only to the extent that there are funds available to make
payments. To the extent the collateral pool includes a large percentage of
delinquent loans, there is a risk that interest payment on subordinate
mortgage-backed or asset-backed securities will not be fully paid. There are
multiple tranches of mortgage-backed and asset-backed securities, offering
investors various maturity and credit risk characteristics. Tranches are
categorized as senior, mezzanine, and subordinated/equity or “first loss,”
according to their degree of risk. The most senior tranche of a mortgage-backed
or asset-backed security has the greatest collateralization and pays the lowest
interest rate. If there are defaults or the collateral otherwise underperforms,
scheduled payments to senior tranches take precedence over those of mezzanine
tranches, and scheduled payments to mezzanine tranches take precedence over
those to subordinated/equity tranches. Lower tranches represent lower degrees of
credit quality and pay higher interest rates intended to compensate for the
attendant risks. The return on the lower tranches is especially sensitive to the
rate of defaults in the collateral pool. The lowest tranche (i.e. the “equity”
or “residual” tranche) specifically receives the residual interest payments
(i.e., money that is left over after the higher tranches have been paid and
expenses of the issuing entities have been paid) rather than a fixed interest
rate. The Portfolios expect that investments in subordinate mortgage-backed and
other asset-backed securities will be subject to risks arising from
delinquencies and foreclosures, thereby exposing its investment portfolio to
potential losses. Subordinate securities of mortgage-backed and other
asset-backed securities are also subject to greater credit risk than those
mortgage-backed or other asset-backed securities that are more highly rated.
■
Extension
Risk. Mortgage-related
and other asset-backed securities are subject to Extension Risk, which is the
risk that the issuer of such a security pays back the principal of such an
obligation later than expected. This may occur when interest rates rise. This
may negatively affect Portfolio returns, as the value of the security decreases
when principal payments are made later than expected. In addition, because
principal payments are made later than expected, the Portfolios may be prevented
from investing proceeds it would otherwise have received at a given time at the
higher prevailing interest rates.
■
Prepayment
Risk. Mortgage-related
and other asset-backed securities are subject to Prepayment Risk, which is the
risk that the issuer of such a security pays back the principal of such an
obligation earlier than expected (due to the sale of the underlying property,
refinancing, or foreclosure). This may occur when interest rates decline.
Prepayment may expose the Portfolios to a lower rate of return upon reinvestment
of principal. Also, if a security subject to prepayment has been purchased at a
premium, the value of the premium would be lost in the event of prepayment.
44 Prospectus | PIMCO Managed Accounts Trust
Prospectus
One type of
SMBS has one class receiving all of the interest from the mortgage assets (the
interest-only, or “IO” class), while the other class will receive all of the
principal (the principal-only, or “PO” class). The yield to maturity on an IO
class is extremely sensitive to the rate of principal payments (including
prepayments) on the underlying mortgage assets, and a rapid rate of principal
payments may have a material adverse effect on a Portfolio’s yield to maturity
from these securities. FISH: Series C and FISH: Series M may not invest more
than 40% of their net assets, and FISH: Series R may not invest more than 20% of
its net assets, in any combination of interest only (“IO”), principal-only
(“PO”) or inverse floating rate securities.
The
Portfolios may invest in each of collateralized bond obligations (“CBOs”),
collateralized loan obligations (“CLOs”), other collateralized debt obligations
(“CDOs”) and other similarly structured securities. CBOs, CLOs and other CDOs
are types of asset-backed securities. A CBO is a trust which is backed by a
diversified pool of high-risk, below investment grade fixed income securities. A
CLO is a trust typically collateralized by a pool of loans, which may include,
among others, domestic and foreign senior secured loans, senior unsecured loans,
and subordinate corporate loans, including loans that may be rated below
investment grade or equivalent unrated loans. Other CDOs are trusts backed by
other types of assets representing obligations of various parties. Each
Portfolio may invest in other asset-backed securities that have been offered to
investors.
■
Privately
Issued Mortgage-Related Securities. Pools created
by non-governmental issuers generally offer a higher rate of interest than
government and government-related pools because there are no direct or indirect
government or agency guarantees of payments in such pools. Privately issued
mortgage-related securities are not subject to the same underwriting
requirements for the underlying mortgages that are applicable to those
mortgage-related securities that have a government or government-sponsored
entity guarantee. As a result, the mortgage loans underlying privately issued
mortgage-related securities may, and frequently do, have less favorable
collateral, credit risk or other underwriting characteristics than government or
government-sponsored mortgage-related securities and have wider variances in a
number of terms including interest rate, term, size, purpose and borrower
characteristics. The risk of nonpayment is greater for mortgage-related
securities that are backed by loans that were originated under weak underwriting
standards, including loans made to borrowers with limited means to make
repayment. A level of risk exists for all loans, although, historically, the
poorest performing loans have been those classified as subprime. Privately
issued mortgage-related securities are not traded on an exchange and there may
be a limited market for the securities, especially when there is a perceived
weakness in the mortgage and real estate market sectors. Without an active
trading market, mortgage-related securities held in a Portfolio’s portfolio may
be particularly difficult to value because of the complexities involved in
assessing the value of the underlying mortgage loans.
Privately
Issued Commercial Mortgage-Related Securities include securities that reflect an
interest in, and are secured by, mortgage loans on commercial real property.
Many of the risks of investing in commercial mortgage-backed securities reflect
the risks of investing in the real estate securing the underlying mortgage
loans. These risks reflect the effects of local and other economic conditions on
real estate markets, the ability of tenants to make loan payments, and the
ability of a property to attract and retain tenants.
Reinvestment
Each
Portfolio may be subject to the risk that the returns of a Portfolio will
decline during periods of falling interest rates because the Portfolio may have
to reinvest the proceeds from matured, traded or called debt obligations at
interest rates below the Portfolio’s current earnings rate. For instance, when
interest rates decline, an issuer of debt obligations may exercise an option to
redeem securities prior to maturity, thereby forcing the Portfolio to invest in
lower-yielding securities. A Portfolio also may choose to sell higher-yielding
portfolio securities and to purchase lower-yielding securities to achieve
greater portfolio diversification, because the Portfolio’s portfolio managers
believe the current holdings are overvalued or for other investment-related
reasons. A decline in the returns received by a Portfolio from its investments
is likely to have an adverse effect on the Portfolio’s NAV, yield and total
return.
Focused
Investment
To the extent
that a Portfolio focuses its investments in a particular sector, the Portfolio
may be susceptible to loss due to adverse developments affecting that sector.
These developments include, but are not limited to, governmental regulation;
inflation; rising interest rates; cost increases in raw materials, fuel and
other operating expenses; technological innovations that may render existing
products and equipment obsolete; competition from new entrants; high research
and development costs; contagion risk within a particular industry or sector;
increased
costs associated with compliance with environmental or other governmental
regulations; and other economic, business or political developments specific to
that sector. Furthermore, a Portfolio may invest a substantial portion of its
assets in companies in related sectors that may share common characteristics,
are often subject to similar business risks and regulatory burdens, and whose
securities may react similarly to the types of developments described above,
which will subject the Portfolio to greater risk. A Portfolio also will be
subject to focused investment risk to the extent that it invests a substantial
portion of its assets in a particular issuer, market, asset class, country or
geographic region.
Inflation-Indexed
Bonds
FISH: Series
R ordinarily expects to invest a substantial portion of its assets in
inflation-indexed bonds. Inflation-indexed bonds (other than municipal
inflation-indexed bonds and certain corporate inflation-indexed bonds, which are
more fully described below) are fixed income securities whose principal value is
periodically adjusted according to the rate of inflation. If the index measuring
inflation falls, the principal value of inflation-indexed bonds (other than
municipal
May
1, 2024 | Prospectus
45
PIMCO
Managed Accounts Trust
inflation-indexed
bonds and certain corporate inflation-indexed bonds) will be adjusted downward,
and consequently the interest payable on these securities (calculated with
respect to a smaller principal amount) will be reduced. Repayment of the
original bond principal upon maturity (as adjusted for inflation) is guaranteed
in the case of TIPS. For bonds that do not provide a similar guarantee, the
adjusted principal value of the bond repaid at maturity may be less than the
original principal. TIPS may also be divided into individual zero-coupon
instruments for each coupon or principal payment (known as “iSTRIPS”). An iSTRIP
of the principal component of a TIPS issue will retain the embedded deflation
floor that will allow the holder of the security to receive the greater of the
original principal or inflation-adjusted principal value at maturity. iSTRIPS
may be less liquid than conventional TIPS because they are a small component of
the TIPS market. Municipal inflation-indexed securities are municipal bonds that
pay coupons based on a fixed rate plus the Consumer Price Index. With regard to
municipal inflation-indexed bonds and certain corporate inflation-indexed bonds,
the inflation adjustment is typically reflected in the semi-annual coupon
payment. As a result, the principal value of municipal inflation-indexed bonds
and such corporate inflation-indexed bonds does not adjust according to the rate
of inflation. At the same time, the value of municipal inflation-indexed
securities and such corporate inflation-indexed securities generally will not
increase if the rate of inflation decreases. Because municipal inflation-indexed
securities and corporate inflation-indexed securities are a small component of
the municipal bond and corporate bond markets, respectively, they may be less
liquid than conventional municipal and corporate bonds. The value of
inflation-indexed bonds is expected to change in response to changes in real
interest rates. Real interest rates are tied to the relationship between nominal
interest rates and the rate of inflation. If nominal interest rates increase at
a faster rate than inflation, real interest rates may rise, leading to a
decrease in value of inflation-indexed bonds. Short-term increases in inflation
may lead to a decline in value. Any increase in the principal amount of an
inflation-indexed bond will be considered taxable ordinary income, even though
investors do not receive their principal until maturity. As a result, in order
to generate cash to make the requisite distributions, a Portfolio may be
required to sell securities in its portfolio (including when it is not
advantageous to do so) that it would otherwise have continued to hold. Please
see “Taxation” in the SAI for more information.
Variable
and Floating Rate Securities
Variable and
floating rate securities are securities that pay interest at rates that adjust
whenever a specified interest rate changes and/or that reset on predetermined
dates (such as the last day of a month or a calendar quarter). In addition to
senior loans, variable- and floating-rate instruments may include, without
limit, instruments such as catastrophe and other event-linked bonds, bank
capital securities, unsecured bank loans, corporate bonds, money market
instruments and certain types of mortgage-related and other asset-backed
securities. Each Portfolio may invest in floating rate debt instruments
(“floaters”) and engage in credit spread trades. A credit spread trade is an
investment position relating to a difference in the prices or interest rates of
two bonds or other
securities,
in which the value of the investment position is determined by changes in the
difference between the prices or interest rates as the case may be, of the
respective securities. Variable and floating rate securities generally are less
sensitive to interest rate changes but may decline in value if their interest
rates do not rise as much, or as quickly, as interest rates in general.
Conversely, floating rate securities will not generally increase in value if
interest rates decline. Each Portfolio may also invest in inverse floating rate
debt instruments (“inverse floaters”). An inverse floater may exhibit greater
price volatility than a fixed rate obligation of similar credit quality.
Residual interest bonds are a type of inverse floater. See “Municipal Bonds”
below. FISH: Series C and FISH: Series M may not invest more than 40% of their
net assets, and FISH: Series R may not invest more than 20% of its net assets,
in any combination of IO, PO, or inverse floating rate securities.
When a
Portfolio holds variable- or floating-rate securities, a decrease (or, in the
case of inverse floating-rate securities, an increase) in market interest rates
will adversely affect the income received from such securities and the net asset
value of the Portfolio’s shares. Certain of a Portfolio’s investments, including
variable- and floating-rate securities, may require the Portfolio to accrue and
distribute income not yet received. As a result, in order to generate cash to
make the requisite distributions, the Portfolio may be required to sell
securities in its portfolio that it would otherwise have continued to hold.
Please see “Taxation” in the SAI for more information.
Foreign
(Non-U.S.) Securities
Certain
Portfolios may invest in securities and instruments that are economically tied
to foreign (non-U.S.) countries. PIMCO generally considers an instrument to be
economically tied to a non-U.S. country if the issuer is a foreign (non-U.S.)
government (or any political subdivision, agency, authority or instrumentality
of such government), or if the issuer is organized under the laws of a non-U.S.
country. Certain Portfolio’s investments in foreign (non-U.S.) securities may
include American Depositary Receipts (“ADRs”), European Depositary Receipts
(“EDRs”), Global Depositary Receipts (“GDRs”) and similar securities that
represent interests in a non-U.S. company’s securities that have been deposited
with a bank or trust and that trade on a U.S. exchange or OTC. ADRs, EDRs and
GDRs may be less liquid or may trade at a different price than the underlying
securities of the issuer. In the case of money market instruments other than
commercial paper and certificates of deposit, such instruments will be
considered economically tied to a non-U.S. country if the issuer of such money
market instrument is organized under the laws of a non-U.S. country. In the case
of commercial paper and certificates of deposit, such instruments will be
considered economically tied to a non-U.S. country if the “country of exposure”
of such instrument is a non-U.S. country, as determined by the criteria set
forth below. With respect to derivative instruments, PIMCO generally considers
such instruments to be economically tied to non-U.S. countries if the underlying
assets are foreign currencies (or baskets or indexes of such currencies), or
instruments or securities that are issued by foreign governments or issuers
organized under the laws of a non-U.S. country (or if the underlying assets are
money market instruments other than commercial paper and certificates of
deposit, the
46 Prospectus | PIMCO Managed Accounts Trust
Prospectus
issuer of
such money market instrument is organized under the laws of a non-U.S. country
or, in the case of underlying assets that are commercial paper or certificates
of deposit, if the “country of exposure” of such money market instrument is a
non-U.S. country). A security’s “country of exposure” is determined by PIMCO
using certain factors provided by a third-party analytical service provider. The
factors are applied in order such that the first factor to result in the
assignment of a country determines the “country of exposure.” Both the factors
and the order in which they are applied may change in the discretion of PIMCO.
The current factors, listed in the order in which they are applied, are: (i) if
an asset-backed or other collateralized security, the country in which the
collateral backing the security is located; (ii) the “country of risk” of the
issuer; (iii) if the security is guaranteed by the government of a country (or
any political subdivision, agency, authority or instrumentality of such
government), the country of the government or instrumentality providing the
guarantee; (iv) the “country of risk” of the issuer’s ultimate parent; or (v)
the country where the issuer is organized or incorporated under the laws
thereof. “Country of risk” is a separate four-part test determined by the
following factors, listed in order of importance: (i) management location; (ii)
country of primary listing; (iii) sales or revenue attributable to the country;
and (iv) reporting currency of the issuer.
Investing in
foreign (non-U.S.) securities involves special risks and considerations not
typically associated with investing in U.S. securities. Investors should
consider carefully the substantial risks involved for FISH: Series C and FISH:
Series M, which may invest in securities issued by foreign companies and
governments of foreign countries, and FISH: Series C, FISH: Series M, FISH:
Series R, and FISH: Series LD, each of which may invest its assets, without
limit, in securities denominated in non-U.S. currencies and may invest without
limit in U.S. dollar denominated securities of foreign issuers. These risks
include: differences in accounting, auditing and financial reporting standards;
generally higher commission rates on foreign portfolio transactions; the
possibility of the imposition of sanctions and other similar measures,
nationalization, expropriation or confiscatory taxation; adverse changes in
investment or exchange control regulations; market disruptions; the possibility
of security suspensions; and political instability. Individual foreign
(non-U.S.) economies may differ favorably or unfavorably from the U.S. economy
in such respects as growth of gross domestic product, rates of inflation,
capital reinvestment, resources, self-sufficiency and balance of payments
position. Other countries’ financial infrastructure or settlement systems may be
less developed than those of the United States. The securities markets, values
of securities, yields and risks associated with foreign (non-U.S.) securities
markets may change independently of each other. Also, foreign (non-U.S.)
securities and dividends and interest payable on those securities may be subject
to foreign taxes, including taxes withheld from payments on those securities.
Foreign (non-U.S.) securities often trade with less frequency and volume than
domestic securities and therefore may exhibit greater price volatility.
Investments
in foreign (non-U.S.) securities may also involve higher custodial costs than
domestic investments and additional transaction costs with respect to foreign
currency conversions. Changes in, or
uncertainty
concerning, foreign exchange rates also will affect the value of securities
denominated or quoted in foreign currencies and in some cases could lead to
uncertainty regarding the reliability of issuers' financial reporting.
FISH: Series
C, FISH: Series M, FISH: Series R and FISH: Series LD also may invest in
sovereign debt issued by governments, their agencies or instrumentalities, or
other government-related entities. Holders of sovereign debt may be requested to
participate in the rescheduling of such debt and to extend further loans to
governmental entities. In addition, there is no bankruptcy proceeding by which
defaulted sovereign debt may be collected.
FISH: Series
C, FISH: Series M, FISH: Series R and FISH: Series LD may invest in Brady Bonds,
which are securities created through the exchange of existing commercial bank
loans to sovereign entities for new obligations in connection with a debt
restructuring. Investments in Brady Bonds may be viewed as speculative. Brady
Bonds acquired by a Portfolio may be subject to restructuring arrangements or to
requests for new credit, which may cause a Portfolio to suffer a loss of
interest or principal on any of its holdings of relevant Brady Bonds.
■
Emerging
Market Securities. FISH: Series
C, FISH: Series M and FISH: Series LD may invest without limit in securities and
instruments that are economically tied to developing (or “emerging market”)
countries. FISH: Series R may invest, subject to applicable law, without limit
in investment grade sovereign debt denominated in the relevant country’s local
currency with less than 1 year remaining to maturity (“short-term investment
grade sovereign debt”), including short-term investment grade sovereign debt
issued by emerging market issuers. FISH: Series R may invest up to 20% of its
total assets in securities of issuers economically tied to “emerging market”
countries other than investments in short-term investment grade sovereign debt
issued by emerging market issuers, where as noted above there is no limit. PIMCO
generally considers an instrument to be economically tied to an emerging market
country if: the issuer is organized under the laws of an emerging market
country; the currency of settlement of the security is a currency of an emerging
market country; the security is guaranteed by the government of an emerging
market country (or any political subdivision, agency, authority or
instrumentality of such government); for an asset-backed or other collateralized
security, the country in which the collateral backing the security is located is
an emerging market country; or the security’s “country of exposure” is an
emerging market country, as determined by the criteria set forth below.
With respect
to derivative instruments, PIMCO generally considers such instruments to be
economically tied to emerging market countries if the underlying assets are
currencies of emerging market countries (or baskets or indexes of such
currencies), or instruments or securities that are issued or guaranteed by
governments of emerging market countries or by entities organized under the laws
of emerging market countries or if an instrument’s “country of exposure” is an
emerging market
May
1, 2024 | Prospectus
47
PIMCO
Managed Accounts Trust
country. A
security’s “country of exposure” is determined by PIMCO using certain factors
provided by a third-party analytical service provider. The factors are applied
in order such that the first factor to result in the assignment of a country
determines the “country of exposure.” Both the factors and the order in which
they are applied may change in the discretion of PIMCO. The current factors,
listed in the order in which they are applied, are: (i) if an asset-backed or
other collateralized security, the country in which the collateral backing the
security is located; (ii) the “country of risk” of the issuer; (iii) if the
security is guaranteed by the government of a country (or any political
subdivision, agency, authority or instrumentality of such government), the
country of the government or instrumentality providing the guarantee; (iv) the
“country of risk” of the issuer’s ultimate parent; or (v) the country where the
issuer is organized or incorporated under the laws thereof. “Country of risk” is
a separate four-part test determined by the following factors, listed in order
of importance: (i) management location; (ii) country of primary listing; (iii)
sales or revenue attributable to the country; and (iv) reporting currency of the
issuer. PIMCO has broad discretion to identify countries that it considers to
qualify as emerging markets. In making investments in emerging market
securities, FISH: Series C, FISH: Series M, FISH: Series R and FISH: Series LD
emphasize countries with relatively low gross national product per capita and
with the potential for rapid economic growth.
Emerging
market countries are generally located in Asia, Africa, the Middle East, Latin
America and Eastern Europe. PIMCO will select the country and currency
composition based on its evaluation of relative interest rates, inflation rates,
exchange rates, monetary and fiscal policies, trade and current account
balances, legal and political developments and any other specific factors it
believes to be relevant.
Investing in
emerging market securities imposes risks different from, or greater than, risks
of investing in domestic securities or in foreign, developed countries. These
risks include smaller market capitalization of securities markets, which may
suffer periods of relative illiquidity; significant price volatility;
restrictions on foreign investment; possible repatriation of investment income
and capital. In addition, foreign investors may be required to register the
proceeds of sales; future economic or political crises could lead to the
imposition of sanctions and other similar measures, price controls, forced
mergers, expropriation or confiscatory taxation, seizure, nationalization, or
creation of government monopolies. The currencies of emerging market countries
may experience significant declines against the U.S. dollar, and devaluation may
occur subsequent to investments in these currencies by a Portfolio. Many
emerging market countries have experienced substantial, and in some periods
extremely high, rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates have had, and may continue to have, negative
effects on the economies and securities markets of certain emerging market
countries.
Additional
risks of emerging market securities may include: greater social, economic and
political uncertainty and instability; more substantial governmental involvement
in the economy; less
governmental
supervision and regulation; unavailability of currency hedging techniques;
companies that are newly organized and small; differences in auditing and
financial reporting standards, which may result in unavailability of material
information about issuers; and less developed legal, custodial and share
registration systems. In addition, emerging securities markets may have
different clearance and settlement procedures, which may be unable to keep pace
with the volume of securities transactions or otherwise make it difficult to
engage in such transactions. Settlement problems may cause a Portfolio to miss
attractive investment opportunities, hold a portion of its assets in cash
pending investment, or be delayed in disposing of a portfolio security. Such a
delay could result in possible liability to a purchaser of the security.
Foreign
(Non-U.S.) Currencies
Direct
investments in foreign (non-U.S.) currencies or in securities that trade in, or
receive revenues in, foreign (non-U.S.) currencies, will be subject to currency
risk. Foreign currency exchange rates may fluctuate significantly over short
periods of time. They generally are determined by supply and demand in the
foreign exchange markets and the relative merits of investments in different
countries, actual or perceived changes in interest rates and other complex
factors. Currency exchange rates also can be affected unpredictably by
intervention (or the failure to intervene) by U.S. or foreign (non-U.S.)
governments or central banks, or by currency controls or political developments.
Currencies in which the Portfolios’ assets are denominated may be devalued
against the U.S. dollar, resulting in a loss to a Portfolio.
■
Foreign
Currency Transactions. FISH: Series
C, FISH: Series M, FISH: Series R and FISH: Series LD may engage in foreign
currency transactions on a spot (cash) basis, enter into forward foreign
currency exchange contracts, and invest in foreign currency futures contracts
and options on foreign currencies and futures. A forward foreign currency
exchange contract, which involves an obligation to purchase or sell a specific
currency at a future date at a price set at the time of the contract, reduces a
Portfolio’s exposure to changes in the value of the currency it will deliver and
increases its exposure to changes in the value of the currency it will receive
for the duration of the contract. Certain foreign currency transactions may also
be settled in cash rather than the actual delivery of the relevant currency. The
effect on the value of a Portfolio is similar to selling securities denominated
in one currency and purchasing securities denominated in another currency.
Foreign currency transactions, like currency exchange rates, can be affected
unpredictably by intervention (or the failure to intervene) by U.S. or foreign
governments or central banks, or by currency controls or political developments.
Such events may prevent or restrict a Portfolio’s ability to enter into foreign
currency transactions, force a Portfolio to exit a foreign currency transaction
at a disadvantageous time or price or result in penalties for the Portfolio, any
of which may result in a loss to the Portfolio. A contract to sell foreign
currency would limit any potential gain that might be realized if the value of
the hedged currency increases. A Portfolio may enter into these contracts to
48 Prospectus | PIMCO Managed Accounts Trust
Prospectus
hedge against
foreign exchange risk, to increase exposure to a foreign currency or to shift
exposure to foreign currency fluctuations from one currency to another. To the
extent foreign exchange transactions for the Portfolios are directed to the
Portfolios' custodian for execution, execution of such transactions may be
better or worse than comparable transactions effected by other intermediaries.
Suitable hedging transactions may not be available in all circumstances, and
there can be no assurance that a Portfolio will engage in such transactions at
any given time or from time to time. Also, such transactions may not be
successful and may eliminate any chance for a Portfolio to benefit from
favorable fluctuations in relevant foreign currencies. A Portfolio may use one
currency (or a basket of currencies) to hedge against adverse changes in the
value of another currency (or a basket of currencies) when exchange rates
between the two currencies are positively correlated.
■
Redenomination.
Uncertainty
as to the status of the euro and the European Monetary Union (the “EMU”) has at
times created significant volatility in currency and financial markets
generally. Any partial or complete dissolution of the EMU could have significant
adverse effects on currency and financial markets and on the values of a
Portfolio’s portfolio investments. If one or more EMU countries were to stop
using the euro as its primary currency, a Portfolio’s investments in such
countries may be redenominated into a different or newly adopted currency. As a
result, the value of those investments could decline significantly and
unpredictably. In addition, securities or other investments that are
redenominated may be subject to currency risk, liquidity risk and risk of
improper valuation to a greater extent than similar investments currently
denominated in euros. To the extent a currency used for redenomination purposes
is not specified in respect of certain EMU-related investments, or should the
euro cease to be used entirely, the currency in which such investments are
denominated may be unclear, making such investments particularly difficult to
value or dispose of. A Portfolio may incur additional expenses to the extent it
is required to seek judicial or other clarification of the denomination or value
of such securities.
There can be
no assurance that if a Portfolio earns income or capital gains in a non-U.S.
country or PIMCO otherwise seeks to withdraw a Portfolio’s investments from a
given country, capital controls imposed by such country will not prevent, or
cause significant expense, or delay in,
doing so.
High
Yield Securities and Distressed Companies
Securities
rated lower than Baa by Moody’s, or equivalently rated by S&P or Fitch, are
sometimes referred to as “high yield securities” or “junk bonds.” Issuers of
these securities may be distressed and undergoing restructuring, bankruptcy or
other proceedings in an attempt to avoid insolvency. Investing in these
securities involves special risks in addition to, the risks associated with
investments in higher-rated fixed income securities. While offering a greater
potential opportunity for capital appreciation and higher yields, high yield and
distressed company securities typically entail greater potential price
volatility and may be
less liquid
than higher-rated securities. High yield securities and debt securities of
distressed companies may be regarded as predominately speculative with respect
to the issuer’s continuing ability to meet principal and interest payments. They
may also be more susceptible to real or perceived adverse economic and
competitive industry conditions than higher-rated securities. Certain Portfolios
may invest in securities that are in default with respect to the payment of
interest or repayment of principal, or present an imminent risk of default with
respect to such payments. Issuers of securities in default may fail to resume
principal or interest payments, in which case a Portfolio may lose its entire
investment.
The market
values of high yield securities tend to reflect individual developments of the
issuer to a greater extent than do higher-quality securities, which tend to
react mainly to fluctuations in the general level of interest rates. In
addition, lower-quality debt securities tend to be more sensitive to general
economic conditions. Certain emerging market governments that issue high yield
securities in which a Portfolio may invest are among the largest debtors to
commercial banks, foreign governments and supranational organizations, such as
the World Bank, and may not be able or willing to make principal and/or interest
payments as they come due.
Credit
Ratings and Unrated Securities
Rating
agencies are private services that provide ratings of the credit quality of
fixed income securities, including convertible securities. Appendix A to this
Prospectus describes the various ratings assigned to fixed income securities by
Moody’s, S&P, and Fitch. Ratings assigned by a rating agency are not
absolute standards of credit quality and do not evaluate market risks. Rating
agencies may fail to make timely changes in credit ratings, and an issuer’s
current financial condition may be better or worse than a rating indicates. A
Portfolio will not necessarily sell a security when its rating is reduced below
its rating at the time of purchase. The ratings of a fixed income security may
change over time. Moody’s, S&P and Fitch monitor and evaluate the ratings
assigned to securities on an ongoing basis. As a result, debt instruments held
by a Portfolio could receive a higher rating or a lower rating during the period
in which they are held by a Portfolio.
PIMCO does
not rely solely on credit ratings, and develops its own analysis of issuer
credit quality. A Portfolio may purchase unrated securities (which are not rated
by a rating agency) if PIMCO determines, in its sole discretion, that the
security is of comparable quality to a rated security that the Portfolio may
purchase. In making ratings determinations, PIMCO may take into account
different factors than those taken into account by rating agencies, and PIMCO's
rating of a security may differ from the rating that a rating agency may have
given the same security. Unrated securities may be less liquid than comparable
rated securities and involve the risk that the portfolio manager may not
accurately evaluate the security’s comparative credit quality, which could
result in the Portfolio’s portfolio having a higher level of credit and/or high
yield risk than PIMCO has estimated or desires for the Portfolio, and could
negatively impact the Portfolio’s performance and/or returns. Analysis of the
creditworthiness of issuers of high yield securities may be more complex than
for issuers of
May
1, 2024 | Prospectus
49
PIMCO
Managed Accounts Trust
higher-quality
fixed income securities. To the extent that a Portfolio invests in high yield
and/ or unrated securities, the Portfolio’s success in achieving its investment
objective may depend more heavily on the portfolio manager’s creditworthiness
analysis than if the Portfolio invested exclusively in higher-quality and
higher-rated securities.
Derivatives
Each
Portfolio may, but is not required to, use derivatives and similar instruments
(referred to collectively as “derivatives”) for risk management purposes or as
part of its investment strategies. Generally, derivatives are financial
contracts whose value depends upon, or is derived from, the value of an
underlying asset, reference rate or index, and may relate to stocks, bonds,
interest rates, spreads between different interest rates, currencies or currency
exchange rates, commodities, real estate and other assets, and related indexes.
Examples of derivative instruments include options contracts, futures contracts,
options on futures contracts and swap agreements (including, but not limited to,
credit default swaps and swaps on exchange-traded funds). Each Portfolio may
invest some or all of its assets in derivative instruments, subject to the
Portfolio’s objective and policies. A portfolio manager may decide not to employ
any of these strategies, and there is no assurance that any derivatives strategy
used by a Portfolio will succeed. A description of these and other derivative
instruments that the Portfolios may use are described under “Investment
Objectives and Policies” in the SAI.
A Portfolio’s
use of derivative instruments involves risks different from, or possibly greater
than, the risks associated with investing directly in securities and other more
traditional investments. Certain derivative transactions may have a leveraging
effect on a Portfolio. For example, a small investment in a derivative
instrument may have a significant impact on a Portfolio’s exposure to interest
rates, currency exchange rates or other investments. As a result, a relatively
small price movement in a derivative instrument may cause an immediate and
substantial loss or gain. A Portfolio may engage in such transactions regardless
of whether the Portfolio owns the asset, instrument or components of the index
underlying the derivative instrument. A Portfolio may invest a significant
portion of its assets in these types of instruments. If it does, the Portfolio’s
investment exposure could far exceed the value of its portfolio securities and
its investment performance could be primarily dependent upon securities it does
not own. A description of various risks associated with particular derivative
instruments is included in “Investment Objectives and Policies” in the SAI. The
following provides a more general discussion of important risk factors relating
to all derivative instruments that may be used by the Portfolios.
Management
Risk. Derivative
products are highly specialized instruments that require investment techniques
and risk analyses different from those associated with stocks and bonds. The use
of a derivative requires an understanding not only of the underlying instrument
but also of the derivative itself, without the benefit of observing the
performance of the derivative under all possible market conditions.
Counterparty
Risk (including Credit Risk). The use of
certain derivative instruments involves the risk that a loss may be sustained as
a result of the failure of another party to the contract (usually referred to as
a “counterparty”) to make required payments or otherwise comply with the
contract’s terms. Additionally, a short position in a credit default swap could
result in losses if a Portfolio does not correctly evaluate the creditworthiness
of the company on which the credit default swap is based. Counterparty risk also
refers to the risks of having concentrated exposure to a counterparty.
Market
and Portfolio Liquidity Risk. Liquidity
risk exists when a particular derivative instrument is difficult to purchase or
sell. If a derivative transaction is particularly large or if the relevant
market is illiquid (as is the case with many privately negotiated derivatives),
it may not be possible to initiate a transaction or liquidate a position at an
advantageous time or price. Liquidity risk also refers to the risk that a
Portfolio may be required to hold additional cash or sell other investments in
order to obtain cash to close out derivatives or meet the liquidity demands that
derivatives can create to make payments of margin, collateral, or settlement
payments to counterparties. A Portfolio may have to sell a security at a
disadvantageous time or price to meet such obligations.
Leverage
Risk. Because many
derivatives have a leverage component, adverse changes in the value or level of
the underlying asset, reference rate or index could result in a loss
substantially greater than the amount invested in the derivative itself. Certain
derivatives have the potential for unlimited loss, regardless of the size of the
initial investment. When a Portfolio uses derivatives for leverage, investments
in the Portfolio will tend to be more volatile, resulting in larger gains or
losses in response to market changes. Leveraging transactions pursued by the
Portfolio may increase its duration and sensitivity to interest rate movements.
Lack
of Availability. Because the
markets for certain derivative instruments (including markets located in foreign
countries) are relatively new and still developing, suitable derivatives
transactions may not be available in all circumstances for risk management or
other purposes. Upon the expiration of a particular contract, a portfolio
manager may wish to retain a Portfolio’s position in the derivative instrument
by entering into a similar contract, but may be unable to do so if the
counterparty to the original contract is unwilling to enter into the new
contract and no other appropriate counterparty can be found. There is no
assurance that a Portfolio will engage in derivatives transactions at any time
or from time to time. A Portfolio’s ability to use derivatives may also be
limited by certain regulatory and tax considerations.
Correlation
Risk . In certain
cases, the value of derivatives may not correlate perfectly, or at all, with the
value of the assets, reference rates or indexes they are designed to closely
track. For example, a swap agreement on an exchange-traded fund would not
correlate perfectly with the index upon which the exchange-traded fund is based
because the fund’s return is net of fees and expenses. In this regard, the
Portfolios offered in this prospectus may seek to achieve their investment
objectives, in part, by investing in derivatives positions that are designed to
closely track the performance (or inverse performance)
50 Prospectus | PIMCO Managed Accounts Trust
Prospectus
of an index
on a daily basis. However, the overall investment strategies of these Portfolios
are not designed or expected to produce returns which replicate the performance
(or inverse performance) of the particular index, and the degree of variation
could be substantial, particularly over longer periods. There are a number of
factors which may prevent the Portfolio, or derivatives or other strategies used
by the Portfolio, from achieving a desired correlation (or inverse correlation)
with an index. These may include, but are not limited to: (i) the impact of fund
fees, expenses and transaction costs, including borrowing and brokerage costs/
bid-ask spreads, which are not reflected in index returns; (ii) differences in
the timing of daily calculations of the value of an index and the timing of the
valuation of derivatives, securities and other assets held by the Portfolio and
the determination of the NAV of Portfolio shares; (iii) disruptions or
illiquidity in the markets for derivative instruments or securities in which the
Portfolio invests; (iv) a Portfolio having exposure to or holding less than all
of the securities in the underlying index and/or having exposure to or holding
securities not included in the underlying index; (v) large or unexpected
movements of assets into and out of a Portfolio (due to share purchases or
redemptions, for example), potentially resulting in the Portfolio being over- or
under-exposed to the index; (vi) the impact of accounting standards or changes
thereto; (vii) changes to the applicable index that are not disseminated in
advance; (viii) a possible need to conform the Portfolio’s portfolio holdings to
comply with investment restrictions or policies or regulatory or tax law
requirements; and (ix) fluctuations in currency exchange rates.
Market
and Other Risks. Like most
other investments, derivative instruments are subject to the risk that the
market value of the instrument will change in a way detrimental to a Portfolio’s
interest. If a portfolio manager incorrectly forecasts the values of securities,
currencies or interest rates or other economic factors in using derivatives for
a Portfolio, the Portfolio might have been in a better position if it had not
entered into the transaction at all. While some strategies involving derivative
instruments can reduce the risk of loss, they can also reduce the opportunity
for gain or even result in losses by offsetting favorable price movements in
other Portfolio investments. The regulation of the derivatives markets has
increased over the past several years, and additional future regulation of the
derivatives markets may make derivatives more costly, may limit the availability
or reduce the liquidity of derivatives, or may otherwise adversely affect the
value or performance of derivatives. Any such adverse future developments could
impair the effectiveness or raise the costs of a Portfolio’s derivative
transactions, or impede the employment of a Portfolio’s derivatives strategies
or adversely affect the Portfolios’ performance.
Other risks
in using derivatives include the risk of mispricing and/or improper valuation of
derivatives. Many derivatives, in particular privately negotiated derivatives,
are complex and often valued subjectively. Improper valuations can result in
increased cash payment requirements to counterparties or a loss of value to a
Portfolio. Also, the value of derivatives may not correlate perfectly, or at
all, with the value of the assets, reference rates or indexes they are designed
to closely track. For example, a swap agreement on an exchange-traded fund would
not correlate perfectly with the index upon which the
exchange-traded
fund is based because the fund’s return is net of fees and expenses. In
addition, a Portfolio’s use of derivatives may cause the Portfolio to realize
higher amounts of short-term capital gains (generally taxed at ordinary income
tax rates when distributed to shareholders) than if the Portfolio had not used
such instruments.
Operational
and Legal Risk. Using
derivatives is also subject to operational and legal risks. Operational risk
generally refers to risk related to potential operational issues, including
documentation issues, settlement issues, systems failures, inadequate controls,
and human error. Legal risk generally refers to insufficient documentation,
insufficient capacity or authority of counterparty, or legality or
enforceability of a contract.
Convertible
and Equity Securities
Common stock
represents equity ownership in a company and typically provides the common
stockholder the power to vote on certain corporate actions, including the
election of the company’s directors. Common stockholders participate in company
profits through dividends and, in the event of bankruptcy, distributions, on a
pro-rata basis after other claims are satisfied. Many factors affect the value
of common stock, including earnings, earnings forecasts, corporate events and
factors impacting the issuer’s industry and the market generally. Common stock
generally has the greatest appreciation and depreciation potential of all
corporate securities.
Each
Portfolio may invest in convertible securities and equity securities, as well as
securities related to equities. Equity related securities include securities
having an equity component (e.g., hybrids, bank capital) and equity derivatives.
Convertible securities are generally preferred securities and other securities,
including fixed income securities and warrants, that are convertible into or
exercisable for common stock at a stated price or rate. The price of a
convertible security will normally vary in some proportion to changes in the
price of the underlying common stock because of this conversion or exercise
feature. However, the value of a convertible security may not increase or
decrease as rapidly as the underlying common stock. A convertible security will
normally also provide income and is subject to interest rate risk. Convertible
securities may be lower-rated securities subject to greater levels of credit
risk. A Portfolio may be forced to convert a security before it would otherwise
choose, which may have an adverse effect on the Portfolio’s ability to achieve
its investment objective.
The
Portfolios may invest in “synthetic“ convertible securities. “Synthetic”
convertible securities are selected based on the similarity of their economic
characteristics to those of a traditional convertible security due to the
combination of separate securities that possess the two principal
characteristics of a traditional convertible security, i.e., an income-producing
security (“income-producing component”) and the right to acquire an equity
security (“convertible component”). The income-producing component is achieved
by investing in non-convertible, income-producing securities such as bonds,
preferred securities and money market instruments, which may be represented by
derivative instruments. The convertible component is achieved by investing in
securities or instruments such as warrants or options to buy
May
1, 2024 | Prospectus
51
PIMCO
Managed Accounts Trust
common stock
at a certain exercise price, or options on a stock index. A simple example of a
synthetic convertible security is the combination of a traditional corporate
bond with a warrant to purchase equity securities of the issuer of the bond. A
Portfolio may also purchase synthetic securities created by other parties,
typically investment banks, including convertible structured notes. The
income-producing and convertible components of a synthetic convertible security
may be issued separately by different issuers and at different times.
Preferred and
other senior securities represent an equity interest in a company that generally
entitles the holder to receive, in preference to the holders of other securities
such as common stocks, dividends and a fixed share of the proceeds resulting
from a liquidation of the company. Some preferred securities also entitle their
holders to receive additional liquidation proceeds on the same basis as holders
of a company's common stock, and thus also represent an ownership interest in
that company. Preferred securities may pay fixed or adjustable rates of return.
Preferred and other senior securities may pay fixed or adjustable rates of
return. Preferred and other senior securities are subject to issuer-specific and
market risks applicable generally to equity securities. In addition, a company’s
preferred and other senior securities generally pay dividends only after the
company makes required payments to holders of its bonds and other debt. For this
reason, the value of preferred and other senior securities will usually react
more strongly than bonds and other debt to actual or perceived changes in the
company’s financial condition or prospects. In addition, preferred and other
senior securities often have special redemption rights allowing issuers to
redeem such securities at par earlier than scheduled. If these rights are
exercised, the Portfolio may have to reinvest proceeds in less attractive
securities.
Preferred
securities of smaller companies may be more vulnerable to adverse developments
than preferred securities of larger companies.
Among other
risks described in this prospectus, the following issues are particularly
associated with investments in preferred and other senior securities.
■
Deferral and
Omission of Distributions. Preferred and other senior securities may include
features permitting or requiring the issuer to defer or omit distributions.
Among other things, such deferral or omission may result in adverse tax
consequences for the Portfolio.
■
Limited
Voting Rights. Preferred and other senior securities generally do not have
voting rights with respect to the issuer unless dividends have been in arrears
for certain specified periods of time.
In the
future, preferred or other senior securities may be offered with features
different from those described above, and as such, may entail different risks.
Over longer periods of time, certain types of preferred or other senior
securities may become more scarce or less liquid as a result of legislative
changes. Such events may result in losses to the Portfolio as the prices of
securities it holds may be negatively affected. Revisions to bank capital
requirements by international regulatory bodies, to the extent they are adopted
in the United States, may also negatively impact the market for certain
preferred or senior securities.
Each
Portfolio may invest in convertible securities or equity
securities. While some countries or companies may be regarded as
favorable investments, pure fixed income opportunities may be unattractive or
limited due to insufficient supply, or legal or technical restrictions. In such
cases, subject to its applicable investment restrictions, a Portfolio may
consider convertible securities or equity securities to gain exposure to such
investments. At times, in connection with the restructuring of a preferred
security or Fixed Income Instrument either outside of bankruptcy court or in the
context of bankruptcy court proceedings, a Portfolio may determine or be
required to accept equity securities, such as common stocks, in exchange for all
or a portion of a preferred security or Fixed Income Instrument. Depending upon,
among other things, PIMCO’s evaluation of the potential value of such securities
in relation to the price that could be obtained by a Portfolio at any given time
upon sale thereof, a Portfolio may determine to hold such securities in its
portfolio. Equity securities generally have greater price volatility than fixed
income securities. The market price of equity securities owned by a Portfolio
may go up or down, sometimes rapidly or unpredictably.
Equity
securities may decline in value due to factors affecting equity securities
markets generally or particular industries represented in those markets. The
value of an equity security may also decline for a number of reasons that
directly relate to the issuer, such as management performance, financial
leverage, and reduced demand for the issuer’s goods or services.
Municipal
Bonds
The amount of
public information available about the municipal bonds held by a Portfolio is
generally less than for corporate equities or bonds, and the investment
performance of the Portfolio may therefore be more dependent on the abilities of
PIMCO than would be a stock fund or taxable bond fund. The secondary market for
municipal bonds, particularly the lower-rated bonds, also tends to be less
well-developed and less liquid than many other securities markets, which may
adversely affect the ability of the Portfolio to sell its bonds at attractive
prices or value municipal bonds.
Municipal
Bonds are generally issued by states, territories, possessions and local
governments and their agencies, authorities and other instrumentalities.
Municipal Bonds are subject to interest rate, credit and market risk,
uncertainties related to the tax status of a Municipal Bond or the rights of
investors invested in these securities. The ability of an issuer to make
payments could be affected by litigation, legislation or other political events
or the bankruptcy of the issuer. In addition, imbalances in supply and demand in
the municipal market may result in a deterioration of liquidity and a lack of
price transparency in the market. At certain times, this may affect pricing,
execution and transaction costs associated with a particular trade. The
secondary market for municipal bonds, particularly the lower rated bonds, also
tends to be less well-developed and less liquid than many other securities
markets, which may adversely affect the ability of the Portfolio to sell its
bonds at attractive prices or value municipal bonds. The value of certain
municipal securities, in particular general obligation debt, may also be
adversely affected by rising health care costs, increasing
52 Prospectus | PIMCO Managed Accounts Trust
Prospectus
unfunded
pension liabilities, changes in accounting standards and by the phasing out of
federal programs providing financial support. Lower rated Municipal Bonds are
subject to greater credit and market risk than higher quality Municipal Bonds.
Municipal securities may also have exposure to potential physical risks
resulting from climate change, including extreme weather, flooding and fires.
Climate risks, if they materialize, can adversely impact a municipal issuer’s
financial plans in current or future years including, for example, the physical
impairment of a facility or other source generating revenues backing a municipal
issuer’s revenue bonds. As a result, the impact of climate risks could adversely
impact the value of a Portfolio’s Municipal Bond investments. The types of
Municipal Bonds in which the Portfolios may invest include municipal lease
obligations, municipal general obligation bonds, municipal essential service
revenue bonds, municipal cash equivalents, loans, mortgages,
pre-refunded and escrowed to maturity Municipal Bonds and other debt instruments
and pools of any of the foregoing. The Portfolios may also invest in industrial
development bonds, which are Municipal Bonds issued by a government agency on
behalf of a private sector company and, in most cases, are not backed by the
credit of the issuing municipality and may therefore involve more risk. The
Portfolios may also invest in securities issued by entities whose underlying
assets are Municipal Bonds. The Portfolios (other than FISH: Series TE) do not
expect to be eligible to pass through the tax-exempt character of interest paid
on Municipal Bonds to their shareholders.
Pre-refunded
Municipal Bonds are tax-exempt bonds that have been refunded to a call date on
or before the final maturity of principal and remain outstanding in the
municipal market. The payment of principal and interest of the pre-refunded
Municipal Bonds held by a Portfolio is funded from securities in a designated
escrow account that holds U.S. Treasury securities or other obligations of the
U.S. Government (including its agencies and instrumentalities (“Agency
Securities”)). As the payment of principal and interest is generated from
securities held in a designated escrow account, the pledge of the municipality
has been fulfilled and the original pledge of revenue by the municipality is no
longer in place. The escrow account securities pledged to pay the principal and
interest of the pre-refunded Municipal Bond do not guarantee the price movement
of the bond before maturity. Issuers of municipal bonds refund in advance of
maturity the outstanding higher cost debt and issue new, lower cost debt,
placing the proceeds of the lower cost issuance into an escrow account to
pre-refund the older, higher cost debt. Investment in pre-refunded Municipal
Bonds held by a Portfolio may subject the Portfolio to interest rate risk,
market risk and credit risk. In addition, while a secondary market exists for
pre-refunded Municipal Bonds, if a Portfolio sells pre-refunded Municipal Bonds
prior to maturity, the price received may be more or less than the original
cost, depending on market conditions at the time of sale. The interest on
pre-funded bonds issued on or before December 31, 2017 is exempt from federal
income tax; the interest on such bonds issued after December 31, 2017 is not
exempt from federal income tax.
The
Portfolios may invest in trust certificates issued in tender option bond
programs. In these programs, a trust typically issues two classes of
certificates and uses the proceeds to purchase municipal securities having
relatively long maturities and bearing interest at a fixed interest
rate
substantially higher than prevailing short-term tax-exempt rates. There is a
risk that a Portfolio investing in a tender option bond program will not be
considered the owner of a tender option bond for federal income tax purposes,
and thus will not be entitled to treat such interest as exempt from federal
income tax. Certain tender option bonds may be illiquid or may become illiquid
as a result of, among other things, a credit rating downgrade, a payment default
or a disqualification from tax-exempt status. A Portfolio’s investment in the
securities issued by a tender option bond trust may involve greater risk and
volatility than an investment in a fixed rate bond, and the value of such
securities may decrease significantly when market interest rates increase.
Tender option bond trusts could be terminated due to market, credit or other
events beyond a Portfolio’s control, which could require the Portfolio to
dispose of portfolio investments at inopportune times and prices. A Portfolio
may use a tender option bond program as a way of achieving leverage in its
portfolio, in which case the Portfolio will be subject to leverage risk.
A Portfolio
may invest in municipal securities (including taxable municipal securities)
issued by Puerto Rico. A Portfolio that invests in municipal securities issued
by Puerto Rico may be particularly affected by political, economic, regulatory
or restructuring developments affecting the ability of Puerto Rican municipal
issuers to pay interest or repay principal.
Municipal
Project Housing-Related Risk
A Portfolio
may invest in the bonds of projects focused on low-income, affordable or other
housing developments and businesses located in low-income areas or invest in or
originate loans that finance or are generally related to such projects. There
are significant risks associated with the Portfolio’s investment in the bonds of
these types of projects and loans related to such projects. There may be
federal, state and local governmental regulatory restrictions on the operation,
rental and transfer of these projects, such as the requirement that the owners
of these affordable housing developments rent or sell certain residential units
to persons or families of low or moderate income and that the amount of rent
that may be charged for these units may be less than market rates. These
restrictions may adversely affect economic performance relative to properties
that are not subject to these restrictions. There are also no assurances that a
project owner will be able to achieve and maintain sufficient rental income in
order to pay all operating expenses and maintenance and repair costs of such a
project and the debt service on the related bonds or loan on a timely basis. In
the event that a project owner is unable to pay all such costs, expenses and
debt service, a default on the related bonds or loan is likely to occur.
Loan
Participations and Assignments
Each
Portfolio may invest in fixed- and floating-rate loans, which investments
generally will be in the form of loan participations and assignments of all or
portions of such loans. Participations and assignments involve special types of
risk, including extension risk, prepayment risk, credit risk, interest rate
risk, liquidity risk, and the risks of being a lender. Loans are subject to the
risk that scheduled interest or principal payments will not be made in a timely
manner or at all, either
May
1, 2024 | Prospectus
53
PIMCO
Managed Accounts Trust
of which may
adversely affect the value of the loan. In addition, the collateral underlying a
loan may be unavailable or insufficient to satisfy a borrower’s obligation, and
a Portfolio could become part owner of any collateral if a loan is foreclosed,
subjecting the Portfolio to costs associated with owning and disposing of the
collateral. If a Portfolio purchases a participation, it may only be able to
enforce its rights through the lender, and may assume the credit risk of the
lender in addition to the borrower.
Delayed
Funding Loans and Revolving Credit Facilities
Each
Portfolio may also enter into, or acquire participations in, delayed funding
loans and revolving credit facilities, in which a lender agrees to make loans up
to a maximum amount upon demand by the borrower during a specified term. These
commitments may have the effect of requiring the Portfolio to increase its
investment in a company at a time when it might not otherwise decide to do so
(including at a time when the company’s financial condition makes it unlikely
that such amounts will be repaid). Delayed funding loans and revolving credit
facilities are subject to credit, interest rate and liquidity risk and the risks
of being a lender.
Loans
of Portfolio Securities
For the
purpose of achieving income, each Portfolio may lend its portfolio securities to
brokers, dealers, and other financial institutions provided that a number of
conditions are satisfied, including that the loan is fully collateralized.
Please see “Investment Objectives and Policies” in the SAI for details. When a
Portfolio lends portfolio securities, its investment performance will continue
to reflect changes in the value of the securities loaned, and the Portfolio will
also receive a fee or interest on the collateral. Securities lending involves
the risk of loss of rights in the collateral or delay in recovery of the
collateral if the borrower fails to return the security loaned or becomes
insolvent. A Portfolio may pay lending fees to a party arranging the loan, which
may be an affiliate of a Portfolio. Cash collateral received by a Portfolio in
securities lending transactions may be invested in short-term liquid fixed
income instruments or in money market or short-term mutual funds, or similar
investment vehicles, including affiliated money market or short-term mutual
funds. As a shareholder of an investment company or other pooled vehicle, a
Portfolio may indirectly bear investment advisory fees, supervisory and
administrative fees, service fees and other fees which are in addition to the
fees the Portfolio pays its service providers. To the extent such cash
collateral is invested in an affiliated money market or short-term mutual fund,
such fees generally will not be waived, and PIMCO expects to select such an
investment without considering or canvassing the universe of available
unaffiliated investment companies. A Portfolio bears the risk of such
investments.
Short
Sales
Each
Portfolio may make short sales as part of its overall portfolio management
strategies or to offset a potential decline in value of a security. A short sale
involves the sale of a security that is borrowed from a broker or other
institution to complete the sale. Short sales expose a Portfolio to the risk
that it will be required to acquire, convert
or exchange
securities to replace the borrowed securities (also known as “covering” the
short position) at a time when the securities sold short have appreciated in
value, thus resulting in a loss to the Portfolio. A short sale is ”against the
box“ to the extent that a Portfolio contemporaneously owns, or has the right to
obtain at no added cost, securities identical to those sold short. The
Portfolios may engage in short selling to the extent permitted by the 1940 Act
and rules and interpretations thereunder and other federal securities laws. To
the extent a Portfolio engages in short selling in foreign (non-U.S.)
jurisdictions, the Portfolio will do so to the extent permitted by the laws and
regulations of such jurisdiction.
When-Issued,
Delayed Delivery and Forward Commitment Transactions
Each
Portfolio may purchase or sell securities that it is eligible to purchase or
sell on a when-issued basis, may purchase or sell such securities for delayed
delivery and may make contracts to purchase or sell such securities for a fixed
price at a future date beyond normal settlement time (forward commitments).
When-issued transactions, delayed delivery purchases and forward commitments
involve a risk of loss if the value of the securities declines prior to the
settlement date. This risk is in addition to the risk that the Portfolio’s other
assets will decline in value. Therefore, these transactions may result in a form
of leverage and increase a Portfolio’s overall investment exposure. Typically,
no income accrues on securities a Portfolio has committed to purchase prior to
the time delivery of the securities is made. When a Portfolio has sold a
security on a when-issued, delayed-delivery or forward commitment basis, the
Portfolio does not participate in future gains or losses with respect to the
security. If the other party to a transaction fails to pay for the securities, a
Portfolio could suffer a loss. Additionally, when selling a security on a
when-issued, delayed-delivery or forward commitment basis without owning the
security, a Portfolio will incur a loss if the security’s price appreciates in
value such that the security’s price is above the agreed-upon price on the
settlement date.
Repurchase
Agreements
Each
Portfolio may enter into repurchase agreements, in which the Portfolio purchases
a security from a bank or broker-dealer, that agrees to repurchase the security
at the Portfolio’s cost plus interest within a specified time. If the party
agreeing to repurchase should default, the Portfolio will seek to sell the
securities which it holds. This could involve procedural costs or delays in
addition to a loss on the securities if their value should fall below their
repurchase price. Repurchase agreements may be or become illiquid. These events
could also trigger adverse tax consequences for the Portfolio.
Reverse
Repurchase Agreements, Dollar Rolls and Other Borrowings
Each
Portfolio may enter into reverse repurchase agreements and dollar rolls, subject
to the Portfolio’s limitations on borrowings. A reverse repurchase agreement
involves the sale of a security by a Portfolio and its agreement to repurchase
the instrument or a similar security at a specified time and price. A dollar
roll is similar except that the
54 Prospectus | PIMCO Managed Accounts Trust
Prospectus
counterparty
is not obligated to return the same securities as those originally sold by the
Portfolio but only securities that are “substantially identical.” Reverse
repurchase agreements and dollar rolls may be considered borrowing for some
purposes. Reverse repurchase agreements, dollar rolls and other forms of
borrowings may create leveraging risk for a Portfolio.
A Portfolio
also may borrow money for investment purposes (including, with respect to FISH:
Series R, FISH: Series TE and FISH: Series LD, borrowing money from certain
affiliated funds pursuant to the Portfolios’ inter-fund lending program, as
described more fully under “Investment Restrictions - Other Information
Regarding Investment Restrictions” in the SAI) subject to any policies of the
Portfolio currently described in this prospectus or in the Portfolio’s SAI.
Event-Linked
Exposure
Each
Portfolio may obtain event-linked exposure by investing in “event-linked bonds”
or “event-linked swaps” or by implementing “event-linked strategies.”
Event-linked exposure results in gains or losses that typically are contingent,
or formulaically related to defined trigger events. Examples of trigger events
include hurricanes, earthquakes, weather-related phenomena, or statistics
related to such events. Some event-linked bonds are commonly referred to as
“catastrophe bonds.” If a trigger event occurs, a Portfolio may lose a portion
of or its entire principal invested in the bond or notional amount on a swap.
Event-linked exposures often provide for an extension of maturity to process and
audit loss claims where a trigger event has, or possibly has, occurred. An
extension of maturity may increase volatility. Event-linked exposures may also
expose the Portfolio to certain unanticipated risks including credit risk,
counterparty risk, adverse regulatory or jurisdictional interpretations, and
adverse tax consequences. Event-linked exposures may also be subject to
liquidity risk.
Portfolio
Turnover
The length of
time a Portfolio has held a particular security is not generally a consideration
in investment decisions. A change in the securities held by a Portfolio is known
as “portfolio turnover.” When the portfolio managers deem it appropriate and
particularly during periods of volatile market movements, a Portfolio may engage
in frequent and active trading of portfolio securities to achieve its investment
objective. Higher portfolio turnover ( e.g.
, an annual
rate greater than 100% of the average value of a Portfolio’s portfolio) involves
correspondingly greater expenses to a Portfolio, including brokerage commissions
or dealer markups and other transaction costs on the sale of securities and
reinvestments in other securities. Such sales may also result in realization of
taxable capital gains, including short-term capital gains (which are generally
taxed at ordinary income tax rates). The trading costs and tax effects
associated with portfolio turnover may adversely affect a Portfolio’s
performance. Please see a Portfolio's “Portfolio Summary—Portfolio Turnover” or
the “Financial Highlights” in this prospectus for the portfolio turnover rates
of the Portfolios that were operational during the last fiscal year.
Illiquid
Investments
Each
Portfolio may invest up to 15% of its net assets (taken at the time of
investment) in illiquid investments that are assets. Certain illiquid
investments may require pricing at fair value as determined in good faith under
the supervision of the Board of Trustees. A portfolio manager may be subject to
significant delays in disposing of illiquid investments, and
transactions in illiquid investments may entail registration expenses and other
transaction costs that are higher than those for transactions in liquid
investments. The term “illiquid investments” for this purpose means investments
that the Portfolio reasonably expects cannot be sold or disposed of in current
market conditions in seven calendar days or less without the sale or disposition
significantly changing the market value of the investment. Restricted
securities, i.e.
, securities
subject to legal or contractual restrictions on resale, may be illiquid.
However, some restricted securities (such as securities issued pursuant to Rule
144A under the Securities Act of 1933, as amended, and certain commercial paper)
may be treated as liquid ( i.e.
, classified
by the Portfolio in a liquidity category other than “illiquid” pursuant to the
Portfolio’s liquidity risk management procedures), although they may be
relatively less liquid than registered securities traded on established
secondary markets. Additional discussion of illiquid investments and related
regulatory limits and requirements is available under “Investment Objectives and
Policies” in the SAI.
Real
Estate Investment Trusts (REITs)
REITs are
pooled investment vehicles that own, and usually operate, income-producing real
estate. Some REITs also finance real estate. If a REIT meets certain
requirements, including distributing to shareholders substantially all of its
taxable income (other than net capital gains), then it is not taxed on the
income distributed to shareholders. Therefore, REITs tend to pay higher
dividends than other issuers.
REITs can be
divided into three basic types: Equity REITs, Mortgage REITs and Hybrid REITs.
Equity REITs invest the majority of their assets directly in real property. They
derive their income primarily from rents received and any profits on the sale of
their properties. Mortgage REITs invest the majority of their assets in real
estate mortgages and derive most of their income from mortgage interest
payments. As its name suggests, Hybrid REITs combine characteristics of both
Equity REITs and Mortgage REITs.
An investment
in a REIT, or in a real-estate linked derivative instrument linked to the value
of a REIT, is subject to the risks that impact the value of the underlying
properties of the REIT. These risks include a possible decline in the value of
(or income generated by) the real estate, variations in rental income,
fluctuations in occupancy levels, changes in the availability or terms of
mortgages and other financing that may render the sale or refinancing of
properties difficult or unattractive, loss to casualty or condemnation, and
changes in local and general economic conditions. Additionally, an investment in
REITs, and investing in the real estate market generally, is subject to risks
involved with supply and demand, including reduced demand for properties or real
estate-related services, reduced demand for commercial and office space as well
as increased maintenance or tenant improvement costs to
May
1, 2024 | Prospectus
55
PIMCO
Managed Accounts Trust
convert
properties for other uses, default risk of tenants and borrowers, the financial
condition of tenants, buyers and sellers, and the inability to re-lease space on
attractive terms or to obtain mortgage financing on a timely basis or at all,
interest rates, zoning laws, regulatory limitations on rents, property taxes and
operating expenses. Real estate securities may have limited diversification and,
therefore, tend to be subject to risks inherent in operating and financing a
limited number of projects. Other factors
that may adversely affect REITs include poor performance by management of the
REIT, changes to the tax laws, or failure by the REIT to qualify for tax-free
distribution of income. REITs are also subject to default by borrowers and
self-liquidation, and are heavily dependent on cash flow. Some REITs lack
diversification because they invest in a limited number of properties, a narrow
geographic area, or a single type of property. Mortgage REITs may be impacted by
the quality of the credit extended.
Investment
in Other Investment Companies
Each
Portfolio may invest in securities of other investment companies (including
those advised by PIMCO), such as open-end or closed-end management investment
companies, including exchange-traded funds and business development companies,
or in pooled accounts, or other unregistered accounts or investment vehicles to
the extent permitted by the 1940 Act and the rules and regulations thereunder
and any exemptive relief therefrom. A Portfolio may invest in other investment
companies to gain broad market or sector exposure or for cash management
purposes, including during periods when it has large amounts of uninvested cash
or when PIMCO believes share prices of other investment companies offer
attractive values. As a shareholder of an investment company or other pooled
vehicle, a Portfolio may indirectly bear investment advisory fees, supervisory
and administrative fees, service fees and other fees which are in addition to
the fees the Portfolio pays its service providers. To the extent a Portfolio
invests in other investment companies that are advised by PIMCO, PIMCO expects
to select such investments without considering or canvassing the universe of
available unaffiliated investment companies.
Each
Portfolio may invest in certain money market funds and/or short-term bond funds
(“Central Funds”), to the extent permitted by the 1940 Act, the rules thereunder
or exemptive relief therefrom. The Central Funds are registered investment
companies created for use solely by the series of registered investment
companies advised by PIMCO, in connection with their cash management activities.
The main investments of the Central Funds are money market instruments and short
maturity Fixed Income Instruments. The Central Funds may incur expenses related
to their investment activities, but do not pay investment advisory or
supervisory and administrative fees to PIMCO.
Subject to
the restrictions and limitations of the 1940 Act, and the rules and regulations
thereunder and any exemptive relief therefrom, each Portfolio may, in the
future, elect to pursue its investment objective either by investing directly in
securities or by investing in one or more underlying investment vehicles or
companies that have substantially similar investment objectives and policies as
the Portfolio. SEC regulations concerning investments by registered investment
companies in the securities of other registered investment companies may, among
other things,
limit investment flexibility and could affect the Portfolios’ ability to utilize
the Central Funds. This could adversely impact the Portfolios’ investment
strategies and operations. The “Investment Objectives and Policies -Regulatory
Risk” section in the SAI discusses these changes in further detail.
Temporary
Defensive Positions
For temporary
defensive purposes, each Portfolio may invest without limit in U.S. debt
securities, including taxable securities and short-term money market securities
in attempting to respond to adverse market, economic, political, or other
conditions, as determined by PIMCO. When a Portfolio engages in such strategies,
it may not achieve its investment objective.
From time to
time, as the prevailing market and interest rate environments warrant, and at
the discretion of its portfolio manager, some portion of a Portfolio’s total net
assets may be uninvested. In such cases, Portfolio assets will be held in cash
in a Portfolio’s custody account. Cash assets are generally not
income-generating and would impact a Portfolio’s performance.
Changes
in Investment Objectives and Policies
The
investment objective of each Portfolio is non-fundamental and may be changed by
the Board of Trustees without shareholder approval. Unless otherwise stated, all
other investment policies of the Portfolios may be changed by the Board of
Trustees without shareholder approval.
Percentage
Investment Limitations and Alternative Means of Gaining Exposure
Unless
otherwise stated, all percentage limitations on Portfolio investments listed in
this prospectus will apply at the time of investment. A Portfolio would not
violate these limitations unless an excess or deficiency occurs or exists
immediately after and as a result of an investment. Unless otherwise indicated,
references to assets in the percentage limitations on portfolio investments
refer to total assets. Unless otherwise stated, if a Portfolio is described as
investing in a particular type of security or other instrument, either generally
or subject to a minimum investment percentage, the Portfolio may make such
investments either directly or by gaining exposure through indirect means, such
as depositary receipts, derivatives, placement warrants or other structured
products. Such exposure may be achieved through a combination of multiple
instruments or through a combination of one or more investment instruments and
cash or cash equivalents.
Operational
Risk
An investment
in a Portfolio, like any fund, can involve operational risks arising from
factors such as processing errors, human errors, inadequate or failed internal
or external processes, failure in systems and technology, changes in personnel
and errors caused by third-party service providers. The occurrence of any of
these failures, errors or breaches could result in a loss of information,
regulatory scrutiny, reputational damage or other events, any of which could
have a significant adverse effect on a Portfolio. The occurrence of any of these
56 Prospectus | PIMCO Managed Accounts Trust
Prospectus
failures,
errors or breaches could result in a loss of information, regulatory scrutiny,
reputational damage or other events, any of which could have a significant
adverse effect on a Portfolio. While the Portfolios seek to minimize such events
through controls and oversight, there may still be failures that could cause
losses to a Portfolio.
Market
Disruptions Risk
The
Portfolios are subject to investment and operational risks associated with
financial, economic and other global market developments and disruptions,
including those arising from war, terrorism, market manipulation, government
interventions, defaults and shutdowns, political changes or diplomatic
developments, public health emergencies (such as the spread of infectious
diseases, pandemics and epidemics) and natural/ environmental disasters, which
can all negatively impact the securities markets and cause a Portfolio to lose
value. These events can also impair the technology and other operational systems
upon which a Portfolio’s service providers, including PIMCO as the Portfolios’
investment adviser, rely, and could otherwise disrupt a Portfolio’s service
providers’ ability to fulfill their obligations to the Portfolios.
Other
Investments and Techniques
The
Portfolios may invest in other types of securities and use a variety of
investment techniques and strategies that are not described in this Prospectus.
These securities and techniques may subject the Portfolios to additional risks.
Please see the SAI for additional information about the securities and
investment techniques described in this Prospectus and about additional
securities and techniques that may be used by the Portfolios.
Geopolitical
Conflicts
The
occurrence of geopolitical conflicts, war or terrorist activities could have
adverse impacts on markets in various and unpredictable ways. For example,
following Russia’s large-scale invasion of Ukraine in February 2022, Russia, and
other countries, persons and entities that were viewed as having provided
material aid to Russia’s aggression against Ukraine, became the subject of
economic sanctions and import and export controls imposed by countries
throughout the world, including the United States. Such measures have had and
may continue to have an adverse effect on the Russian, Belarusian and other
securities and economies. The extent, duration and impact of geopolitical
conflicts and related market impacts are difficult to ascertain, but could be
significant and could have significant adverse effects on regional and global
economies and the markets for certain securities and commodities, such as oil
and natural gas, as well as other sectors, and on a Portfolio’s investments.
Cyber
Security
As the use of
technology, including
cloud-based technology, has become more prevalent in the course of business, the
Portfolios have become potentially more susceptible to operational and
information security risks resulting from breaches in cyber security. A breach
in cyber security refers to both intentional and unintentional cyber events from
outside
threat actors or internal resources that may, among other things, cause a
Portfolio to lose proprietary information, suffer data corruption and/or
destruction or lose operational capacity, result in the unauthorized release or
other misuse of confidential information, or otherwise disrupt normal business
operations. Cyber security breaches may involve unauthorized access to a
Portfolio’s digital information systems ( e.g.
, through
“hacking” or malicious software coding), and may come from multiple sources,
including outside attacks such as denial-of-service attacks ( i.e.
, efforts to
make network services unavailable to intended users) or cyber extortion,
including exfiltration of data held for ransom and/or “ransomware” attacks that
render systems
inoperable until ransom is paid, or insider actions ( e.g.
,
intentionally
or unintentionally harmful act of PIMCO personnel). In addition, cyber security
breaches involving a Portfolio’s third party service providers (including but
not limited to advisers, administrators, transfer agents, custodians, vendors,
suppliers, distributors and other third parties), trading counterparties or
issuers in which a Portfolio invests can also subject a Portfolio to many of the
same risks associated with direct cyber security breaches or extortion of
company data. PIMCO's use of cloud-based service providers could heighten or
change these risks. Cyber security failures or breaches may result in financial
losses to a Portfolio and its shareholders. For example, cyber security failures
or breaches involving trading counterparties or issuers in which a Portfolio
invests could adversely impact such counterparties or issuers and cause a
Portfolio’s investments to lose value. In addition, work-from-home arrangements
by a Portfolio, the Investment Manager or their service providers could increase
all of the above risks, create additional data and information accessibility
concerns, and make a Portfolio, PIMCO or its service providers susceptible to
operational disruptions, any of which could adversely impact their operations.
These
failures or breaches may also result in disruptions to business operations,
potentially resulting in financial losses; interference with a Portfolio’s
ability to calculate its NAV, process shareholder transactions or otherwise
transact business with shareholders; impediments to trading; violations of
applicable privacy and other laws; regulatory fines; penalties; third party
claims in litigation; reputational damage; reimbursement or other compensation
costs; additional compliance and cyber security risk management costs and other
adverse consequences. In addition, substantial costs may be incurred in order to
prevent any cyber incidents in the future.
Like with
operational risk in general, the Portfolios have established business continuity
plans and risk management systems designed to reduce the risks associated with
cyber security. However, there are inherent limitations in these plans and
systems, including that certain risks may not have been identified, in large
part because different or unknown threats may emerge in the future. As such,
there is no guarantee that such efforts will succeed, especially because the
Portfolios do not directly control the cyber security systems of issuers in
which a Portfolio may invest, trading counterparties or third party service
providers to the Portfolios. Such entities have experienced cyber attacks and
other attempts to gain unauthorized access to systems from time to time, and
there is no guarantee that efforts to prevent or mitigate the effects of such
attacks or other attempts to gain
May
1, 2024 | Prospectus
57
PIMCO
Managed Accounts Trust
unauthorized
access will be successful. There is also a risk that cyber security breaches may
not be detected. The Portfolios and their shareholders may suffer losses as a
result of a cyber security breach related to the Portfolios, their service
providers, trading counterparties or the issuers in which a Portfolio invests.
Regulatory
Changes Risk
Financial
entities, such as investment companies and investment advisers, are generally
subject to extensive government regulation and intervention. Government
regulation and/or intervention may change the way the Portfolio is regulated,
affect the expenses incurred directly by the Portfolio and the value of its
investments, and limit and/or preclude the Portfolio’s ability to achieve its
investment objective. Government regulation may change frequently and may have
significant adverse consequences. The Portfolio and the investment adviser have
historically been eligible for exemptions from certain regulations. However,
there is no assurance that the Portfolio and the investment adviser will
continue to be eligible for such exemptions. Actions by governmental entities
may also impact certain instruments in which the Portfolio invests.
Moreover,
government regulation may have unpredictable and unintended effects. Legislative
or regulatory actions to address perceived liquidity or other issues in fixed
income markets generally, or in particular markets such as the municipal
securities market, may alter or impair the Portfolio’s ability to pursue its
investment objective or utilize certain investment strategies and techniques.
58 Prospectus | PIMCO Managed Accounts Trust
PIMCO
Managed Accounts Trust
Financial
Highlights
The financial
highlights table is intended to help a shareholder understand the financial
performance of FISH: Series C, FISH: Series LD, FISH: Series M, FISH: Series R
and FISH: Series TE for the last five fiscal years. Certain information reflects
financial results for a single Portfolio share. The total returns in the table
represent the rate that an investor would have earned or lost on an investment
in a particular Portfolio (assuming reinvestment of all dividends and
distributions). This information has been audited by PricewaterhouseCoopers LLP,
whose report, along with each Portfolio’s financial statements, are included in
the Trust’s annual report to shareholders. The annual report is available free
of charge by calling the Trust at the phone number on the back of this
prospectus. The annual report is also available for download free of charge on
the Trust’s website at pimco.com.
|
|
|
Investment
Operations |
Less
Distributions (c)
| |||||
|
|
|
|
| |||||
|
Selected
Per Share Data for
the
Year Ended^: |
Net
Asset Value
Beginning
of
Year
(a)
|
Net
Investment
Income
(Loss) (b)
|
Net
Realized/
Unrealized
Gain
(Loss) |
Total
|
From
Net
Investment
Income
|
From
Net
Realized
Capital
Gains |
Tax
Basis
Return
of
Capital
|
Total
|
|
Series
C |
|
|
|
|
|
|
|
|
|
12/31/2023
|
$
8.54
|
$0.40
|
$
0.29
|
$
0.69
|
$(0.39)
|
$
0.00
|
$
0.00
|
$(0.39)
|
|
12/31/2022
|
10.77
|
0.33
|
(2.12)
|
(1.79)
|
(0.44)
|
0.00
|
0.00
|
(0.44)
|
|
12/31/2021
|
11.08
|
0.34
|
(0.31)
|
0.03
|
(0.34)
|
0.00
|
0.00
|
(0.34)
|
|
12/31/2020
|
10.43
|
0.34
|
0.66
|
1.00
|
(0.35)
|
0.00
|
0.00
|
(0.35)
|
|
12/31/2019
|
9.94
|
0.38
|
0.52
|
0.90
|
(0.41)
|
0.00
|
0.00
|
(0.41)
|
|
Series
LD |
|
|
|
|
|
|
|
|
|
12/31/2023
|
$
8.59
|
$
0.34
|
$
0.17
|
$
0.51
|
$
(0.17)
|
$
0.00
|
$
(0.12)
|
$
(0.29)
|
|
12/31/2022
|
9.41
|
0.25
|
(0.77)
|
(0.52)
|
(0.26)
|
(0.04)
|
0.00
|
(0.30)
|
|
12/31/2021
|
9.62
|
0.28
|
(0.24)
|
0.04
|
(0.25)
|
0.00
|
0.00
|
(0.25)
|
|
12/31/2020
|
9.40
|
0.35
|
0.23
|
0.58
|
(0.36)
|
0.00
|
0.00
|
(0.36)
|
|
12/31/2019
|
9.40
|
0.36
|
0.00
|
0.36
|
(0.36)
|
0.00
|
0.00
|
(0.36)
|
|
Series
M |
|
|
|
|
|
|
|
|
|
12/31/2023
|
$
8.35
|
$0.47
|
$
0.26
|
$
0.73
|
$(0.48)
|
$
0.00
|
$
0.00
|
$(0.48)
|
|
12/31/2022
|
10.33
|
0.42
|
(1.95)
|
(1.53)
|
(0.45)
|
0.00
|
0.00
|
(0.45)
|
|
12/31/2021
|
10.68
|
0.42
|
(0.26)
|
0.16
|
(0.42)
|
(0.09)
|
0.00
|
(0.51)
|
|
12/31/2020
|
10.48
|
0.41
|
0.53
|
0.94
|
(0.41)
|
(0.33)
|
0.00
|
(0.74)
|
|
12/31/2019
|
10.14
|
0.47
|
0.37
|
0.84
|
(0.50)
|
0.00
|
0.00
|
(0.50)
|
|
Series
R |
|
|
|
|
|
|
|
|
|
12/31/2023
|
$
7.94
|
$
0.19
|
$
0.05
|
$
0.24
|
$
(0.04)
|
$
0.00
|
$
(0.15)
|
$
(0.19)
|
|
12/31/2022
|
10.79
|
0.81
|
(2.59)
|
(1.78)
|
(1.07)
|
0.00
|
0.00
|
(1.07)
|
|
12/31/2021
|
10.74
|
0.72
|
0.02
|
0.74
|
(0.69)
|
0.00
|
0.00
|
(0.69)
|
|
12/31/2020
|
9.40
|
0.22
|
1.33
|
1.55
|
(0.21)
|
0.00
|
0.00
|
(0.21)
|
|
12/31/2019
|
8.68
|
0.26
|
0.70
|
0.96
|
(0.24)
|
0.00
|
0.00
|
(0.24)
|
|
Series
TE |
|
|
|
|
|
|
|
|
|
12/31/2023
|
$
9.25
|
$0.47
|
$
0.41
|
$
0.88
|
$(0.46)
|
$
0.00
|
$
0.00
|
$(0.46)
|
|
12/31/2022
|
10.71
|
0.41
|
(1.47)
|
(1.06)
|
(0.40)
|
0.00
|
0.00
|
(0.40)
|
|
12/31/2021
|
10.76
|
0.38
|
(0.06)
|
0.32
|
(0.37)
|
0.00
|
0.00
|
(0.37)
|
|
12/31/2020
|
10.39
|
0.36
|
0.37
|
0.73
|
(0.36)
|
0.00
|
0.00
|
(0.36)
|
|
12/31/2019
|
9.94
|
0.38
|
0.45
|
0.83
|
(0.38)
|
0.00
|
0.00
|
(0.38)
|
^
A zero balance
may reflect actual amounts rounding to less than $0.01 or 0.01%.
(a)
Includes
adjustments required by U.S. GAAP and may differ from net asset values and
performance reported elsewhere by the Portfolios.
(b)
Per share
amounts based on average number of shares outstanding during the year.
(c)
The tax
characterization of distributions is determined in accordance with Federal
income tax regulations. See Note 2, Distributions to Shareholders, in the Notes
to Financial Statements for more information.
(d)
Includes
adjustments required by U.S. GAAP and may differ from net asset values and
performance reported elsewhere by the Portfolios. Additionally, excludes initial
sales charges and contingent deferred sales charges.
(e)
The
calculation assumes that all income dividends and capital gain distributions, if
any, have been reinvested. Total return does not reflect broker commissions or
“wrap fee” charges. Total investment return for a period of less than one year
is not annualized.
(f)
The financial
statements reflect the fact that no investment management fees or expenses are
incurred by the Portfolios. The Portfolios are an integral part of “wrap-fee”
programs sponsored by investment advisers and/or broker-dealers unaffiliated
with the Portfolios and PIMCO. Participants in these programs pay a “wrap fee”
to the sponsor of the program.
60 Prospectus | PIMCO Managed Accounts Trust
Prospectus
|
|
|
Ratios/Supplemental
Data | ||||||
|
|
|
|
Ratios
to Average Net Assets |
| ||||
|
Net
Asset Value End
of
Year (a)
|
Total
Return
(d)(e)
|
Net
Assets End of
Year
(000s) |
Expenses
(f)
|
Expenses
Excluding
Waivers (f)
|
Expenses
Excluding
Interest
Expense (f)
|
Expenses
Excluding
Interest
Expense
and
Waivers (f)
|
Net
Investment
Income
(Loss) |
Portfolio
Turnover
Rate |
|
|
|
|
|
|
|
|
|
|
|
$
8.84
|
8.34
%
|
$
1,282,061
|
0.03
%
|
0.03
%
|
0.00
%
|
0.00
%
|
4.69
%
|
571
%
|
|
8.54
|
(16.74
)
|
1,155,312
|
0.15
|
0.15
|
0.00
|
0.00
|
3.58
|
308
|
|
10.77
|
0.34
|
1,540,072
|
0.02
|
0.02
|
0.00
|
0.00
|
3.10
|
282
|
|
11.08
|
9.77
|
1,585,611
|
0.03
|
0.03
|
0.00
|
0.00
|
3.18
|
562
|
|
10.43
|
9.18
|
1,434,199
|
0.21
|
0.21
|
0.00
|
0.00
|
3.72
|
533
|
|
|
|
|
|
|
|
|
|
|
|
$
8.81
|
6.07
%
|
$
73,673
|
2.31
%
|
2.31
%
|
0.00
%
|
0.00
%
|
3.90
%
|
192
%
|
|
8.59
|
(5.53
)
|
74,964
|
1.57
|
1.57
|
0.00
|
0.00
|
2.75
|
43
|
|
9.41
|
0.38
|
122,608
|
0.23
|
0.23
|
0.00
|
0.00
|
2.94
|
97
|
|
9.62
|
6.28
|
108,895
|
0.66
|
0.66
|
0.00
|
0.00
|
3.63
|
69
|
|
9.40
|
3.85
|
79,806
|
2.98
|
2.98
|
0.00
|
0.00
|
3.82
|
88
|
|
|
|
|
|
|
|
|
|
|
|
$
8.60
|
8.99
%
|
$
1,279,095
|
0.04
%
|
0.04
%
|
0.00
%
|
0.00
%
|
5.62
%
|
569
%
|
|
8.35
|
(14.99
)
|
1,147,875
|
0.01
|
0.01
|
0.00
|
0.00
|
4.58
|
495
|
|
10.33
|
1.45
|
1,520,815
|
0.01
|
0.01
|
0.00
|
0.00
|
3.97
|
468
|
|
10.68
|
9.12
|
1,562,661
|
0.02
|
0.02
|
0.00
|
0.00
|
3.80
|
635
|
|
10.48
|
8.40
|
1,442,194
|
0.06
|
0.06
|
0.00
|
0.00
|
4.47
|
543
|
|
|
|
|
|
|
|
|
|
|
|
$
7.99
|
3.05
%
|
$
163,970
|
3.31
%
|
3.31
%
|
0.00
%
|
0.00
%
|
2.45
%
|
223
%
|
|
7.94
|
(17.22
)
|
216,389
|
0.87
|
0.87
|
0.00
|
0.00
|
8.88
|
93
|
|
10.79
|
7.09
|
259,263
|
0.05
|
0.05
|
0.00
|
0.00
|
6.71
|
162
|
|
10.74
|
16.58
|
157,315
|
0.26
|
0.26
|
0.00
|
0.00
|
2.13
|
295
|
|
9.40
|
11.10
|
130,421
|
1.35
|
1.35
|
0.00
|
0.00
|
2.80
|
357
|
|
|
|
|
|
|
|
|
|
|
|
$
9.67
|
9.74
%
|
$
61,959
|
0.06
%
|
0.06
%
|
0.00
%
|
0.00
%
|
5.05
%
|
56
%
|
|
9.25
|
(9.91
)
|
69,553
|
0.07
|
0.07
|
0.00
|
0.00
|
4.29
|
67
|
|
10.71
|
3.04
|
88,310
|
0.02
|
0.02
|
0.00
|
0.00
|
3.50
|
20
|
|
10.76
|
7.19
|
91,321
|
0.04
|
0.04
|
0.00
|
0.00
|
3.47
|
57
|
|
10.39
|
8.42
|
87,423
|
0.08
|
0.08
|
0.00
|
0.00
|
3.69
|
31
|
May
1, 2024 | Prospectus
61
PIMCO
Managed Accounts Trust
Appendix
A
Description
of Securities Ratings
The
Portfolio’s investments may range in quality from securities rated in the lowest
category in which the Portfolio is permitted to invest to securities rated in
the highest category (as rated by Moody’s, Standard & Poor’s or Fitch, or,
if unrated, determined by PIMCO to be of comparable quality). The percentage of
the Portfolio’s assets invested in securities in a particular rating category
will vary. The following terms are generally used to describe the credit quality
of fixed income securities:
High
Quality Debt Securities are those
rated in one of the two highest rating categories (the highest category for
commercial paper) or, if unrated, deemed comparable by PIMCO.
Investment
Grade Debt Securities are those
rated in one of the four highest rating categories, or, if unrated, deemed
comparable by PIMCO.
Below
Investment Grade High Yield Securities (“Junk Bonds”), are those
rated lower than Baa by Moody’s, BBB by Standard & Poor’s or Fitch, and
comparable securities. They are deemed predominantly speculative with respect to
the issuer’s ability to repay principal and interest.
The following
is a description of Moody’s, Standard & Poor’s and Fitch’s rating categories
applicable to fixed income securities.
Moody’s
Investors Service, Inc.
Global
Long-Term Rating Scale
Ratings
assigned on Moody’s global long-term rating scales are forward-looking opinions
of the relative credit risks of financial obligations issued by non-financial
corporates, financial institutions, structured finance vehicles, project finance
vehicles, and public sector entities. Long-term ratings are assigned to issuers
or obligations with an original maturity of eleven months or more and reflect
both on the likelihood of a default or impairment on contractual financial
obligations and the expected financial loss suffered in the event of default or
impairment.
Aaa:
Obligations rated Aaa are judged to be of the highest quality, subject to the
lowest level of credit risk.
Aa:
Obligations rated Aa are judged to be of high quality and are subject to very
low credit risk.
A:
Obligations rated A are judged to be upper-medium grade and are subject to low
credit risk.
Baa:
Obligations rated Baa are judged to be medium-grade and subject to moderate
credit risk and as such may possess certain speculative characteristics.
Ba:
Obligations rated Ba are judged to be speculative and are subject to substantial
credit risk.
B:
Obligations rated B are considered speculative and are subject to high credit
risk.
Caa:
Obligations rated Caa are judged to be speculative of poor standing and are
subject to very high credit risk.
Ca:
Obligations rated Ca are highly speculative and are likely in, or very near,
default, with some prospect of recovery of principal and interest.
C:
Obligations rated C are the lowest rated and are typically in default, with
little prospect for recovery of principal or interest.
Moody’s
appends numerical modifiers 1, 2, and 3 to each generic rating classification
from Aa through Caa. The modifier 1 indicates that the obligation ranks in the
higher end of its generic rating category; the modifier 2 indicates a mid-range
ranking; and the modifier 3 indicates a ranking in the lower end of that generic
rating category. Additionally, a “(hyb)” indicator is appended to all ratings of
hybrid securities issued by banks, insurers, finance companies, and securities
firms.*
*
By their terms, hybrid securities allow for the omission of scheduled dividends,
interest, or principal payments, which can potentially result in impairment if
such an omission occurs. Hybrid securities may also be subject to contractually
allowable write-downs of principal that could result in impairment. Together
with the hybrid indicator, the long-term obligation rating assigned to a hybrid
security is an expression of the relative credit risk associated with that
security.
Medium-Term
Note Program Ratings
Moody’s
assigns provisional ratings to medium-term note (MTN) or similar programs and
definitive ratings to the individual debt securities issued from them (referred
to as drawdowns or notes).
MTN program
ratings are intended to reflect the ratings likely to be assigned to drawdowns
issued from the program with the specified priority of claim ( e.g.
, senior or
subordinated). To capture the contingent nature of a program rating, Moody’s
assigns provisional ratings to MTN programs. A provisional rating is denoted by
a (P) in front of the rating.
The rating
assigned to a drawdown from a rated MTN or bank/deposit note program is
definitive in nature, and may differ from the program rating if the drawdown is
exposed to additional credit risks besides the issuer’s default, such as links
to the defaults of other issuers, or has other structural features that warrant
a different rating. In some circumstances, no rating may be assigned to a
drawdown.
Moody’s
encourages market participants to contact Moody’s Ratings Desks or visit
www.moodys.com directly if they have questions regarding ratings for specific
notes issued under a medium-term note program. Unrated notes issued under an MTN
program may be assigned an NR (not rated) symbol.
Global
Short-Term Rating Scale
Ratings
assigned on Moody’s global short-term rating scales are forward-looking opinions
of the relative credit risks of financial obligations issued by non-financial
corporates, financial institutions, structured finance vehicles, project finance
vehicles, and public sector entities. Short-term ratings are assigned to
obligations with an original maturity of thirteen months or less and reflect
both on the likelihood of a default or impairment on contractual financial
obligations and the expected financial loss suffered in the event of default or
impairment.
Moody’s
employs the following designations to indicate the relative repayment ability of
rated issuers:
A-1 Prospectus | PIMCO Managed Accounts Trust
Prospectus
P-1: Ratings
of Prime-1 reflect a superior ability to repay short-term obligations.
P-2: Ratings
of Prime-2 reflect a strong ability to repay short-term obligations.
P-3: Ratings
of Prime-3 reflect an acceptable ability to repay short-term obligations.
NP: Issuers
(or supporting institutions) rated Not Prime do not fall within any of the Prime
rating categories.
National
Scale Long-Term Ratings
Moody’s
long-term National Scale Ratings (NSRs) are opinions of the relative
creditworthiness of issuers and financial obligations within a particular
country. NSRs are not designed to be compared among countries; rather, they
address relative credit risk within a given country. Moody’s assigns national
scale ratings in certain local capital markets in which investors have found the
global rating scale provides inadequate differentiation among credits or is
inconsistent with a rating scale already in common use in the country.
In each
specific country, the last two characters of the rating indicate the country in
which the issuer is located or the financial obligation was issued (
e.g.,
Aaa.ke for
Kenya).
Aaa.n:
Issuers or issues rated Aaa.n demonstrate the strongest creditworthiness
relative to other domestic issuers and issuances.
Aa.n: Issuers
or issues rated Aa.n demonstrate very strong creditworthiness relative to other
domestic issuers and issuances.
A.n: Issuers
or issues rated A.n present above-average creditworthiness relative to other
domestic issuers and issuances.
Baa.n:
Issuers or issues rated Baa.n represent average creditworthiness relative to
other domestic issuers and issuances.
Ba.n: Issuers
or issues rated Ba.n demonstrate below-average creditworthiness relative to
other domestic issuers and issuances.
B.n: Issuers
or issues rated B.n demonstrate weak creditworthiness relative to other domestic
issuers and issuances.
Caa.n:
Issuers or issues rated Caa.n demonstrate very weak creditworthiness relative to
other domestic issuers and issuances.
Ca.n: Issuers
or issues rated Ca.n demonstrate extremely weak creditworthiness relative to
other domestic issuers and issuances.
C.n: Issuers
or issues rated C.n demonstrate the weakest creditworthiness relative to other
domestic issuers and issuances.
Moody’s
appends numerical modifiers 1, 2, and 3 to each generic rating classification
from Aa through Caa. The modifier 1 indicates that the obligation ranks in the
higher end of its generic rating category; the modifier 2 indicates a mid-range
ranking; and the modifier 3 indicates a ranking in the lower end of that generic
rating category.
National
Scale Short-Term Ratings
Moody’s
short-term NSRs are opinions of the ability of issuers or issuances in a given
country, relative to other domestic issuers or issuances, to repay debt
obligations that have an original maturity not
exceeding
thirteen months. Short-term NSRs in one country should not be compared with
short-term NSRs in another country, or with Moody’s global ratings. There are
four categories of short-term national scale ratings, generically denoted N-1
through N-4 as defined below.
In each
specific country, the first two letters indicate the country in which the issuer
is located ( e.g.
, KE-1
through KE-4 for Kenya).
N-1: N-1
issuers or issuances represent the strongest likelihood of repayment of
short-term debt obligations relative to other domestic issuers or issuances.
N-2: N-2
issuers or issuances represent an above average likelihood of repayment of
short-term debt obligations relative to other domestic issuers or issuances.
N-3: N-3
issuers or issuances represent an average likelihood of repayment of short-term
debt obligations relative to other domestic issuers or issuances.
N-4: N-4
issuers or issuances represent a below average likelihood of repayment of
short-term debt obligations relative to other domestic issuers or issuances.
The
short-term rating symbols P-1.za, P-2.za, P-3.za and NP.za are used in South
Africa.
Short-Term
Obligation Ratings
The Municipal
Investment Grade (MIG) scale is used for US municipal cash flow notes, bond
anticipation notes and certain other short-term obligations, which typically
mature in three years or less. Under certain circumstances, the MIG scale is
used for bond anticipation notes with maturities of up to five years.
MIG 1: This
designation denotes superior credit quality. Excellent protection is afforded by
established cash flows, highly reliable liquidity support, or demonstrated
broad-based access to the market for refinancing.
MIG 2: This
designation denotes strong credit quality. Margins of protection are ample,
although not as large as in the preceding group.
MIG 3: This
designation denotes acceptable credit quality. Liquidity and cash-flow
protection may be narrow, and market access for refinancing is likely to be less
well-established.
SG: This
designation denotes speculative-grade credit quality. Debt instruments in this
category may lack sufficient margins of protection.
Demand
Obligation Ratings
In the case
of variable rate demand obligations (VRDOs), a two-component rating is assigned.
The components are a long-term rating and a short-term demand obligation rating.
The long-term rating addresses the issuer’s ability to meet scheduled principal
and interest payments. The short-term demand obligation rating addresses the
ability of the issuer or the liquidity provider to make payments associated with
the purchase-price-upon-demand feature (“demand feature”) of the VRDO. The
short-term demand obligation rating uses the Variable Municipal Investment Grade
(VMIG) scale.
May
1, 2024 | Prospectus
A-2
PIMCO
Managed Accounts Trust
VMIG 1: This
designation denotes superior credit quality. Excellent protection is afforded by
the superior short-term credit strength of the liquidity provider and structural
and legal protections.
VMIG 2: This
designation denotes strong credit quality. Good protection is afforded by the
strong short-term credit strength of the liquidity provider and structural and
legal protections.
VMIG 3: This
designation denotes acceptable credit quality. Adequate protection is afforded
by the satisfactory short-term credit strength of the liquidity provider and
structural and legal protections.
SG: This
designation denotes speculative-grade credit quality. Demand features rated in
this category may be supported by a liquidity provider that does not have a
sufficiently strong short-term rating or may lack the structural or legal
protections.
Standard
& Poor’s Ratings Services
Long-Term
Issue Credit Ratings
Issue credit
ratings are based, in varying degrees, on S&P Global Ratings’ (“S&P”)
analysis of the following considerations:
■
Likelihood of
payment—capacity and willingness of the obligor to meet its financial
commitments on an obligation in accordance with the terms of the obligation;
■
Nature and
provisions of the financial obligation and the promise S&P imputes; and
■
Protection
afforded by, and relative position of, the financial obligation in the event of
a bankruptcy, reorganization, or other arrangement under the laws of bankruptcy
and other laws affecting creditors’ rights.
Issue ratings
are an assessment of default risk, but may incorporate an assessment of relative
seniority or ultimate recovery in the event of default. Junior obligations are
typically rated lower than senior obligations, to reflect lower priority in
bankruptcy, as noted above. (Such differentiation may apply when an entity has
both senior and subordinated obligations, secured and unsecured obligations, or
operating company and holding company obligations.)
Investment
Grade
AAA: An
obligation rated ‘AAA’ has the highest rating assigned by S&P. The obligor’s
capacity to meet its financial commitments on the obligation is extremely
strong.
AA: An
obligation rated ‘AA’ differs from the highest-rated obligations only to a small
degree. The obligor’s capacity to meet its financial commitments on the
obligation is very strong.
A: An
obligation rated ‘A’ is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than obligations in
higher-rated categories. However, the obligor’s capacity to meet its financial
commitments on the obligation is still strong.
BBB: An
obligation rated ‘BBB’ exhibits adequate protection parameters. However, adverse
economic conditions or changing circumstances are more likely to weaken the
obligor’s capacity to meet its financial commitments on the obligation.
Speculative
Grade
Obligations
rated ‘BB’, ‘B’, ‘CCC’, ‘CC’, and ‘C’ are regarded as having significant
speculative characteristics. ‘BB’ indicates the least degree of speculation and
‘C’ the highest. While such obligations will likely have some quality and
protective characteristics, these may be outweighed by large uncertainties or
major exposure to adverse conditions.
BB: An
obligation rated ‘BB’ is less vulnerable to nonpayment than other speculative
issues. However, it faces major ongoing uncertainties or exposure to adverse
business, financial, or economic conditions that could lead to the obligor’s
inadequate capacity to meet its financial commitments on the obligation.
B: An
obligation rated ‘B’ is more vulnerable to nonpayment than obligations rated
‘BB’, but the obligor currently has the capacity to meet its financial
commitments on the obligation. Adverse business, financial, or economic
conditions will likely impair the obligor’s capacity or willingness to meet its
financial commitments on the obligation.
CCC: An
obligation rated ‘CCC’ is currently vulnerable to nonpayment, and is dependent
upon favorable business, financial, and economic conditions for the obligor to
meet its financial commitments on the obligation. In the event of adverse
business, financial, or economic conditions, the obligor is not likely to have
the capacity to meet its financial commitments on the obligation.
CC: An
obligation rated ‘CC’ is currently highly vulnerable to nonpayment. The ‘CC’
rating is used when a default has not yet occurred, but S&P expects default
to be a virtual certainty, regardless of the anticipated time to default.
C: An
obligation rated ‘C’ is currently highly vulnerable to nonpayment, and the
obligation is expected to have lower relative seniority or lower ultimate
recovery compared with obligations that are rated higher.
D: An
obligation rated ‘D’ is in default or in breach of an imputed promise. For
non-hybrid capital instruments, the ‘D’ rating category is used when payments on
an obligation are not made on the date due, unless S&P believes that such
payments will be made within the next five business days in the absence of a
stated grace period or within the earlier of the stated grace period or the next
30 calendar days. The ‘D’ rating also will be used upon the filing of a
bankruptcy petition or the taking of similar action and where default on an
obligation is a virtual certainty, for example due to automatic stay provisions.
A rating on an obligation is lowered to ‘D’ if it is subject to a distressed
debt restructuring.
NR: This
indicates that a rating has not been assigned or is no longer assigned.
Plus (+) or
minus (-): The ratings from ‘AA’ to ‘CCC’ may be modified by the addition of a
plus (+) or minus (-) sign to show relative standing within the rating
categories.
A-3 Prospectus | PIMCO Managed Accounts Trust
Prospectus
Short-Term
Issue Credit Ratings
A-1: A
short-term obligation rated ‘A-1’ is rated in the highest category by S&P.
The obligor’s capacity to meet its financial commitments on the obligation is
strong. Within this category, certain obligations are designated with a plus
sign (+). This indicates that the obligor’s capacity to meet its financial
commitments on these obligations is extremely strong.
A-2: A
short-term obligation rated ‘A-2’ is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than obligations in
higher rating categories. However, the obligor’s capacity to meet its financial
commitments on the obligation is satisfactory.
A-3: A
short-term obligation rated ‘A-3’ exhibits adequate protection parameters.
However, adverse economic conditions or changing circumstances are more likely
to weaken an obligor’s capacity to meet its financial commitments on the
obligation.
B: A
short-term obligation rated ‘B’ is regarded as vulnerable and has significant
speculative characteristics. The obligor currently has the capacity to meet its
financial commitments; however, it faces major ongoing uncertainties that could
lead to the obligor’s inadequate capacity to meet its financial commitments.
C: A
short-term obligation rated ‘C’ is currently vulnerable to nonpayment and is
dependent upon favorable business, financial, and economic conditions for the
obligor to meet its financial commitments on the obligation.
D: A
short-term obligation rated ‘D’ is in default or in breach of an imputed
promise. For non-hybrid capital instruments, the ‘D’ rating category is used
when payments on an obligation are not made on the date due, unless S&P
believes that such payments will be made within any stated grace period.
However, any stated grace period longer than five business days will be treated
as five business days. The ‘D’ rating also will be used upon the filing of a
bankruptcy petition or the taking of a similar action and where default on an
obligation is a virtual certainty, for example due to automatic stay provisions.
A rating on an obligation is lowered to ‘D’ if it is subject to a distressed
debt restructuring.
Dual Ratings:
Dual ratings may be assigned to debt issues that have a put option or demand
feature. The first component of the rating addresses the likelihood of repayment
of principal and interest as due, and the second component of the rating
addresses only the demand feature. The first component of the rating can relate
to either a short-term or long-term transaction and accordingly use either
short-term or long-term rating symbols. The second component of the rating
relates to the put option and is assigned a short-term rating symbol (for
example, ‘AAA/A-1+‘ or ‘A-1+/ A-1’). With U.S. municipal short-term demand debt,
the U.S. municipal short-term note rating symbols are used for the first
component of the rating (for example, ‘SP-1+/A-1+‘).
Active
Qualifiers
S&P uses
the following qualifiers that limit the scope of a rating. The structure of the
transaction can require the use of a qualifier such as a ‘p’ qualifier, which
indicates the rating addresses the principal portion of the obligation only. A
qualifier appears as a suffix and is part of the rating.
L: Ratings
qualified with ‘L’ apply only to amounts invested up to federal deposit
insurance limits.
p: This
suffix is used for issues in which the credit factors, the terms, or both, that
determine the likelihood of receipt of payment of principal are different from
the credit factors, terms or both that determine the likelihood of receipt of
interest on the obligation. The ‘p’ suffix indicates that the rating addresses
the principal portion of the obligation only and that the interest is not rated.
prelim:
Preliminary ratings, with the ‘prelim’ suffix, may be assigned to obligors or
obligations, including financial programs, in the circumstances described below.
Assignment of a final rating is conditional on the receipt by S&P of
appropriate documentation. S&P reserves the right not to issue a final
rating. Moreover, if a final rating is issued, it may differ from the
preliminary rating.
■
Preliminary
ratings may be assigned to obligations, most commonly structured and project
finance issues, pending receipt of final documentation and legal opinions.
■
Preliminary
ratings may be assigned to obligations that will likely be issued upon the
obligor’s emergence from bankruptcy or similar reorganization, based on
late-stage reorganization plans, documentation, and discussions with the
obligor. Preliminary ratings may also be assigned to the obligors. These ratings
consider the anticipated general credit quality of the reorganized or
post-bankruptcy issuer as well as attributes of the anticipated obligation(s).
■
Preliminary
ratings may be assigned to entities that are being formed or that are in the
process of being independently established when, in S&P’s opinion,
documentation is close to final. Preliminary ratings may also be assigned to the
obligations of these entities.
■
Preliminary
ratings may be assigned when a previously unrated entity is undergoing a
well-formulated restructuring, recapitalization, significant financing or other
transformative event, generally at the point that investor or lender commitments
are invited. The preliminary rating may be assigned to the entity and to its
proposed obligation(s). These preliminary ratings consider the anticipated
general credit quality of the obligor, as well as attributes of the anticipated
obligation(s), assuming successful completion of the transformative event.
Should the transformative event not occur, S&P would likely withdraw these
preliminary ratings.
■
A preliminary
recovery rating may be assigned to an obligation that has a preliminary issue
credit rating.
May
1, 2024 | Prospectus
A-4
PIMCO
Managed Accounts Trust
t: This
symbol indicates termination structures that are designed to honor their
contracts to full maturity or, should certain events occur, to terminate and
cash settle all their contracts before their final maturity date.
cir: This
symbol indicates a Counterparty Instrument Rating (CIR), which is a
forward-looking opinion about the creditworthiness of an issuer in a
securitization structure with respect to a specific financial obligation to a
counterparty (including interest rate swaps, currency swaps, and liquidity
facilities). The CIR is determined on an ultimate payment basis; these opinions
do not take into account timeliness of payment.
Inactive
Qualifiers (no longer applied or outstanding)
*: This
symbol indicated that the rating was contingent upon S&P receipt of an
executed copy of the escrow agreement or closing documentation confirming
investments and cash flows. Discontinued use in August 1998.
c: This
qualifier was used to provide additional information to investors that the bank
may terminate its obligation to purchase tendered bonds if the long-term credit
rating of the issuer was lowered to below an investment-grade level and/or the
issuer’s bonds were deemed taxable. Discontinued use in January 2001.
G: The letter
‘G’ followed the rating symbol when a fund’s portfolio consisted primarily of
direct U.S. government securities.
i: This
suffix was used for issues in which the credit factors, terms, or both that
determine the likelihood of receipt of payment of interest are different from
the credit factors, terms, or both that determine the likelihood of receipt of
principal on the obligation. The 'i' suffix indicated that the rating addressed
the interest portion of the obligation only. The 'i' suffix was always used in
conjunction with the 'p' suffix, which addresses likelihood of receipt of
principal. For example, a rated obligation could have been assigned a rating of
'AAApNRi' indicating that the principal portion was rated 'AAA' and the interest
portion of the obligation was not rated.
pi: This
qualifier was used to indicate ratings that were based on an analysis of an
issuer’s published financial information, as well as additional information in
the public domain. Such ratings did not, however, reflect in-depth meetings with
an issuer’s management and therefore, could have been based on less
comprehensive information than ratings without a ‘pi’ suffix. Discontinued use
as of December 2014 and as of August 2015 for Lloyd’s Syndicate Assessments.
pr: The
letters ‘pr’ indicate that the rating was provisional. A provisional rating
assumed the successful completion of a project financed by the debt being rated
and indicates that payment of debt service requirements was largely or entirely
dependent upon the successful, timely completion of the project. This rating,
however, while addressing credit quality subsequent to completion of the
project, made no comment on the likelihood of or the risk of default upon
failure of such completion.
q: A ‘q’
subscript indicates that the rating is based solely on quantitative analysis of
publicly available information. Discontinued use in April 2001.
r: The ‘r’
modifier was assigned to securities containing extraordinary risks, particularly
market risks, that are not covered in the credit rating. The absence of an ‘r’
modifier should not be taken as an indication that an obligation would not
exhibit extraordinary noncredit-related risks. S&P discontinued the use of
the ‘r’ modifier for most obligations in June 2000 and for the balance of
obligations (mainly structured finance transactions) in November 2002.
Fitch
Ratings
Long-Term
Credit Ratings
Investment Grade
Investment Grade
Rated
entities in a number of sectors, including financial and non-financial
corporations, sovereigns, insurance companies and certain sectors within public
finance, are generally assigned Issuer Default Ratings (“IDRs”). IDRs are also
assigned to certain entities or enterprises in global infrastructure, project
finance, and public finance. IDRs opine on an entity’s relative vulnerability to
default (including by way of a distressed debt exchange) on financial
obligations. The threshold default risk addressed by the IDR is generally that
of the financial obligations whose non-payment would best reflect the uncured
failure of that entity. As such, IDRs also address relative vulnerability to
bankruptcy, administrative receivership or similar concepts.
In aggregate,
IDRs provide an ordinal ranking of issuers based on the agency’s view of their
relative vulnerability to default, rather than a prediction of a specific
percentage likelihood of default.
AAA: Highest
credit quality. ‘AAA’ ratings denote the lowest expectation of default risk.
They are assigned only in cases of exceptionally strong capacity for payment of
financial commitments. This capacity is highly unlikely to be adversely affected
by foreseeable events.
AA: Very high
credit quality. ‘AA’ ratings denote expectations of very low default risk. They
indicate very strong capacity for payment of financial commitments. This
capacity is not significantly vulnerable to foreseeable events.
A: High
credit quality. ‘A’ ratings denote expectations of low default risk. The
capacity for payment of financial commitments is considered strong. This
capacity may, nevertheless, be more vulnerable to adverse business or economic
conditions than is the case for higher ratings.
BBB: Good
credit quality. ‘BBB’ ratings indicate that expectations of default risk are
currently low. The capacity for payment of financial commitments is considered
adequate, but adverse business or economic conditions are more likely to impair
this capacity.
Speculative
Grade
BB:
Speculative. ‘BB’ ratings indicate an elevated vulnerability to default risk,
particularly in the event of adverse changes in business or economic conditions
over time; however, business or financial flexibility exists that supports the
servicing of financial commitments.
A-5 Prospectus | PIMCO Managed Accounts Trust
Prospectus
B: Highly
speculative. ‘B’ ratings indicate that material default risk is present, but a
limited margin of safety remains. Financial commitments are currently being met;
however, capacity for continued payment is vulnerable to deterioration in the
business and economic environment.
CCC:
Substantial credit risk. Very low margin for safety. Default is a real
possibility.
CC: Very high
levels of credit risk. Default of some kind appears probable.
C: Near
default.
A default or
default-like process has begun, or the issuer is in standstill, or for a closed
funding vehicle, payment capacity is irrevocably impaired. Conditions that are
indicative of a ‘C’ category rating for an issuer include:
a. the issuer
has entered into a grace or cure period following non-payment of a material
financial obligation;
b. the issuer
has entered into a temporary negotiated waiver or standstill agreement following
a payment default on a material financial obligation;
c. the formal
announcement by the issuer or their agent of a distressed debt exchange;
d. a closed
financing vehicle where payment capacity is irrevocably impaired such that it is
not expected to pay interest and/or principal in full during the life of the
transaction, but where no payment default is imminent
RD:
Restricted default. ‘RD’ ratings indicate an issuer that in Fitch’s opinion has
experienced an uncured payment default or distressed debt exchange on a bond,
loan or other material financial obligation but has not entered into bankruptcy
filings, administration, receivership, liquidation or other formal winding-up
procedure, and has not otherwise ceased operating. This would include:
i. the
selective payment default on a specific class or currency of debt;
ii. the
uncured expiry of any applicable grace period, cure period or default
forbearance period following a payment default on a bank loan, capital markets
security or other material financial obligation;
iii. the
extension of multiple waivers or forbearance periods upon a payment default on
one or more material financial obligations, either in series or in parallel;
ordinary execution of a distressed debt exchange on one or more material
financial obligations.
D: Default.
‘D’ ratings indicate an issuer that in Fitch’s opinion has entered into
bankruptcy filings, administration, receivership, liquidation or other formal
winding-up procedure or that has otherwise ceased business. Default ratings are
not assigned prospectively to entities or their obligations; within this
context, non-payment on an instrument that contains a deferral feature or grace
period will generally not be considered a default until after the expiration of
the deferral or grace period, unless a default is otherwise driven by bankruptcy
or other similar circumstance, or by a distressed debt exchange.
In all cases,
the assignment of a default rating reflects the agency’s opinion as to the most
appropriate rating category consistent with the rest of its universe of ratings,
and may differ from the definition of default under the terms of an issuer’s
financial obligations or local commercial practice.
The modifiers
“+” or “-” may be appended to a rating to denote relative status within major
rating categories. For example, the rating category ‘AA’ has three
notch-specific rating levels (’AA+‘; ’AA’; ‘AA-’; each a rating level). Such
suffixes are not added to ‘AAA’ ratings and ratings below the ‘CCC’ category.
Recovery
Ratings
Recovery
Ratings are assigned to selected individual securities and obligations, most
frequently for individual obligations of corporate finance issuers with IDRs in
speculative grade categories.
Among the
factors that affect recovery rates for securities are the collateral, the
seniority relative to other obligations in the capital structure (where
appropriate), and the expected value of the company or underlying collateral in
distress.
The Recovery
Rating scale is based on the expected relative recovery characteristics of an
obligation upon the curing of a default, emergence from insolvency or following
the liquidation or termination of the obligor or its associated collateral.
Recovery
Ratings are an ordinal scale and do not attempt to precisely predict a given
level of recovery. As a guideline in developing the rating assessments, the
agency employs broad theoretical recovery bands in its ratings approach based on
historical averages and analytical judgment, but actual recoveries for a given
security may deviate materially from historical averages.
RR1:
Outstanding
recovery prospects given default. ‘RR1’ rated
securities have characteristics consistent with securities historically
recovering 91%-100% of current principal and related interest.
RR2:
Superior
recovery prospects given default. ‘RR2’ rated
securities have characteristics consistent with securities historically
recovering 71%-90% of current principal and related interest.
RR3:
Good
recovery prospects given default. ‘RR3’ rated
securities have characteristics consistent with securities historically
recovering 51%-70% of current principal and related interest.
RR4:
Average
recovery prospects given default. ‘RR4’ rated
securities have characteristics consistent with securities historically
recovering 31%-50% of current principal and related interest.
RR5:
Below
average recovery prospects given default. ‘RR5’ rated
securities have characteristics consistent with securities historically
recovering 11%-30% of current principal and related interest.
RR6:
Poor
recovery prospects given default. ‘RR6’ rated
securities have characteristics consistent with securities historically
recovering 0%-10% of current principal and related interest.
May
1, 2024 | Prospectus
A-6
PIMCO
Managed Accounts Trust
Short-Term
Credit Ratings
A short-term
issuer or obligation rating is based in all cases on the short-term
vulnerability to default of the rated entity and relates to the capacity to meet
financial obligations in accordance with the documentation governing the
relevant obligation. Short-term deposit ratings may be adjusted for loss
severity. Short-Term Ratings are assigned to obligations whose initial maturity
is viewed as “short term” based on market convention (a long-term rating can
also be used to rate an issue with short maturity). Typically, this means up to
13 months for corporate, sovereign, and structured obligations, and up to 36
months for obligations in U.S. public finance markets.
F1:
Highest
short-term credit quality. Indicates the
strongest intrinsic capacity for timely payment of financial commitments; may
have an added “+” to denote any exceptionally strong credit feature.
F2:
Good
short-term credit quality. Good
intrinsic capacity for timely payment of financial commitments.
F3:
Fair
short-term credit quality. The intrinsic
capacity for timely payment of financial commitments is adequate.
B:
Speculative
short-term credit quality. Minimal
capacity for timely payment of financial commitments, plus heightened
vulnerability to near term adverse changes in financial and economic conditions.
C:
High
short-term default risk. Default is a
real possibility.
RD:
Restricted
default. Indicates an
entity that has defaulted on one or more of its financial commitments, although
it continues to meet other financial obligations. Typically applicable to entity
ratings only.
D:
Default.
Indicates a
broad-based default event for an entity, or the default of a short-term
obligation.
A-7 Prospectus | PIMCO Managed Accounts Trust
INVESTMENT
ADVISER AND ADMINISTRATOR
PIMCO, 650
Newport Center Drive, Newport Beach, CA 92660
DISTRIBUTOR
PIMCO
Investments LLC, 1633 Broadway, New York, NY 10019
CUSTODIAN
State Street
Bank & Trust Co., 1100 Main Street, Suite 400, Kansas City, MO 64105
TRANSFER
AGENT
SS&C
Global Investor & Distribution Solutions, Inc., 430 W 7th Street STE 219024,
Kansas City, MO 64105
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
PricewaterhouseCoopers
LLP, 1100 Walnut Street, Suite 1300, Kansas City, MO 64106-2197
LEGAL
COUNSEL
Ropes &
Gray LLP, Prudential Tower, 800 Boylston Street, Boston, MA 02199-3600
PIMCO
Managed Accounts Trust
650 Newport Center Drive
Newport Beach, CA 92660
650 Newport Center Drive
Newport Beach, CA 92660
The Trust’s
SAI and annual and semi-annual reports to shareholders include additional
information about the Portfolios. The SAI is incorporated by reference into this
Prospectus, which means it is part of this Prospectus for legal purposes. The
Portfolio's annual report discusses the market conditions and investment
strategies that significantly affected each Portfolio’s performance during its
last fiscal year.
The SAI
contains detailed information about Portfolio purchase, redemption and exchange
options and procedures and other information about the Portfolios. You can get a
free copy of the SAI.
You may get
free copies of any of these materials, or request other information about the
Portfolios by calling the Trust at 1-800-927-4648 or by writing to:
PIMCO
Managed Accounts Trust
650 Newport Center Drive
Newport Beach, CA 92660
650 Newport Center Drive
Newport Beach, CA 92660
Daily updates
on the NAV of a Portfolio may be obtained by calling 1-800-927-4648.
As permitted
by regulations adopted by the Securities and Exchange Commission, paper copies
of the Portfolio’s annual and semi-annual shareholder reports from your
financial intermediary, such as a broker-dealer or bank, which offers the
Portfolio will no longer be sent by mail, unless you specifically request paper
copies from the Portfolio or from your financial intermediary. Instead, the
shareholder reports will be made available on a website, and your financial
intermediary will notify you by mail each time a report is posted and provide
you with a website link to access the report. Instructions for requesting paper
copies will be provided by your financial intermediary. Paper copies of the
Portfolio’s shareholder reports are required to be provided free of charge by
the financial intermediary.
You may
access reports and other information about the Trust on the EDGAR Database on
the Commission’s web site at www.sec.gov
. You may get
copies of additional information about the Trust, including its SAI, with
payment of a duplication fee, by e-mailing your request to [email protected].
You can also visit our web site at pimco.com
for
additional information about the Portfolios, including the SAI and the annual
and semi-annual reports, which are available for download free of charge.
Reference the
Trust’s Investment Company Act file number in your correspondence.
Investment
Company Act File Number: 811-09721
FISH0001_050124