DIVERSIFY WITH CORPORATE INCOME

Transcription

1 DIVERSIFY WITH CORPORATE INCOME FIXED-INCOME FUNDS AS OF 2/3/5 / A

2 THE CASE FOR CORPORATE INCOME Historically Low Interest Rates Generating income in your portfolio has become more difficult as interest rates have declined over the past 20 years. Short-term interest rates (as defined by the Federal Funds Target Rate) continue to remain under % while longer-term rates (as defined by the 0-year Treasury yield) have been in the 2% range since 20. 9% 8% 7% 6% 5% 4% 3% 2% 0-Year Treasury Rates % 0% Source: Barclays as of 2/3/ Yield Opportunities Still Exist In exchange for increased risk, corporate fixed-income securities can provide greater opportunities for income as compared to U.S. government securities. As an example, on 2/3/5, U.S. investment-grade corporate bonds had a yield to maturity of 3.67% as compared to U.S. government securities, which had a yield to maturity of.72%. 0% Yield to Maturity 8% 8.74% 6% 5.98% 6.53% 4% 3.67% 2% 2.59% 0%.72% Barclays U.S. Government Barclays Aggregate Bond Barclays Corporate estment Grade Barclays Barclays U.S. Yield Credit Suisse Leveraged Loan Index Source: Barclays and Credit Suisse as of 2/3/5 No bank guarantee Not a deposit May lose value Not FDIC/NCUA insured Not insured by any federal government agency

3 DIVERSIFICATION MATTERS Regardless of the interest-rate environment, opportunities within fixed income exist. The total return leader often changes from year to year. That s why it s important to have an experienced investment management team actively allocate assets among an increasingly complex universe of fixed-income securities. Pacific Funds offers six fixed-income funds with opportunities for investors seeking the potential benefits of corporate income U.S. -Yield.85 U.S. Govt 8.66 U.S. Govt 2.39 U.S. -Yield 58.2 U.S. -Yield 5.2 U.S. Govt U.S. -Yield 7.44 U.S. Grade Corp Annual Index Return Floating Rate Barclays Agg 4.33 Barclays Agg U.S. Grade Corp 4.56 Barclays Agg U.S. Grade Corp Floating Rate U.S. Grade Corp 8.68 Barclays Agg Floating Rate 9.97 U.S. Grade Corp 9.00 Barclays Agg 6.54 U.S. Grade Corp 8.5 Barclays Agg U.S. -Yield 4.98 U.S. -Yield 5.8 U.S. Grade Corp 9.82 Floating Rate 9.43 Barclays Agg 4.2 Floating Rate U.S. Grade Corp.53 Barclays Agg 2.02 Barclays Agg 5.97 U.S. Govt U.S. -Yield 2.45 U.S. Govt 0.86 Barclays Agg Floating Rate 0.38 U.S. Grade Corp 4.30 Floating Rate.88 U.S. -Yield U.S. Govt 5.52 Floating Rate.82 U.S. Govt 2.02 U.S. Govt 2.60 Floating Rate 2.06 U.S. Grade Corp 0.68 U.S. Gov 3.48 U.S. -Yield.87 Floating Rate U.S. Govt U.S. -Yield 4.47 Year-End Federal Funds Target Rate 0-Year Treasury Yield Calculations assume dividends and capital gains are reinvested and do not include any managerial expenses. The performance data herein represents past performance. Past performance does not guarantee future returns. Source: Barclays, Credit Suisse and Morningstar, Inc., 205. Federal Funds Target Rate from Federal Reserve Bank of New York, /5. The Federal Funds Target Rate is set by the Federal Open Market Committee (FOMC), and is the interest rate that depository institutions charge one another for overnight loans of deposits at the Federal Reserve. 0-year Treasury yield from Barclays. A 0-year Treasury yield is the market interest rate on U.S. Treasury bonds that will mature 0 years from the date of purchase. The U.S. Govt category is based on the Barclays U.S. Government Index, which includes securities issued by the U.S. government (i.e., securities in the Treasury and Agency Indexes). The Barclays Agg category is based on the Barclays U.S. Aggregate Bond Index, which includes U.S. government, corporate, and mortgage-backed securities, and maturities up to 30 years. The U.S. Grade Corp category is based on the Barclays U.S. Corporate estment-grade Index, which includes publicly issued U.S. corporate and specified foreign debentures and secured notes that meet the specified maturity, liquidity, and quality requirements. To qualify, bonds must be registered with the Securities and Exchange Commission (SEC). The category is based on the Barclays Emerging Markets Index, which includes U.S. dollar-denominated debt from emerging markets in the following regions: Americas, Europe, Middle East, Africa, and Asia. The Floating Rate category is based on the Credit Suisse Leveraged Loan Index, which is designed to mirror the investable universe of the U.S. dollar denominated leveraged loan market. Index performance is not illustrative of the performance of the Pacific Funds Floating Rate Income. The U.S. -Yield category is based on the Barclays U.S. -Yield Index, which covers the universe of fixed rate, non-investment-grade debt. The category is based on the BofA Merrill Lynch U.S. 3-Month Treasury Bill Index (T bill). A diversified portfolio does not guarantee future results, ensure a profit, or protect against loss.

4 FOCUSED ON CORPORATE INCOME The Fixed-Income Funds are carefully constructed using a combination of investment-grade corporate bonds, high-yield/high risk corporate bonds, floating-rate loans, and short-term debt securities. The portfolio management team stays true to its strength as corporate income specialists by researching individual securities and investing across these asset classes. The Fixed-Income Funds cover a broad spectrum of income opportunities, enabling shareholders to select solutions to help meet their own needs and risk-reward preferences. er Asset class mix as of 2/3/5 Pacific Funds Income SD SI Pacific Funds Limited Duration Income Core LDHI HI SD Core SI Pacific Funds Floating Rate Income LDHI HI Potential Income SD Core SI LDHI Pacific Funds Strategic Income HI SD Core SI LDHI HI Lower SD SD Pacific Funds Core Income Core SI Pacific Funds Short Duration Income Core SI LDHI -Yield Bonds Floating-Rate Loans HI estment-grade Corporate Bonds and Other LDHI HI Lower Volatility (Risk) er PACIFIC FUNDS SM SHORT DURATION INCOME PACIFIC FUNDS SM CORE INCOME PACIFIC FUNDS SM STRATEGIC INCOME PACIFIC FUNDS SM FLOATING RATE INCOME PACIFIC FUNDS SM LIMITED DURATION HIGH INCOME Focused on short-term corporate securities with the ability to invest in a variety of corporate sectors. Focused on corporate securities with the flexibility to respond to market and interest-rate movements. Focused on high-yield/high risk corporate securities and senior floating-rate loans with the ability to diversify into investment-grade securities. Focused on floating-rate loans and built to add diversification to a traditional fixed-income portfolio. Focused on a combination of non-investment-grade corporate securities and floating-rate loans designed to provide less sensitivity to interest-rate movements. Class A Class C Advisor Class PLADX PLCSX PLDSX PLIAX PLNCX PLIDX PLSTX PLCNX PLSFX PLFLX PLBCX PLFDX PLLDX PLLCX PLLYX PACIFIC FUNDS SM HIGH INCOME Focused on high-yield/high risk corporate securities. PLAHX PLCHX PLHYX The tickers are used to uniquely identify the funds for transactional purposes. All funds and share classes may not be available at all firms and not all investors may be eligible for all share classes. 2

5 CORPORATE INCOME SPECIALISTS Pacific Asset Management, a subsidiary of Pacific Life Insurance Company, is the subadvisor for the Fixed-Income Funds. The portfolio managers specialize in credit investments, applying their depth of experience to identify opportunities and value in multiple areas of the credit market. They believe in a disciplined investment process that focuses on credit fundamentals for individual security selection. Pacific Asset Management offers investors two advantages rarely found in the same entity: speed and size. Organized like a boutique firm, Pacific Asset Management is able to act quickly on investment ideas while being supported by the scale and infrastructure of Pacific Life Insurance Company. estment Philosophy The Pacific Asset Management investment philosophy focuses on four areas: Experienced Portfolio Management The Fixed-Income Funds portfolio management and research group is a cohesive team of professionals who, on average, possess more than a decade of investment experience. C. Robert Boyd 6 years of investment experience Fundamental Analysis Fundamental credit analysis is the cornerstone of the investment process. Credit analysis is performed on each company and a relative value analysis is performed on each security. Top-Down Market Assessment The fundamental analysis is complemented by a top-down assessment. The managers identify potential macro headwinds or tailwinds and articulate these findings through overall portfolio risk and sector weightings. J.P. Leasure 7 years of investment experience Michael Long 28 years of investment experience Team Approach Close communication between portfolio managers and research analysts is used to promote idea generation. The team draws on each member s experience to provide a blend of investment insight and perspective. About Risk Capital Preservation The investment team focuses on companies they believe will meet their debt obligations, thus mitigating downside risk and preserving investor capital. In addition, the Fixed-Income Funds typically hold larger issuers, which improves liquidity in various market environments. As with any mutual fund, the value of the fund s holdings will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. The fund is subject to interest-rate risk (bond prices generally fall when interest rates rise) and credit risk (the risk an issuer may be unable or unwilling to meet its financial obligations). Floating-rate loans involve risk of default on interest or principal payments along with risks of bankruptcy and illiquidity. The fund invests in high-yield/high risk bonds (also known as junk bonds ), which have greater credit risk than higher-quality bonds. The fund is subject to liquidity risk (the risk that certain investments may be difficult to purchase and sell in adverse market conditions). estments in foreign markets are subject to currency fluctuations, political changes, and less liquidity than U.S. investments. estments rated below investment grade are generally subject to greater price volatility and illiquidity than higher-rated investments. Michael Marzouk, CFA 7 years of investment experience Brian M. Robertson, CFA years of investment experience Jason R. Rosiak 2 years of investment experience David Weismiller, CFA 7 years of investment experience 3

6 PACIFIC FUNDS SHORT DURATION INCOME MANAGED BY: PACIFIC ASSET MANAGEMENT DECEMBER 3, 205 Class A Class C Advisor Class PLADX 3 PLCSX 33 PLDSX 03 Fund Overview estment Goal: Seeks current income; capital appreciation is of secondary importance. estment Strategy: This Fund invests principally in income-producing debt instruments. Under normal circumstances, the Fund will invest at least 70% of its assets in investment-grade corporate debt instruments, including those issued by non-u.s. entities denominated in U.S. dollars, and U.S. government and agency securities. The Fund may invest up to 30% of its assets in non-investment-grade (high-yield/high-risk, sometimes called junk bonds ) debt instruments, including those issued by non-u.s. entities denominated in U.S. dollars, and floating-rate senior loans. The Fund expects to maintain a duration position within one year (plus or minus) of the Barclays 3 Year U.S. Government/Credit Bond Index, although the investments held by the Fund may have short, intermediate, and long terms to maturity. estment Management Portfolio Manager (since inception) Pacific Asset Management David Weismiller, CFA Managing Director 7 years of investment experience Michael Marzouk, CFA Managing Director 7 years of investment experience estment Adviser Pacific Life Fund Advisors LLC Pacific Funds Short Duration Income is a mutual fund: Designed for Income: Constructed to seek steady streams of income. Focused on Short-Term Corporate Securities: Ability for the Fund to invest in a variety of corporate securities. Based on Experience: A portfolio management team that specializes in fixed-income asset management based on a foundation of corporate credit research. Fund Snapshot While many short-duration funds are anchored in government securities as core investments, our focus is on corporate securities. Attractive Yields: In exchange for slightly greater risk, corporate bonds provide higher income than U.S. Treasuries of comparable maturity. Opportunity: Corporate bonds offer a wide range of income opportunities in fixed-rate, floating-rate, high-quality, low-quality, domestic, and international markets. Diversification: Corporate bonds may add diversification to a fixed-income portfolio of government, mortgage-backed, or other fixed-income securities. Total Returns (%) Annualized Total Returns (%) 3-Month YTD -Year 3-Year Since Fund Inception 2/9/ Class A NAV Class A MOP Class C NAV Class C MOP Advisor Class Barclays -3 Year U.S. Government/ Credit Bond Index Calendar Year-End Returns (%) Class A NAV Class A MOP Class C NAV Class C MOP Advisor Class Barclays 3 Year U.S. Government/Credit Bond Index Returns reflect reinvestment of dividends and distributions. Share class incepted 6/29/2. Performance shown prior to that date is hypothetical and is that of Class I shares (2/9/ inception date), restated to reflect applicable service and/or 2b- fees. Class A shares at maximum offering price (MOP) reflect the deduction of an up-front 3.00% sales load. Class C shares at MOP reflect the deduction of a.00% contingent deferred sales charge (CDSC). Advisor Class shares are sold at net asset value (NAV) without an initial sales charge and do not include a CDSC. Performance reflects any applicable fee waivers and expense reimbursements. If a sales charge had been deducted, the results would have been lower. 2 Barclays 3 Year U.S. Government/Credit Bond Index is the 3 year component of the U.S. Government/Credit Index. The U.S. Government/Credit Bond Index is the non-securitized component of the U.S. Aggregate Bond Index. The U.S. Government/Credit Bond Index includes Treasuries, government-related issues, and corporates. The total return is equal to the change in price plus the coupon return. Indexes are unmanaged and cannot be invested in directly. For performance data current to the most recent month-end, call Pacific Funds at (800) , option 2, or go to Performance data quoted represents past performance, which does not guarantee future results. Current performance may be lower or higher than the performance quoted. The investment return and principal value of an investment will fluctuate so, when redeemed, may be worth more or less than the original cost. All share classes may not be available at all broker/dealer firms. 4

7 Asset Allocation (%) estment-grade Corporate Bonds Floating-Rate Loans Yield Bonds 6.9 Government Bonds Top-0 Country Allocations (%) Maturity Schedule (%) Less than year years years years years 0.24 More than 0 years 0.35 United States 83.9 Singapore 0.93 Canada 2.43 Cayman Islands 0.72 South Korea.69 Ireland 0.7 Australia.37 Luxembourg 0.64 United Kingdom.06 Switzerland 0.6 Top-0 country allocations are calculated based on the country of risk. Top-0 Holdings Maturity Weight (%) Goldman Sachs Group, Inc..48% 4/23/20.70 Exelon Corporation.55% 6/9/7.52 McGraw Hill Financial, Inc. 2.5% 8/5/8.47 JP Morgan Chase & Co..53% 0/29/20.47 Hewlett Packard Enterprise Company 2.25% 0/5/8.46 Morgan Stanley 2.25% 4/25/8.46 Duke Energy Corporation.625% 8/5/7.46 McDonald's Corporation 2.% 2/7/8.45 Citigroup Inc..7% 4/27/8.44 Charter Communications Operating LLC 3.579% 7/23/20.32 Total 4.75 Class A 30-Day SEC Yield 3.6% Credit Quality Allocation (%) AAA 0.4 BBB AA 3.73 BB 9.93 A B 3.45 (A Shares) Fund Information Class A Class C Advisor Class Inception Date 6/29/2 6/29/2 6/29/2 Minimum Initial/ Subsequent estment Sales Load/ Maximum Sales Charge (%) The investment adviser has agreed to limit certain Other Expenses incurred by the Fund that exceed an annual rate of 0.20% for Class A, C, and Advisor Class shares through 7/3/6. There is no guarantee that the investment adviser will continue to cap expenses after the expiration date. Please see the prospectus for additional information about availability. Information provided by Pacific Asset Management. 2 Contact your financial advisor. $,000/$50 $,000/$50 N/A 2 Front-End/3.00 CDSC/.00 None Net/Gross Expense Ratio (%) 0.85/.09.60/ /0.84 CCC and Below 0.00 Pacific Asset Management receives credit quality ratings on underlying securities of the Fund from major rating agencies S&P, Moody s, and/or Fitch. When the rating agencies rate a security differently, Pacific Asset Management uses the higher rating. Below investment grade is represented by a rating of BB and below. Pacific Asset Management converts all ratings to the equivalent S&P major rating category for purposes of the category shown. Ratings and portfolio credit quality may change over time. Per Share Amount October November December Characteristics Duration Weighted Average Maturity.94 years 2.82 years Average Price Number of Issues 55 Monthly Dividends/Annual Capital Gains 3 The 30-Day SEC Yield represents the net investment income earned over the 30-day period ending on the above date and includes any fee waivers and expense reimbursements. It is an annualized rate calculated under a methodology prescribed by the Securities and Exchange Commission (SEC). Without fee waivers and expense reimbursements, the 30-Day SEC Yield is.43%. Yields for other share classes will vary. Duration is often used to measure a bond s or fund s sensitivity to interest rates. The longer a fund s duration, the more sensitive it is to interest-rate risk. The shorter a fund s duration, the less sensitive it is to interest-rate risk. Maturity of a debt instrument, however, refers to the specific period of time until final payment (principal and any applicable interest) is due. Third-party trademarks and service marks are the property of their respective owners. Gross expense ratio reflects the total annual operating expenses paid by the Fund. Net expense ratio reflects waivers, reductions, and reimbursements. Net and gross expense ratios are sourced from the current prospectus. Expense cap and/or fee waivers are reevaluated annually. Please see the prospectus for more information. 5

8 PACIFIC FUNDS CORE INCOME MANAGED BY: PACIFIC ASSET MANAGEMENT DECEMBER 3, 205 PLIAX Class A Class C Advisor Class 06 PLNCX 306 PLIDX 006 Fund Overview estment Goal: Seeks a high level of current income; capital appreciation is of secondary importance. estment Strategy: This Fund invests principally in income-producing debt instruments. The Fund will generally invest at least 60% of its assets in investment-grade corporate debt instruments, including those issued by non-u.s. entities denominated in U.S. dollars, and U.S. government and agency securities. The Fund may invest up to 40% of its assets in non-investment-grade (high-yield/high-risk, sometimes called junk bonds ) debt instruments, including those issued by non-u.s. entities denominated in U.S. dollars, and floating-rate senior loans. The Fund expects to maintain a duration position within two years (plus or minus) of the Barclays U.S. Aggregate Bond Index. estment Management Portfolio Manager (since inception) Pacific Asset Management Jason R. Rosiak Senior Managing Director 2 years of investment experience David Weismiller, CFA Managing Director 7 years of investment experience estment Adviser Pacific Life Fund Advisors LLC Morningstar Rating as of 2/3/5 Overall Rating out of,042 Intermediate-Term Bond Funds 6 Class A Load Waived* Class A Load Pacific Funds Core Income is a mutual fund: Designed for Income: Constructed to seek steady streams of higher income. With Greater Flexibility: Ability for the Fund to respond to market and interest-rate movements. Based on Experience: A portfolio management team that specializes in fixed-income asset management based on a foundation of corporate credit research. Fund Snapshot The Fund will generally invest its assets in: estment-grade Corporate Bonds: Typically provide higher income than government bonds. estment-grade Non-U.S. Bonds: Often capture higher income than investment-grade U.S. bonds of similar credit quality and maturity. The Fund may enhance income by investing in other types of instruments, such as: -Yield/-Risk Corporate Bonds: Typically offer higher income than investment-grade bonds, although with greater risk. Total Returns (%) Annualized Total Returns (%) 3-Month YTD -Year 3-Year 5-Year CORE: estment-grade Bonds Plus: Senior Floating-Rate Loans Senior Floating-Rate Loans: Can serve as both an income driver and a hedge against rising interest rates. Since Fund Inception 2/3/0 Class A NAV Class A MOP Class C NAV Class C MOP Advisor Class Barclays U.S. Aggregate Bond Index Calendar Year-End Returns (%) Class A NAV Class A MOP Class C NAV Class C MOP Advisor Class Barclays U.S. Aggregate Bond Index Plus: -Yield Corporate Bonds Returns reflect reinvestment of dividends and distributions. U.S. dollar denominated. 2 Class A shares at maximum offering price (MOP) reflect the deduction of an up-front 4.25% sales load. 3 Class C shares incepted on 6/30/. Class C shares at MOP reflect the deduction of a.00% contingent deferred sales charge (CDSC). 4 Advisor Class shares incepted on 6/29/2. Performance shown prior to these dates is hypothetical and is that of Class I shares (2/3/0 inception date), restated to reflect applicable service and/or 2b- fees. Advisor Class shares are sold at net asset value (NAV) without an initial sales charge and do not include a CDSC. Performance reflects any applicable fee waivers and expense reimbursements. If a sales charge had been deducted, the results would have been lower. Performance reflects any applicable fee waivers and expense reimbursements. 5 Barclays U.S. Aggregate Bond Index: Composed of approximately 7,000 asset-based, corporate, government, and mortgage-backed bonds. The index s total return consists of price appreciation/depreciation and income as a percentage of the original investment. Indexes are unmanaged and cannot be invested in directly. -yield/high-risk corporate bonds and senior floating-rate loans are typically non-investment grade. For performance data current to the most recent month-end, call Pacific Funds at (800) , option 2, or go to Performance data quoted represents past performance, which does not guarantee future results. Current performance may be lower or higher than the performance quoted. The investment return and principal value of an investment will fluctuate so, when redeemed, may be worth more or less than the original cost. All share classes may not be available at all broker/dealer firms. Overall Morningstar Rating: For each fund with at least a three-year history, Morningstar calculates a Morningstar Rating based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a fund s monthly performance (including the effects of sales charges and loads), placing more emphasis on downward variations and rewarding consistent performance. The top 0% of funds in each category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 0% receive star. (Each share class is counted as a fraction of one fund within this scale and rated separately, which may cause slight variations in the distribution percentages.) The Overall Morningstar Rating for a fund is derived from a weighted average of the performance figures associated with its three-, five- and ten-year (if applicable) Morningstar Rating metrics. 205 Morningstar, Inc. All Rights Reserved. The information contained herein: () is proprietary to Morningstar; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Third-party trademarks and service marks are the property of their respective owners. For Morningstar Ratings for other share classes, visit The Fund s Class A (Load Waived) and Class A (Load) also received a 3 and 5-year Morningstar Rating as of 2/3/5: 3 and 2 stars; 5 and 3 stars (respectively) among,042 funds. *The load-waived rating should only be considered by investors who are not subject to a sales load.

9 Asset Allocation (%) Government Bonds 2.87 Agencies 0.00 estment-grade Corporate Bonds Floating-Rate Loans Yield Bonds Maturity Schedule (%) Less than year years years years years years 4.04 More than 20 years 6.78 Credit Quality Allocation (%) AAA 5.76 BBB 46.0 AA 3.92 BB 8.69 A 9.35 B and Below 6.27 Pacific Asset Management receives credit quality ratings on underlying securities of the Fund from major rating agencies S&P, Moody s, and/or Fitch. When the rating agencies rate a security differently, Pacific Asset Management uses the higher rating. Below investment grade is represented by a rating of BB and below. Pacific Asset Management converts all ratings to the equivalent S&P major rating category for purposes of the category shown. Ratings and portfolio credit quality may change over time. Top-0 Country Allocations (%) United States Chile.23 Canada 3.36 Australia.05 United Kingdom 2.24 South Korea.03 Singapore.37 Ireland 0.95 Cayman Islands.36 Mexico 0.90 Top-0 country allocations are calculated based on the country of risk. (A Shares) Per Share Amount October November December Characteristics Duration Weighted Average Maturity 4.85 years 7.65 years Average Price Number of Issues 206 Top-0 Holdings Maturity Weight (%) Ford Motor Credit Company 4.25% 9/20/22.09 Goldman Sachs Group, Inc. 2.55% 0/23/ Avago Technologies 4.25% /3/ U.S. Treasury 2.875% 8/5/ Delta Airlines 4.75% 5/7/ Air Lease Corporation 3.875% 4// Verizon Communications Inc. 5.5% 9/5/ Ares Capital Corporation 4.875% /30/ Duke Realty LP 4.375% 6/5/ United Airlines, Inc. 4.75% 4// Total 9.32 Class A 30-Day SEC Yield % Fund Information Class A Class C Advisor Class Inception Date 2/3/0 6/30/ 6/29/2 Minimum Initial/ Subsequent estment Sales Load/ Maximum Sales Charge (%) The investment adviser has agreed to limit certain Other Expenses incurred by the Fund that exceed an annual rate of 0.20% for Class A, C, and Advisor Class shares through 7/3/6. There is no guarantee that the investment adviser will continue to cap expenses after the expiration date. Please see the prospectus for additional information about availability. Information provided by Pacific Asset Management. 2 Contact your financial advisor. $,000/$50 $,000/$50 N/A 2 Front-End/4.25 CDSC/.00 None Net/Gross Expense Ratio (%) 0.95/.3.70/ /0.88 Monthly Dividends/Annual Capital Gains 3 The 30-Day SEC Yield represents the net investment income earned over the 30-day period ending on the above date and includes any fee waivers and expense reimbursements. It is an annualized rate calculated under a methodology prescribed by the Securities and Exchange Commission (SEC). Without fee waivers and expense reimbursements, the 30-Day SEC Yield is 2.87%. Yields for other share classes will vary. Duration is often used to measure a bond s or fund s sensitivity to interest rates. The longer a fund s duration, the more sensitive it is to interest-rate risk. The shorter a fund s duration, the less sensitive it is to interest-rate risk. Maturity of a debt instrument, however, refers to the specific period of time until final payment (principal and any applicable interest) is due. Third-party trademarks and service marks are the property of their respective owners. Gross expense ratio reflects the total annual operating expenses paid by the Fund. Net expense ratio reflects waivers, reductions, and reimbursements. Net and gross expense ratios are sourced from the current prospectus. Expense cap and/or fee waivers are reevaluated annually. Please see the prospectus for more information 7

10 PACIFIC FUNDS STRATEGIC INCOME MANAGED BY: PACIFIC ASSET MANAGEMENT DECEMBER 3, 205 PLSTX Class A Class C Advisor Class 4 PLCNX 34 PLSFX 04 Fund Overview estment Goal: Seeks a high level of current income and may also seek capital appreciation. estment Strategy: This Fund invests principally in income-producing debt instruments. Under normal circumstances, the Fund will invest up to 70% of its assets in non-investment-grade (high-yield/high-risk, sometimes called junk bonds ) debt instruments, including those issued by non-u.s. entities denominated in U.S. dollars, and floating-rate loans. The Fund may invest up to 65% of its assets in investment-grade corporate debt instruments, including those issued by non-u.s. entities denominated in U.S. dollars, and U.S. government and agency securities. The Fund s average portfolio duration is expected to be within a range of one to seven years. estment Management Portfolio Manager (since inception) Pacific Asset Management Jason R. Rosiak Senior Managing Director 2 years of investment experience Brian M. Robertson, CFA Managing Director years of investment experience estment Adviser Pacific Life Fund Advisors LLC Pacific Funds Strategic Income is a mutual fund: Designed for Income: Constructed to seek steady streams of higher income. With a Broad Perspective: Seeks opportunities across a wide range of securities. Based on Experience: A portfolio management team that specializes in fixed-income asset management based on a foundation of corporate credit research. Fund Snapshot The Fund will generally invest its assets in: -Yield/-Risk Corporate Bonds: Typically offer higher income than investment-grade bonds, although with greater risk. Senior Floating-Rate Loans: Can serve as both an income driver and a hedge against rising interest rates. The Fund may diversify sources of income by investing in other types of instruments, such as: Total Returns (%) Annualized Total Returns (%) 3-Month YTD -Year 3-Year CORE: -Yield Corporate Bonds and Senior Floating-Rate Loans estment- Grade Corporate Bonds estment-grade Corporate Bonds: Typically provide higher income than government bonds. estment-grade Non-U.S. Bonds: Often capture higher income than investment-grade U.S. bonds of similar credit quality and maturity. Since Fund Inception 2/9/ Class A NAV Class A MOP Class C NAV Class C MOP Advisor Class Barclays U.S. Aggregate Bond Index Calendar Year-End Returns (%) Class A NAV Class A MOP Class C NAV Class C MOP Advisor Class Barclays U.S. Aggregate Bond Index estment- Grade Non-U.S. Bonds Returns reflect reinvestment of dividends and distributions. U.S. dollar denominated. 2 Share class incepted 6/29/2. Performance shown prior to that date is hypothetical and is that of Class I shares (2/9/ inception date), restated to reflect applicable service and/or 2b- fees. Class A shares at maximum offering price (MOP) reflect the deduction of an up-front 4.25% sales load. Class C shares at MOP reflect the deduction of a.00% contingent deferred sales charge (CDSC). Advisor Class shares are sold at net asset value (NAV) without an initial sales charge and do not include a CDSC. Performance reflects any applicable fee waivers and expense reimbursements. If a sales charge had been deducted, the results would have been lower. 3 Barclays U.S. Aggregate Bond Index: Composed of approximately 7,000 asset-based, corporate, government, and mortgage-backed bonds. The index s total return consists of price appreciation/depreciation and income as a percentage of the original investment. Indexes are unmanaged and cannot be invested in directly. -yield corporate bonds and senior floating-rate loans are typically non-investment grade. For performance data current to the most recent month-end, call Pacific Funds at (800) , option 2, or go to Performance data quoted represents past performance, which does not guarantee future results. Current performance may be lower or higher than the performance quoted. The investment return and principal value of an investment will fluctuate so, when redeemed, may be worth more or less than the original cost. All share classes may not be available at all broker/dealer firms 8

11 Asset Allocation (%) -Yield Bonds Floating-Rate Loans 7.43 estment-grade Corporate Bonds Government Bonds Equities 3.86 Top-0 Country Allocations (%) Maturity Schedule (%) Less than year years years years years years.59 More than 20 years.00 Equities 3.86 United States 85.0 Switzerland.36 Canada 4.55 Netherlands.6 Singapore.78 United Kingdom 0.94 Ireland.6 Cayman Islands 0.69 Luxembourg.52 Brazil 0.64 Top-0 country allocations are calculated based on the country of risk. Credit Quality Allocation (%) AAA 0.39 BB AA 0.00 B 27.9 A 0.8 CCC and Below 9.6 BBB 34.0 Equities 3.86 Pacific Asset Management receives credit quality ratings on underlying securities of the Fund from major rating agencies S&P, Moody s, and/or Fitch. When the rating agencies rate a security differently, Pacific Asset Management uses the higher rating. Below investment grade is represented by a rating of BB and below. Pacific Asset Management converts all ratings to the equivalent S&P major rating category for purposes of the category shown. Ratings and portfolio credit quality may change over time. (A Shares) Per Share Amount October November December Characteristics Duration Weighted Average Maturity 4. years 6.46 years Average Price 95.0 Number of Issues 256 Top-0 Holdings Maturity Weight (%) Avago Technologies 4.25% /3/22.38 Novelis, Inc. 8.75% 2/5/20.9 Reynolds Group Issuer, Inc. 8.25% 2/5/2.4 Sabine Pass Liquefaction, LLC 5.625% 3//25.04 ADT Corporation 6.25% 0/5/2.0 HD Supply, Inc. 7.5% 7/5/ JP Morgan Chase & Co % 9/0/ International Lease Finance Corporation 6.25% 5/5/ Marriott International, Inc % 3// McGraw Hill Financial, Inc. 3.3% 8/4/ Total 0.55 Class A 30-Day SEC Yield % Fund Information Class A Class C Advisor Class Inception Date 6/29/2 6/29/2 6/29/2 Minimum Initial/ Subsequent estment Sales Load/ Maximum Sales Charge (%) The investment adviser has agreed to limit certain Other Expenses incurred by the Fund that exceed an annual rate of 0.20% for Class A, C, and Advisor Class shares through 7/3/6. There is no guarantee that the investment adviser will continue to cap expenses after the expiration date. Please see the prospectus for additional information about availability. Information provided by Pacific Asset Management. 2 Contact your financial advisor. $,000/$50 $,000/$50 N/A 2 Front-End/4.25 CDSC/.00 None Net/Gross Expense Ratio (%).07/.30.82/ /.05 Monthly Dividends/Annual Capital Gains 3 The 30-Day SEC Yield represents the net investment income earned over the 30-day period ending on the above date and includes any fee waivers and expense reimbursements. It is an annualized rate calculated under a methodology prescribed by the Securities and Exchange Commission (SEC). Without fee waivers and expense reimbursements, the 30-Day SEC Yield is 5.09%. Yields for other share classes will vary. Duration is often used to measure a bond s or fund s sensitivity to interest rates. The longer a fund s duration, the more sensitive it is to interest-rate risk. The shorter a fund s duration, the less sensitive it is to interest-rate risk. Maturity of a debt instrument, however, refers to the specific period of time until final payment (principal and any applicable interest) is due. Third-party trademarks and service marks are the property of their respective owners. Gross expense ratio reflects the total annual operating expenses paid by the Fund. Net expense ratio reflects waivers, reductions, and reimbursements. Net and gross expense ratios are sourced from the current prospectus. Expense cap and/or fee waivers are reevaluated annually. Please see the prospectus for more information. 9

12 PACIFIC FUNDS FLOATING RATE INCOME MANAGED BY: PACIFIC ASSET MANAGEMENT DECEMBER 3, 205 PLFLX Class A Class C Advisor Class 0 PLBCX 30 PLFDX 00 Fund Overview estment Goal: Seeks a high level of current income. estment Strategy: This Fund invests principally in income-producing floating-rate loans and floating-rate debt securities. Under normal circumstances, this Fund generally invests at least 80% of its assets in floatingrate loans and floating-rate debt securities. Floating-rate loans and floating-rate debt securities are those with interest rates which float, adjust, or vary periodically based on a benchmark indicator, a specified adjustment schedule, or prevailing interest rates. Floating-rate loans and floating-rate debt securities in which the Fund invests consist of senior secured and unsecured floating-rate loans, secured and unsecured second lien floating-rate loans, and floatingrate debt securities of domestic and foreign issuers. Senior floating-rate loans and some floating-rate debt securities are debt instruments that may have a right to payment that is senior to most other debts of the borrowers. estment Management Portfolio Manager (since inception) Pacific Asset Management Jason R. Rosiak Senior Managing Director 2 years of investment experience J.P. Leasure Senior Managing Director 7 years of investment experience Michael Marzouk, CFA Managing Director 7 years of investment experience estment Adviser Pacific Life Fund Advisors LLC 0 Morningstar Rating as of 2/3/5 Overall Rating out of 253 Bank Loan Funds Class A Load Waived* Class A Load Pacific Funds Floating Rate Income is a mutual fund: Designed for Income: Constructed to seek steady streams of higher income. Built for Portfolio Diversification: Floating-rate loans may complement a traditional fixed-income portfolio. Based on Experience: A portfolio management team that specializes in fixed-income asset management based on a foundation of corporate credit research. Fund Snapshot Pacific Funds Floating Rate Income invests primarily in floating-rate loans of non-investment-grade companies. These investments can serve as both an income driver and a hedge against rising interest rates. Floating-rate loans, also known as senior bank loans, are variable-rate loans made by financial institutions to companies that are generally considered to have low credit quality. Borrowers enter into these loans to raise capital. In exchange for investing with these companies, holders typically receive higher levels of income. Total Returns (%) Annualized Total Returns (%) 3-Month YTD -Year 3-Year Since Fund Inception 6/30/ Class A NAV Class A MOP Class C NAV Class C MOP Advisor Class Credit Suisse Leveraged Loan Index Calendar Year-End Returns (%) Class A NAV Class A MOP Class C NAV Class C MOP Advisor Class Credit Suisse Leveraged Loan Index Returns reflect reinvestment of dividends and distributions. Class A and C shares incepted on 2/30/. Class A shares at maximum offering price (MOP) reflect the deduction of an up-front 3.00% sales load. Class C shares at MOP reflect the deduction of a.00% contingent deferred sales charge (CDSC). 2 Advisor Class shares incepted on 6/29/2. Performance shown prior to these dates is hypothetical and is that of Class I shares (6/30/ inception date), restated to reflect applicable service and/or 2b- fees. Advisor Class shares are sold at net asset value (NAV) without an initial sales charge and do not include a CDSC. Performance reflects any applicable fee waivers and expense reimbursements. If a sales charge had been deducted, the results would have been lower. 3 Credit Suisse Leveraged Loan Index is an index of U.S. dollar-denominated leveraged loan market securities. The total return is equal to the change in price plus the coupon return. Indexes are unmanaged and cannot be invested in directly. For performance data current to the most recent month-end, call Pacific Funds at (800) , option 2, or go to Performance data quoted represents past performance, which does not guarantee future results. Current performance may be lower or higher than the performance quoted. The investment return and principal value of an investment will fluctuate so, when redeemed, may be worth more or less than the original cost. All share classes may not be available at all broker/dealer firms. Effective December 3, 204, Pacific Life Funds and its family of mutual funds changed its name to Pacific Funds. In addition, individual funds were also renamed. For more information, please visit Overall Morningstar Rating For each fund with at least a three-year history, Morningstar calculates a Morningstar Rating based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a fund s monthly performance (including the effects of sales charges and loads), placing more emphasis on downward variations and rewarding consistent performance. The top 0% of funds in each category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 0% receive star. (Each share class is counted as a fraction of one fund within this scale and rated separately, which may cause slight variations in the distribution percentages.) The Overall Morningstar Rating for a fund is derived from a weighted average of the performance figures associated with its three-, five- and ten-year (if applicable) Morningstar Rating metrics. 205 Morningstar, Inc. All Rights Reserved. The information contained herein: () is proprietary to Morningstar; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Third-party trademarks and service marks are the property of their respective owners. For Morningstar Ratings for other share classes, visit The Fund s Class A (Load Waived) and Class A (Load) also received a 3-year Morningstar Rating as of 2/3/5: 4 and 3 stars (respectively) among 253 funds. *The load-waived rating should only be considered by investors who are not subject to a sales load.

13 Asset Allocation (%) Floating-Rate Loans Yield Bonds 5.0 estment-grade Corporate Bonds Maturity Schedule (%) Less than year.66 3 years years years years.60 More than 0 years 0.00 Credit Quality Allocation (%) BBB and Above 6. CCC and Below 5.98 BB 39.9 N/R.56 B Pacific Asset Management receives credit quality ratings on underlying securities of the Fund from major rating agencies S&P, Moody s, and/or Fitch. When the rating agencies rate a security differently, Pacific Asset Management uses the higher rating. Below investment grade is represented by a rating of BB and below. Pacific Asset Management converts all ratings to the equivalent S&P major rating category for purposes of the category shown. Ratings and portfolio credit quality may change over time. Unrated securities do not necessarily indicate low quality. Top-0 Industries (%) Service 4.85 Media/Telecom 6.35 Housing 9.38 Gaming/Leisure 5.73 Forest Products/Containers 9.5 Financial 5.47 Retail 8.0 Aerospace 5.42 Food/Tobacco 7.58 Food And Drug 5.42 (A Shares) Per Share Amount October November December Characteristics Duration Weighted Average Maturity Average Floating-Rate Loan Price 0.43 years 4.86 years Number of Issues 0 Top-0 Holdings Maturity Weight (%) Avago Technologies /3/ Rite Aid 8/2/ Ardagh Holdings USA 2/7/9 2.2 Berry Plastics 0/3/ Hub International 0/2/ Cablevision 0/9/ Caesars Entertainment Resort Properties 0//20.93 BWAY Holding Initial Term Loan 8/4/20.9 Albertson's 8/25/2.83 Ply Gem 2//2.74 Total Class A 30-Day SEC Yield % Fund Information Class A Class C Advisor Class Inception Date 2/30/ 2/30/ 6/29/2 Minimum Initial/ Subsequent estment Sales Load/ Maximum Sales Charge (%) $,000/$50 $,000/$50 N/A 2 Front-End/3.00 CDSC/.00 None Net/Gross Expense Ratio (%)./.29.86/ /.04 Monthly Dividends/Annual Capital Gains The investment adviser has agreed to limit certain Other Expenses incurred by the Fund that exceed an annual rate of 0.20% for Class A, C, and Advisor Class shares through 7/3/6. There is no guarantee that the investment adviser will continue to cap expenses after the expiration date. Please see the prospectus for additional information about availability. Information provided by Pacific Asset Management. 2 Contact your financial advisor. 3 The 30-Day SEC Yield represents the net investment income earned over the 30-day period ending on the above date and includes any fee waivers and expense reimbursements. It is an annualized rate calculated under a methodology prescribed by the Securities and Exchange Commission (SEC). Without fee waivers and expense reimbursements, the 30-Day SEC Yield is 3.39%. Yields for other share classes will vary. Duration is often used to measure a bond s or fund s sensitivity to interest rates. The longer a fund s duration, the more sensitive it is to interest-rate risk. The shorter a fund s duration, the less sensitive it is to interest-rate risk. Maturity of a debt instrument, however, refers to the specific period of time until final payment (principal and any applicable interest) is due. Third-party trademarks and service marks are the property of their respective owners. Gross expense ratio reflects the total annual operating expenses paid by the Fund. Net expense ratio reflects waivers, reductions, and reimbursements. Net and gross expense ratios are sourced from the current prospectus. Expense cap and/or fee waivers are reevaluated annually. Please see the prospectus for more information.

14 PACIFIC FUNDS LIMITED DURATION HIGH INCOME MANAGED BY: PACIFIC ASSET MANAGEMENT DECEMBER 3, 205 PLLDX Class A Class C Advisor Class 5 PLLCX 35 PLLYX 05 Fund Overview estment Goal: Seeks a high level of current income. estment Strategy: This Fund invests principally in income-producing debt instruments. Under normal circumstances, the Fund invests principally in non-investmentgrade (high-yield/high-risk, sometimes called junk bonds ) debt instruments of any credit quality, including those issued by non-u.s. entities denominated in U.S. dollars, and floating-rate loans of any credit quality. The Fund may also invest up to 40% of its assets in investment-grade debt instruments, including those issued by non-u.s. corporate and sovereign entities denominated in U.S. dollars, and U.S. government and agency securities. The Fund expects to maintain a duration position between zero and three years, although the investments held by the Fund may have short, intermediate, and long terms to maturity. estment Management Portfolio Manager (since inception) Pacific Asset Management Brian M. Robertson, CFA Managing Director years of investment experience Michael Marzouk, CFA Managing Director 7 years of investment experience estment Adviser Pacific Life Fund Advisors LLC Pacific Funds Limited Duration Income is a mutual fund: Designed for Income: Constructed to seek steady streams of higher income. With Lower Sensitivity to Interest-Rate Movements: Expects to maintain a duration between zero to three years. Based on Experience: A portfolio management team that specializes in fixed-income asset management based on a foundation of corporate credit research. Fund Snapshot Pacific Funds Limited Duration Income seeks to generate high levels of income. The Fund does this primarily through investments in: -Yield/-Risk Corporate Bonds: Typically offer higher income than investment-grade bonds, although with greater risk. Senior Floating-Rate Loans: Can serve as both an income driver and a hedge against rising interest rates in exchange for additional credit risk. Total Returns (%) Annualized Total Returns (%) 3-Month YTD -Year Since Fund Inception 7/3/3 Class A NAV Class A MOP Class C NAV Class C MOP Advisor Class Barclays U.S. -5 Year Yield Index Returns reflect reinvestment of dividends and distributions. Class A shares at maximum offering price (MOP) reflect the deduction of an up-front 3.00% sales load. 2 Class C shares at MOP reflect the deduction of a.00% contingent deferred sales charge (CDSC). 3 Advisor Class shares are sold at net asset value (NAV) without an initial sales charge and do not include a CDSC. Performance reflects any applicable fee waivers and expense reimbursements. If a sales charge had been deducted, the results would have been lower. 4 Barclays U.S. 5 Year Yield Index is an index that covers the universe of fixed-rate, non-investment-grade debt with maturities between one and five years. Indexes are unmanaged and cannot be invested in directly. -yield/high-risk corporate bonds and senior floating-rate loans are typically non-investment grade. For performance data current to the most recent month-end, call Pacific Funds at (800) , option 2, or go to Performance data quoted represents past performance, which does not guarantee future results. Current performance may be lower or higher than the performance quoted. The investment return and principal value of an investment will fluctuate so, when redeemed, may be worth more or less than the original cost. All share classes may not be available at all broker/dealer firms. 2