Correspondence 0001193125-24-258699 from PIMCO Equity Series (CIK 0001479360)
PIMCO Equity Series (CIK 0001479360)
Date: Nov. 14, 2024 · CIK: 0001479360 · Accession: 0001193125-24-258699
AI Filing Summary & Sentiment
File numbers found in text: 333-164077, 811-22375
Letter
VIA EDGAR Division of Investment Management Washington, D.C. 20549 Re: PIMCO Equity Series (the “Registrant”) File Nos. 333-164077; 811-22375
Dear Ms. Dubey:
You previously communicated the Securities and Exchange Commission (“SEC”) staff’s (the “Staff”) comments on Post-Effective Amendment No. 94 (“PEA 94”) to the Registrant’s registration statement under the Securities Act of 1933, as amended, and Amendment No. 96 to the Registrant’s registration statement under the Investment Company Act of 1940, as amended (the “1940 Act”), as filed on August 23, 2024. PEA 94 was filed to register shares of the PIMCO REALPATH® Blend 2070 Fund, a new series of the Registrant (the “Fund”). A summary of the Staff’s comments, along with the Registrant’s responses, is set forth below. Undefined capitalized terms used herein have the same meaning as in PEA 94. All references to “Fund” refer only to the Fund, unless noted otherwise.
General
Comment 1: Please confirm that all such information noted “to be updated by subsequent amendment” will be updated in the amendment to this filing.
Response: All information noted “to be updated by subsequent amendment” will be updated in the definitive post-effective amendment for this purpose is expected to be filed and effective on or about November 22, 2024 (“PEA 96”).
Prospectus
Comment 2: In the “Investment Objective” section of the summary portion of the Prospectus, please consider defining “total return” (e.g. capital appreciation and income).
Response: The Registrant has added the following sentence to the Fund’s “Principal Investment Strategies” section of the summary portion of the Prospectus:
The “total return” sought by the Fund generally may consist of income earned on the Fund’s investments, plus capital appreciation, if any, which may arise from decreases in interest rates,
Anu Dubey
November 14, 2024
Page
foreign currency appreciation, or improving credit fundamentals for a particular sector or security.
Comment 3: Please bold the second sentence in the “Fees and Expenses of the Fund” section in accordance with Item 3 of Form N-1A.
Response: Comment accepted.
Comment 4: Provide supplementally the completed fee table and expense examples in its entirety.
Response: The Registrant has provided what is expected to be the Fund’s completed fee table and expense examples as Attachment A to this response.
Comment 5: Footnote 2 to the fee table relates to interest expense. This footnote is neither permitted nor required by Form N-1A. Please move this information out of the summary prospectus. See General Instruction C(3)(b) of Form N-1A.
Response: The Registrant has reviewed this footnote in light of the Staff’s comment and has already consolidated interest expense-related footnotes into a single footnote, consistent with the Staff’s request provided as a comment to the 2016 annual update of the PIMCO Funds’ registration statement.1 However, the Registrant respectfully declines to delete this footnote in its entirety. The Registrant’s response, set forth below, is the same as the response provided to similar comments to several prior post-effective amendments of PIMCO-advised registrants.2
To the extent the Fund enters into certain investments, such as reverse repurchase agreements or short sales, the Fund incurs interest expense. Interest expense is required to be treated as an expense of the Fund for accounting purposes,3 but the amount of interest expense, if any, will vary from year to year with the Fund’s use of such investments as an investment strategy.
Unlike many other fund complexes, the Fund has a “unified fee” structure wherein the Fund pays two fixed fees to PIMCO in return for required services that PIMCO provides or arranges to provide for the Fund. This unified fee is comprised of the investment advisory fee and supervisory and administrative fee as described in
See, e.g., Letter from Adam T. Teufel to Amy Miller, Division of Investment Management, U.S. Securities and Exchange Commission, Responding to Comments on PIMCO Funds’ Post-Effective Amendment No. 284, at comment 2 (Aug. 11, 2016).
See, e.g., Letter from Adam T. Teufel to Anu Dubey, Division of Investment Management, U.S. Securities and Exchange Commission, Responding to Comments on PIMCO Funds’ Post-Effective Amendment No. 292, at comment 3 (Nov. 14, 2018); Letter from Adam T. Teufel to Anu Dubey, Division of Investment Management, U.S. Securities and Exchange Commission, Responding to Comments on PIMCO Equity Series’ Post-Effective Amendment No. 90, at comment 2 (Nov. 4, 2022).
See Fin. Accounting Standards Bd. Accounting Standards Codification 946-225-45-3 (requiring investment companies to report interest expense separately when calculating net assets for purposes of the fund’s statement of operations).
Anu Dubey
November 14, 2024
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the Fund’s statutory prospectus and disclosed in the combined Management Fees line item of the fee table. Under the unified fee, PIMCO provides or procures advisory and supervisory and administrative services for shareholders and also bears the costs of various third-party services required by the Fund, including audit, custodial, portfolio accounting, legal, transfer agency and printing costs. As such, the unified fee structure is designed to be an “all-in” fee structure that pays for the fees and costs of all PIMCO and third-party provided services under more or less a fixed fee. Accordingly, the Registrant believes that investors have come to expect a total expense ratio from year to year that is generally fixed.
There are, however, certain expenses the Fund does bear that are not covered under the unified fee structure that may materially impact the total level of expenses that shareholders generally expect to pay under a unified fee structure. One of the few expenses not covered by the unified fee, and thus reflected in the “Other Expenses” line item of the fee table, is the Fund’s interest expense. As interest expense may vary, causing the Fund to disclose a different total expense ratio from year to year, the Registrant believes that failure to include an explanation for this variance may create investor confusion. The Registrant believes explanatory footnotes appropriately placed where they are most likely to be read by investors (i.e., immediately adjacent to the fee table and expense ratio) are helpful and informative for the average investor, not confusing or burdensome.
The Registrant notes that the SEC, in adopting the summary prospectus amendments to Form N-1A, indicated that “[t]he fee table and example are designed to help investors understand the costs of investing in a fund and compare those costs with the costs of other funds” (emphasis added).4 The SEC further stated that the “prospectus summary section is intended to provide investors with streamlined disclosure of key mutual fund information at the front of the statutory prospectus, in a standardized order that facilitates comparisons across funds” (emphasis added).5 The Registrant agrees. The primary goal of a statutory prospectus summary section should be to provide clear, concise information to facilitate investor comparison of the Fund with other mutual funds. Without the current fee table footnotes describing the relevant Fund’s interest expense and its effect on the Fund’s expense ratio, the Registrant believes the Fund’s fee table would not adequately facilitate an investor comparison of the Fund’s costs against other mutual funds’ costs as investors will not have the context in which to accurately make such a comparison. Because the Fund has a unique unified fee structure as described above, what comprises “Other Expenses” for the Fund is likely very different from what comprises “Other Expenses” for other mutual funds. Therefore, the impact of “Other Expenses” on the Fund’s total expense ratio from year to year as compared to other mutual funds’ expense ratios is likely to be quite different. For example, because the Fund does not include any routine servicing or administrative expenses under “Other Expenses,” as such expenses are covered by the unified fee, any “Other Expenses” reflect non-routine activities such as interest expense accrued as a result of discretionary investment activities. Since the unified fee structure renders “Other Expenses” a non-routine line item for certain Funds, investors in the relevant Funds have reasonably come to expect that the total expense ratio of the relevant Funds is often the unified fee plus any share class-specific fixed expenses (such as 12b-1 fees). Thus, without the footnotes to explain the non-routine instances where the Fund needs to disclose “Other Expenses,” investors may not understand that the Fund operates under a unified fee structure, as they may mistakenly assume that such “Other Expenses” are expenses that are in fact
New Disclosure Option for Open-End Management Investment Companies, SEC Rel. No. IC-23065 at 31 (Jun. 1, 1998).
Id. at 16-17.
Anu Dubey
November 14, 2024
Page
covered by the unified fee. This is particularly true under the “summary prospectus” paradigm where the statutory prospectus is not required to be sent unless the investor requests it and detailed information about the unified fee structure is only included in the statutory prospectus. Accordingly, the Registrant believes an investor could be unaware of the Fund’s unified fee structure unless the Fund includes explanatory footnotes in the summary prospectus. The Registrant believes deleting these footnotes would cause its fee tables to fall short in meeting the SEC’s objective of providing clear, concise, standardized information to facilitate cost comparisons across different mutual funds because the Registrant’s unified fee structure is unique as compared to most other mutual funds.
Thus, as General Instruction C(1)(a) to Form N-1A states that the requirements of the Form are “intended to promote effective communication between the [Fund] and prospective investors,” the Registrant believes it is “effective communication” within the meaning of the General Instruction to include a limited number of footnotes as part of the table to clearly communicate the nature and amount of the Funds’ interest expense, where applicable, including why interest expense is incurred and that interest expense may vary from year to year (i.e., that it is not a fixed fee or expense, like the other line items in a Fund’s fee table). The Registrant believes the failure to do so may result in investors not otherwise understanding why the Fund’s total expense ratio may differ, sometimes substantially, each year largely as a function of interest expense. Moreover, the inclusion of the interest expense footnotes, in addition to providing clarifying information to investors, does not lengthen the summary section of the statutory prospectus in any meaningful way or otherwise interfere with a concise, plain English presentation of material information to investors. To the contrary, the interest expense footnotes provide helpful, clarifying information for investors.
Comment 6: For footnote 3 to the fee table, confirm that the date to be inserted will be at least one year from the effective date of the Prospectus. Instruction 3(e) to Item 3 of Form N-1A.
Response: The Registrant confirms that the date through which the expense limitation agreement (“Expense Limitation Agreement”) is effective will be at least one year from the effective date of the Fund’s Prospectus.
Comment 7: For footnote 3 to the fee table, please disclose who can terminate the waiver agreement. Instruction 3(e) to Item 3 of Form N-1A.
Response: Under the terms of the Expense Limitation Agreement, only the Board of Trustees of the Registrant may terminate the Expense Limitation Agreement prior to the then-current term of the Expense Limitation Agreement, and the current disclosure notes PIMCO’s ability to terminate the Expense Limitation Agreement and the circumstances under which PIMCO may terminate. In accordance with General Instruction (C)(1) of Form N-1A, as the Expense Limitation Agreement is beneficial to the Fund, the Registrant does not believe that disclosing the ability of the Board of Trustees to terminate the Expense Limitation Agreement would be helpful to investors and, instead, could result in investor confusion.
Comment 8: In the “Principal Investment Strategies” section of the summary portion of the Prospectus, please disclose the credit quality guideline with respect to the Fixed Income Instruments, including high yield securities, in which the Fund will invest as part of its principal investment strategies.
Anu Dubey
November 14, 2024
Page
Response: Comment accepted. The Registrant has added the following disclosure to the “Principal Investment Strategies” section of the summary portion of the Prospectus (new language bold and underlined):
The Fund seeks to achieve its investment objective by investing under normal circumstances in a combination of affiliated and unaffiliated funds that are registered under the Investment Company Act of 1940, as amended (the “1940 Act”), equity securities, Fixed Income Instruments of varying maturities and credit qualities, or related derivatives on any of the preceding securities mentioned.
Comment 9: In the “Principal Investment Strategies” section of the summary portion of the Prospectus, please identify the types of derivatives in which the Fund will invest as part of its principal investment strategies.
Response: Comment accepted. The Registrant has added the following disclosure to the “Principal Investment Strategies” section of the summary portion of the Prospectus (new language bold and underlined):
The Fund seeks to achieve its investment objective by investing under normal circumstances in a combination of affiliated and unaffiliated funds that are registered under the Investment Company Act of 1940, as amended (the “1940 Act”), equity securities, Fixed Income Instruments of varying maturities and credit qualities, or related derivatives, such as options, futures contracts, or swap agreements, on any of the preceding securities mentioned.
Comment 10: Given that the Fund includes Small-Cap and Mid-Cap Company Risk as a principal risk of the Fund, please add “U.S. mid-cap equities” to the Fund’s “glide path”.
Response: The Registrant respectfully declines to revise the Fund’s glidepath, which does not target exposure to equities categorized in the glide path as U.S. mid-cap equities at the present time. The Registrant will also retain the Small-Cap and Mid-Cap Company Risk disclosure as the glide path may target U.S. mid-cap equities in the future.
Comment 11: In the “Principal Investment Strategies” section of the summary portion of the Prospectus, it is disclosed that “[a]s part of its investment process, PIMCO expects to seek to reduce exposure to certain risks by implementing various hedging transactions”. Please describe the Fund’s hedging transactions with more specificity.
Response: Comment accepted. The Registrant has added the following disclosure to the “Principal Investment Strategies” section of the summary portion of the Prospectus (new language bold and underlined; deleted language struck through):
As part of its investment process, PIMCO may expects to seek to reduce exposure to certain risks by implementing various hedging transactions. These hedging transactions seek to reduce the Fund’s exposure to certain severe, unanticipated market events that could significantly detract from returns. PIMCO may intends to
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CORRESP 1 filename1.htm CORRESP 1900 K Street, NW Washington, DC 20006-1110 +1 202 261 3300 Main +1 202 261 3333 Fax www.dechert.com ADAM T. TEUFEL adam.teufel@dechert.com +1 202 261 3464 Direct +1 202 261 3164 Fax November 14, 2024 VIA EDGAR Anu Dubey Division of Investment Management U.S. Securities and Exchange Commission 100 F Street, N.E. Washington, D.C. 20549 Re: PIMCO Equity Series (the “Registrant”) File Nos. 333-164077; 811-22375 Dear Ms. Dubey: You previously communicated the Securities and Exchange Commission (“SEC”) staff’s (the “Staff”) comments on Post-Effective Amendment No. 94 (“PEA 94”) to the Registrant’s registration statement under the Securities Act of 1933, as amended, and Amendment No. 96 to the Registrant’s registration statement under the Investment Company Act of 1940, as amended (the “1940 Act”), as filed on August 23, 2024. PEA 94 was filed to register shares of the PIMCO REALPATH® Blend 2070 Fund, a new series of the Registrant (the “Fund”). A summary of the Staff’s comments, along with the Registrant’s responses, is set forth below. Undefined capitalized terms used herein have the same meaning as in PEA 94. All references to “Fund” refer only to the Fund, unless noted otherwise. General Comment 1: Please confirm that all such information noted “to be updated by subsequent amendment” will be updated in the amendment to this filing. Response: All information noted “to be updated by subsequent amendment” will be updated in the definitive post-effective amendment for this purpose is expected to be filed and effective on or about November 22, 2024 (“PEA 96”). Prospectus Comment 2: In the “Investment Objective” section of the summary portion of the Prospectus, please consider defining “total return” (e.g. capital appreciation and income). Response: The Registrant has added the following sentence to the Fund’s “Principal Investment Strategies” section of the summary portion of the Prospectus: The “total return” sought by the Fund generally may consist of income earned on the Fund’s investments, plus capital appreciation, if any, which may arise from decreases in interest rates, Anu Dubey November 14, 2024 Page 2 foreign currency appreciation, or improving credit fundamentals for a particular sector or security. Comment 3: Please bold the second sentence in the “Fees and Expenses of the Fund” section in accordance with Item 3 of Form N-1A. Response: Comment accepted. Comment 4: Provide supplementally the completed fee table and expense examples in its entirety. Response: The Registrant has provided what is expected to be the Fund’s completed fee table and expense examples as Attachment A to this response. Comment 5: Footnote 2 to the fee table relates to interest expense. This footnote is neither permitted nor required by Form N-1A. Please move this information out of the summary prospectus. See General Instruction C(3)(b) of Form N-1A. Response: The Registrant has reviewed this footnote in light of the Staff’s comment and has already consolidated interest expense-related footnotes into a single footnote, consistent with the Staff’s request provided as a comment to the 2016 annual update of the PIMCO Funds’ registration statement.1 However, the Registrant respectfully declines to delete this footnote in its entirety. The Registrant’s response, set forth below, is the same as the response provided to similar comments to several prior post-effective amendments of PIMCO-advised registrants.2 To the extent the Fund enters into certain investments, such as reverse repurchase agreements or short sales, the Fund incurs interest expense. Interest expense is required to be treated as an expense of the Fund for accounting purposes,3 but the amount of interest expense, if any, will vary from year to year with the Fund’s use of such investments as an investment strategy. Unlike many other fund complexes, the Fund has a “unified fee” structure wherein the Fund pays two fixed fees to PIMCO in return for required services that PIMCO provides or arranges to provide for the Fund. This unified fee is comprised of the investment advisory fee and supervisory and administrative fee as described in 1 See, e.g., Letter from Adam T. Teufel to Amy Miller, Division of Investment Management, U.S. Securities and Exchange Commission, Responding to Comments on PIMCO Funds’ Post-Effective Amendment No. 284, at comment 2 (Aug. 11, 2016). 2 See, e.g., Letter from Adam T. Teufel to Anu Dubey, Division of Investment Management, U.S. Securities and Exchange Commission, Responding to Comments on PIMCO Funds’ Post-Effective Amendment No. 292, at comment 3 (Nov. 14, 2018); Letter from Adam T. Teufel to Anu Dubey, Division of Investment Management, U.S. Securities and Exchange Commission, Responding to Comments on PIMCO Equity Series’ Post-Effective Amendment No. 90, at comment 2 (Nov. 4, 2022). 3 See Fin. Accounting Standards Bd. Accounting Standards Codification 946-225-45-3 (requiring investment companies to report interest expense separately when calculating net assets for purposes of the fund’s statement of operations). Anu Dubey November 14, 2024 Page 3 the Fund’s statutory prospectus and disclosed in the combined Management Fees line item of the fee table. Under the unified fee, PIMCO provides or procures advisory and supervisory and administrative services for shareholders and also bears the costs of various third-party services required by the Fund, including audit, custodial, portfolio accounting, legal, transfer agency and printing costs. As such, the unified fee structure is designed to be an “all-in” fee structure that pays for the fees and costs of all PIMCO and third-party provided services under more or less a fixed fee. Accordingly, the Registrant believes that investors have come to expect a total expense ratio from year to year that is generally fixed. There are, however, certain expenses the Fund does bear that are not covered under the unified fee structure that may materially impact the total level of expenses that shareholders generally expect to pay under a unified fee structure. One of the few expenses not covered by the unified fee, and thus reflected in the “Other Expenses” line item of the fee table, is the Fund’s interest expense. As interest expense may vary, causing the Fund to disclose a different total expense ratio from year to year, the Registrant believes that failure to include an explanation for this variance may create investor confusion. The Registrant believes explanatory footnotes appropriately placed where they are most likely to be read by investors (i.e., immediately adjacent to the fee table and expense ratio) are helpful and informative for the average investor, not confusing or burdensome. The Registrant notes that the SEC, in adopting the summary prospectus amendments to Form N-1A, indicated that “[t]he fee table and example are designed to help investors understand the costs of investing in a fund and compare those costs with the costs of other funds” (emphasis added).4 The SEC further stated that the “prospectus summary section is intended to provide investors with streamlined disclosure of key mutual fund information at the front of the statutory prospectus, in a standardized order that facilitates comparisons across funds” (emphasis added).5 The Registrant agrees. The primary goal of a statutory prospectus summary section should be to provide clear, concise information to facilitate investor comparison of the Fund with other mutual funds. Without the current fee table footnotes describing the relevant Fund’s interest expense and its effect on the Fund’s expense ratio, the Registrant believes the Fund’s fee table would not adequately facilitate an investor comparison of the Fund’s costs against other mutual funds’ costs as investors will not have the context in which to accurately make such a comparison. Because the Fund has a unique unified fee structure as described above, what comprises “Other Expenses” for the Fund is likely very different from what comprises “Other Expenses” for other mutual funds. Therefore, the impact of “Other Expenses” on the Fund’s total expense ratio from year to year as compared to other mutual funds’ expense ratios is likely to be quite different. For example, because the Fund does not include any routine servicing or administrative expenses under “Other Expenses,” as such expenses are covered by the unified fee, any “Other Expenses” reflect non-routine activities such as interest expense accrued as a result of discretionary investment activities. Since the unified fee structure renders “Other Expenses” a non-routine line item for certain Funds, investors in the relevant Funds have reasonably come to expect that the total expense ratio of the relevant Funds is often the unified fee plus any share class-specific fixed expenses (such as 12b-1 fees). Thus, without the footnotes to explain the non-routine instances where the Fund needs to disclose “Other Expenses,” investors may not understand that the Fund operates under a unified fee structure, as they may mistakenly assume that such “Other Expenses” are expenses that are in fact 4 New Disclosure Option for Open-End Management Investment Companies, SEC Rel. No. IC-23065 at 31 (Jun. 1, 1998). 5 Id. at 16-17. Anu Dubey November 14, 2024 Page 4 covered by the unified fee. This is particularly true under the “summary prospectus” paradigm where the statutory prospectus is not required to be sent unless the investor requests it and detailed information about the unified fee structure is only included in the statutory prospectus. Accordingly, the Registrant believes an investor could be unaware of the Fund’s unified fee structure unless the Fund includes explanatory footnotes in the summary prospectus. The Registrant believes deleting these footnotes would cause its fee tables to fall short in meeting the SEC’s objective of providing clear, concise, standardized information to facilitate cost comparisons across different mutual funds because the Registrant’s unified fee structure is unique as compared to most other mutual funds. Thus, as General Instruction C(1)(a) to Form N-1A states that the requirements of the Form are “intended to promote effective communication between the [Fund] and prospective investors,” the Registrant believes it is “effective communication” within the meaning of the General Instruction to include a limited number of footnotes as part of the table to clearly communicate the nature and amount of the Funds’ interest expense, where applicable, including why interest expense is incurred and that interest expense may vary from year to year (i.e., that it is not a fixed fee or expense, like the other line items in a Fund’s fee table). The Registrant believes the failure to do so may result in investors not otherwise understanding why the Fund’s total expense ratio may differ, sometimes substantially, each year largely as a function of interest expense. Moreover, the inclusion of the interest expense footnotes, in addition to providing clarifying information to investors, does not lengthen the summary section of the statutory prospectus in any meaningful way or otherwise interfere with a concise, plain English presentation of material information to investors. To the contrary, the interest expense footnotes provide helpful, clarifying information for investors. Comment 6: For footnote 3 to the fee table, confirm that the date to be inserted will be at least one year from the effective date of the Prospectus. Instruction 3(e) to Item 3 of Form N-1A. Response: The Registrant confirms that the date through which the expense limitation agreement (“Expense Limitation Agreement”) is effective will be at least one year from the effective date of the Fund’s Prospectus. Comment 7: For footnote 3 to the fee table, please disclose who can terminate the waiver agreement. Instruction 3(e) to Item 3 of Form N-1A. Response: Under the terms of the Expense Limitation Agreement, only the Board of Trustees of the Registrant may terminate the Expense Limitation Agreement prior to the then-current term of the Expense Limitation Agreement, and the current disclosure notes PIMCO’s ability to terminate the Expense Limitation Agreement and the circumstances under which PIMCO may terminate. In accordance with General Instruction (C)(1) of Form N-1A, as the Expense Limitation Agreement is beneficial to the Fund, the Registrant does not believe that disclosing the ability of the Board of Trustees to terminate the Expense Limitation Agreement would be helpful to investors and, instead, could result in investor confusion. Comment 8: In the “Principal Investment Strategies” section of the summary portion of the Prospectus, please disclose the credit quality guideline with respect to the Fixed Income Instruments, including high yield securities, in which the Fund will invest as part of its principal investment strategies. Anu Dubey November 14, 2024 Page 5 Response: Comment accepted. The Registrant has added the following disclosure to the “Principal Investment Strategies” section of the summary portion of the Prospectus (new language bold and underlined): The Fund seeks to achieve its investment objective by investing under normal circumstances in a combination of affiliated and unaffiliated funds that are registered under the Investment Company Act of 1940, as amended (the “1940 Act”), equity securities, Fixed Income Instruments of varying maturities and credit qualities, or related derivatives on any of the preceding securities mentioned. Comment 9: In the “Principal Investment Strategies” section of the summary portion of the Prospectus, please identify the types of derivatives in which the Fund will invest as part of its principal investment strategies. Response: Comment accepted. The Registrant has added the following disclosure to the “Principal Investment Strategies” section of the summary portion of the Prospectus (new language bold and underlined): The Fund seeks to achieve its investment objective by investing under normal circumstances in a combination of affiliated and unaffiliated funds that are registered under the Investment Company Act of 1940, as amended (the “1940 Act”), equity securities, Fixed Income Instruments of varying maturities and credit qualities, or related derivatives, such as options, futures contracts, or swap agreements, on any of the preceding securities mentioned. Comment 10: Given that the Fund includes Small-Cap and Mid-Cap Company Risk as a principal risk of the Fund, please add “U.S. mid-cap equities” to the Fund’s “glide path”. Response: The Registrant respectfully declines to revise the Fund’s glidepath, which does not target exposure to equities categorized in the glide path as U.S. mid-cap equities at the present time. The Registrant will also retain the Small-Cap and Mid-Cap Company Risk disclosure as the glide path may target U.S. mid-cap equities in the future. Comment 11: In the “Principal Investment Strategies” section of the summary portion of the Prospectus, it is disclosed that “[a]s part of its investment process, PIMCO expects to seek to reduce exposure to certain risks by implementing various hedging transactions”. Please describe the Fund’s hedging transactions with more specificity. Response: Comment accepted. The Registrant has added the following disclosure to the “Principal Investment Strategies” section of the summary portion of the Prospectus (new language bold and underlined; deleted language struck through): As part of its investment process, PIMCO may expects to seek to reduce exposure to certain risks by implementing various hedging transactions. These hedging transactions seek to reduce the Fund’s exposure to certain severe, unanticipated market events that could significantly detract from returns. PIMCO may intends to