Pimco To Release 3-7 Year U.S. Treasury Index Fund And 20+ Year Zero Coupon U.S. Treasury Index Fund Monday Nov 2nd

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October 30, 2009 10:40am NYSE:FIVZ NYSE:ZROZ

pimcoPimco is looking to release two more U.S. Treasury ETFs, expanding their current lineup. The first of these funds, the Pimco 3-7 Year U.S. Treasury Index Fund (FIVZ), will seek to to provide total return that closely corresponds, before fees and expenses, to


 the total return of The Merrill Lynch 3-7 Year US Treasury Index. The second instrument, the Pimco 20+ Year Zero Coupon U.S. Treasury Index Fund (ZROZ) aims to provide total return that closely corresponds, before fees and expenses, to the total return of The Merrill Lynch Long STRIPS Index. Both ETFs will be released Monday, November 2nd on the NYSE.

PIMCO 3-7 Year U.S. Treasury Index Fund (FIVZ)

The Fund seeks to achieve its investment objective by investing under normal circumstances at least 80% of its total assets (exclusive of collateral held from securities lending) in the component securities (“Component Securities”) of The Merrill Lynch 3-7 Year US Treasury IndexSM (the “Underlying Index”). The Fund may invest the remainder of its assets in Fixed Income Instruments that are not Component Securities, but which PIMCO believes will help the Fund track its Underlying Index, as well as in cash and investment grade, liquid short-term instruments, forwards or derivatives, such as options, futures contracts or swap agreements, and shares of affiliated bond funds. The average portfolio duration of this Fund will closely correspond to the duration of its Underlying Index, which as of July 31, 2009 was 4.36 years.

The Underlying Index is an unmanaged index comprised of U.S. dollar denominated sovereign debt securities publicly issued by the U.S. Treasury having a maturity of at least 3 years and less than 7 years. As of July 31, 2009, there were 50 issues in the Underlying Index. The securities in the Underlying Index have a minimum $1 billion of outstanding face value, have 3 to 7 years remaining to maturity, are fixed-rate and are non-convertible. Bills, inflation-linked debt and strips are excluded from the Underlying Index; however, original issue zero coupon bonds are included in the Underlying Index and the amounts outstanding of qualifying coupon securities are not reduced by any portions that have been stripped. The Underlying Index is capitalization-weighted and the composition of Component Securities is updated monthly. Intra-month cash flows are reinvested daily, at the beginning-of-month 1-month Libid rate, until the end of the month at which point all cash is removed from the Underlying Index. It is not possible to invest directly in the Underlying Index. The Underlying Index does not reflect deductions for fees, expenses or taxes.

PIMCO uses an indexing approach in managing the Fund’s investments. The Fund employs a representative sampling strategy in seeking to achieve its investment objective. In using this strategy, PIMCO seeks to invest in a combination of Component Securities and other instruments such that the combination effectively provides exposure to the Underlying Index. In using a representative sampling strategy, the Fund may not track its Underlying Index with the same degree of accuracy as a fund that replicates each of the Component Securities of the Underlying Index. Unlike many investment companies, the Fund does not attempt to outperform the index the Fund tracks. An indexing approach may eliminate the chance that the Fund will substantially outperform its Underlying Index but also may reduce some of the risks of active management. Indexing seeks to achieve lower costs by keeping portfolio turnover low in comparison to actively managed investment companies.

The Fund may invest in derivative instruments, such as options, futures contracts or swap agreements. The Fund may, without limitation, seek to obtain market exposure to the securities in which it primarily invests by entering into a series of purchase and sale contracts or by using other investment techniques (such as buy backs). The “total return” sought by the Fund consists of income earned on the Fund’s investments, plus capital appreciation, if any, which generally arises from decreases in interest rates.

You can find the full prospectus: HERE

PIMCO 20+ Year Zero Coupon U.S. Treasury Index Fund (ZROZ)

The Fund seeks to achieve its investment objective by investing under normal circumstances at least 80% of its total assets (exclusive of collateral held from securities lending) in the component securities (“Component Securities”) of The Merrill Lynch Long STRIPS IndexSM (the “Underlying Index”). The Fund may invest the remainder of its assets in Fixed Income Instruments that are not Component Securities, but which PIMCO believes will help the Fund track its Underlying Index, as well as in cash and investment grade, liquid short-term instruments, forwards or derivatives, such as options, futures contracts or swap agreements, and shares of affiliated bond funds. The average portfolio duration of this Fund will closely correspond to the duration of its Underlying Index, which as of [ ], 2009 was [ ] years.

The Underlying Index is an unmanaged index that tracks the performance of long dated U.S. Treasury principal STRIPS (Separate Trading of Registered Interest and Principal of Securities). Securities of the Underlying Index must be created from the principal component of underlying U.S. Treasury bonds having a remaining term to final maturity as of the rebalancing date of at least 20 years and an amount outstanding of at least $1 billion. STRIPS that represent the coupon component of underlying U.S. Treasury bonds, or that have been created from Treasury Inflation-Protected Securities (TIPS), are excluded. As of [ ], 2009, there were [ ] issues in the Underlying Index. Index constituents are capitalization-weighted on the assumption that the entire amount of each underlying U.S. Treasury bond has been stripped. The Underlying Index is rebalanced quarterly on January 31, April 30, July 31 and October 31. Securities that no longer meet the maturity criteria during the course of the quarterly rebalancing cycle remain in the Underlying Index until the next quarterly rebalancing date at which point they are dropped from the Underlying Index. It is not possible to invest directly in the Underlying Index. The Underlying Index does not reflect deductions for fees, expenses or taxes.

PIMCO uses an indexing approach in managing the Fund’s investments. The Fund employs a representative sampling strategy in seeking to achieve its investment objective. In using this strategy, PIMCO seeks to invest in a combination of Component Securities and other instruments such that the combination effectively provides exposure to the Underlying Index. In using a representative sampling strategy, the Fund may not track its Underlying Index with the same degree of accuracy as a fund that replicates each of the Component Securities of the Underlying Index. Unlike many investment companies, the Fund does not attempt to outperform the index the Fund tracks. An indexing approach may eliminate the chance that the Fund will substantially outperform its Underlying Index but also may reduce some of the risks of active management. Indexing seeks to achieve lower costs by keeping portfolio turnover low in comparison to actively managed investment companies.

The Fund may invest in derivative instruments, such as options, futures contracts or swap agreements. The Fund may, without limitation, seek to obtain market exposure to the securities in which it primarily invests by entering into a series of purchase and sale contracts or by using other investment techniques (such as buy backs). The “total return” sought by the Fund consists of income earned on the Fund’s investments, plus capital appreciation, if any, which generally arises from decreases in interest rates.

You can find the full prospectus: HERE

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