<SEC-DOCUMENT>0001193125-17-011017.txt : 20170608
<SEC-HEADER>0001193125-17-011017.hdr.sgml : 20170608

<ACCEPTANCE-DATETIME>20170117152853

<PRIVATE-TO-PUBLIC>

ACCESSION NUMBER:		0001193125-17-011017

CONFORMED SUBMISSION TYPE:	N-2

PUBLIC DOCUMENT COUNT:		4

FILED AS OF DATE:		20170117

DATE AS OF CHANGE:		20170323


FILER:


	COMPANY DATA:	

		COMPANY CONFORMED NAME:			PIMCO Dynamic Income Fund

		CENTRAL INDEX KEY:			0001510599

		IRS NUMBER:				274580758

		STATE OF INCORPORATION:			MA

		FISCAL YEAR END:			0331



	FILING VALUES:

		FORM TYPE:		N-2

		SEC ACT:		1933 Act

		SEC FILE NUMBER:	333-215573

		FILM NUMBER:		17530613



	BUSINESS ADDRESS:	

		STREET 1:		1633 BROADWAY

		CITY:			NEW YORK

		STATE:			NY

		ZIP:			10019

		BUSINESS PHONE:		212-739-4000



	MAIL ADDRESS:	

		STREET 1:		1633 BROADWAY

		CITY:			NEW YORK

		STATE:			NY

		ZIP:			10019




FILER:


	COMPANY DATA:	

		COMPANY CONFORMED NAME:			PIMCO Dynamic Income Fund

		CENTRAL INDEX KEY:			0001510599

		IRS NUMBER:				274580758

		STATE OF INCORPORATION:			MA

		FISCAL YEAR END:			0331



	FILING VALUES:

		FORM TYPE:		N-2

		SEC ACT:		1940 Act

		SEC FILE NUMBER:	811-22673

		FILM NUMBER:		17530614



	BUSINESS ADDRESS:	

		STREET 1:		1633 BROADWAY

		CITY:			NEW YORK

		STATE:			NY

		ZIP:			10019

		BUSINESS PHONE:		212-739-4000



	MAIL ADDRESS:	

		STREET 1:		1633 BROADWAY

		CITY:			NEW YORK

		STATE:			NY

		ZIP:			10019



</SEC-HEADER>

<DOCUMENT>
<TYPE>N-2
<SEQUENCE>1
<FILENAME>d302337dn2.htm
<DESCRIPTION>PIMCO DYNAMIC INCOME FUND
<TEXT>
<HTML><HEAD>
<TITLE>PIMCO DYNAMIC INCOME FUND</TITLE>
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<h5 align="left"><a href="#toc">Table of Contents</a></h5>

 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">As filed with the Securities and Exchange Commission on January&nbsp;17, 2017 </P>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P> <P STYLE="line-height:1.5pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1.50pt solid #000000">&nbsp;</P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:70%; text-indent:-2%; font-size:10pt; font-family:Times New Roman">1933 Act File <FONT STYLE="white-space:nowrap">No.&nbsp;333-</FONT> </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:70%; text-indent:-2%; font-size:10pt; font-family:Times New Roman">1940 Act File <FONT STYLE="white-space:nowrap">No.&nbsp;811-</FONT> 22673 </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:18pt; font-family:Times New Roman" ALIGN="center"><B>UNITED STATES </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:18pt; font-family:Times New Roman" ALIGN="center"><B>SECURITIES AND EXCHANGE COMMISSION </B></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>WASHINGTON, D.C. 20549 </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:18pt; font-family:Times New Roman" ALIGN="center"><B>FORM <FONT STYLE="white-space:nowrap">N-2</FONT> </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">(Check appropriate box or boxes) </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>[X]&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B><FONT STYLE="white-space:nowrap">[&nbsp;&nbsp;&nbsp;&nbsp;]&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pre-Effective</FONT> Amendment No.
</B></P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>[&nbsp;&nbsp;&nbsp;&nbsp;]&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Post-Effective Amendment No. </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>and </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>[X]&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>[X]&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amendment No.&nbsp;6 </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:18pt; font-family:Times New Roman" ALIGN="center"><B>PIMCO DYNAMIC INCOME FUND </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B><I>(Exact Name of Registrant as Specified in Charter) </I></B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>1633 Broadway </B></P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>New York,
New York 10019 </B></P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:8pt; font-family:Times New Roman" ALIGN="center"><B>(Address of Principal Executive Offices) </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:8pt; font-family:Times New Roman" ALIGN="center"><B>(Number, Street, City, State, Zip Code) </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>(888) <FONT STYLE="white-space:nowrap">877-4626</FONT> </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:8pt; font-family:Times New Roman" ALIGN="center"><B><I>(Registrant&#146;s Telephone Number, including Area Code) </I></B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>Joshua D. Ratner </B></P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>c/o
Pacific Investment Management Company LLC </B></P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>1633 Broadway </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>New York, New York 10019</B><B><I> </I></B><B> </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:8pt; font-family:Times New Roman" ALIGN="center"><B><I>(Name and Address (Number, Street, City, State, Zip Code) of Agent for Service) </I></B></P>
<P STYLE="margin-top:20pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B><I>Copies of Communications to: </I></B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>David C. Sullivan, Esq. </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>Ropes&nbsp;&amp; Gray LLP </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>Prudential Tower, 800 Boylston Street </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>Boston, Massachusetts 02199 </B></P>
<P STYLE="margin-top:24pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>Approximate Date of Proposed Public Offering: </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>As soon as practicable after the effective date of this Registration Statement. </B></P>
<P STYLE="margin-top:24pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">If any securities being registered on this form will be offered on a delayed or continuous basis in reliance on Rule 415 under the Securities Act of 1933,
other than securities offered in connection with a dividend reinvestment plan, check the following box [X]. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">It is proposed that this filing will become
effective (check appropriate box): </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">[&nbsp;&nbsp;]</TD>
<TD ALIGN="left" VALIGN="top">when declared effective pursuant to section 8(c). </TD></TR></TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT
OF 1933 </B></P> <P STYLE="font-size:18pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:8pt" ALIGN="center">


<TR>
<TD WIDTH="44%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="13%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="13%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="13%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="13%"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:8pt">
<TD VALIGN="middle" NOWRAP ALIGN="center" STYLE="BORDER-LEFT:1.50pt solid #000000; BORDER-TOP:1.50pt solid #000000; BORDER-BOTTOM:1px solid #000000; padding-left:8pt"><B>Title of Securities Being Registered</B></TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1.50pt solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="middle" NOWRAP ALIGN="center" STYLE="BORDER-TOP:1.50pt solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000"><B>Amount Being<BR>Registered<SUP STYLE="font-size:85%; vertical-align:top">(1) </SUP></B></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1.50pt solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="middle" NOWRAP ALIGN="center" STYLE="BORDER-TOP:1.50pt solid #000000; BORDER-BOTTOM:1px solid #000000"><B>Proposed Maximum<BR>&nbsp;&nbsp;Offering&nbsp;Price&nbsp;Per&nbsp;Unit&nbsp;&nbsp;</B></TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1.50pt solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" NOWRAP ALIGN="center" STYLE="BORDER-TOP:1.50pt solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000"><B>Proposed&nbsp;Maximum<BR>&nbsp;&nbsp;Aggregate&nbsp;Offering&nbsp;&nbsp;<BR>Price<SUP
STYLE="font-size:85%; vertical-align:top">(2) </SUP></B></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1.50pt solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="middle" NOWRAP ALIGN="center" STYLE="BORDER-TOP:1.50pt solid #000000; BORDER-RIGHT:1.50pt solid #000000; BORDER-BOTTOM:1px solid #000000; padding-right:8pt"><B>Amount&nbsp;of&nbsp;Registration<BR>Fee</B></TD></TR>


<TR STYLE="font-family:Times New Roman; font-size:8pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1.50pt solid #000000; BORDER-BOTTOM:1.50pt solid #000000; padding-left:8pt">
<P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Common Shares, par value $0.00001</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1.50pt solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1.50pt solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1.50pt solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1.50pt solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1.50pt solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1.50pt solid #000000">$1,000,000&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1.50pt solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right" STYLE="BORDER-RIGHT:1.50pt solid #000000; BORDER-BOTTOM:1.50pt solid #000000; padding-right:8pt">$115.90</TD></TR>
</TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:8pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">(1)</TD>
<TD ALIGN="left" VALIGN="top">There are being registered hereunder a presently indeterminate number of shares of common stock to be offered on an immediate, continuous or delayed basis. </TD></TR></TABLE>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:8pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">(2)</TD>
<TD ALIGN="left" VALIGN="top">Estimated solely for purposes of calculating the registration fee as required by Rule 457(o) under the Securities Act of 1933, as amended. </TD></TR></TABLE>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the
registrant shall file a further amendment that specifically states that this Registration Statement shall thereafter become effective in accordance with Section&nbsp;8(a) of the Securities Act of 1933 or until this Registration Statement shall
become effective on such date as the Commission, acting pursuant to said Section&nbsp;8(a), may determine. </B></P>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>

 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><FONT COLOR="#de1a1e"><B>The information in this preliminary prospectus is not complete and may be changed. We
may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted. </B></FONT></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><FONT COLOR="#de1a1e"><B>Subject to Completion dated
[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;], 2017 </B></FONT></P> <P STYLE="margin-top:24pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>BASE PROSPECTUS </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:18pt; font-family:Times New Roman">$[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;] </P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:18pt; font-family:Times New Roman"><B>PIMCO
Dynamic Income Fund </B></P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Common Shares of Beneficial Interest </B></P>
<P STYLE="line-height:1.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P> <P STYLE="margin-top:3pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><I>Investment Objective. </I>PIMCO Dynamic Income Fund
(the &#147;Fund&#148;) is a diversified, <FONT STYLE="white-space:nowrap">closed-end</FONT> management investment company that commenced operations on May&nbsp;30, 2012, following the initial public offering of its common shares. The Fund seeks
current income as a primary objective and capital appreciation as a secondary objective. The Fund cannot assure you that it will achieve its investment objective, and you could lose all of your investment in the Fund. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><I>Investment Strategy</I>.&nbsp;The Fund seeks to achieve its investment objectives by utilizing a dynamic asset allocation strategy that focuses on duration
management, credit quality analysis, risk management techniques and broad diversification among issuers, industries and sectors. The Fund normally invests in a portfolio that consists primarily of corporate debt obligations of varying maturities,
other corporate income-producing securities, and income-producing securities of <FONT STYLE="white-space:nowrap">non-corporate</FONT> issuers. On behalf of the Fund, Pacific Investment Management Company LLC, the Fund&#146;s investment manager
(&#147;PIMCO&#148; or the &#147;Investment Manager&#148;), employs an active approach to allocation among multiple fixed-income sectors based on, among other things, market conditions, valuation assessments and economic outlook, credit market trends
and other economic factors. The Fund focuses on seeking the best income generating investment ideas across multiple fixed income sectors, with an emphasis on seeking opportunities in developed and emerging global credit markets. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><I>(continued on following page) </I></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund&#146;s common
shares (the &#147;Common Shares&#148;) are listed on the New York Stock Exchange (&#147;NYSE&#148;) under the symbol PDI. The last reported sale price of the Common Shares, as reported by the NYSE on [ ], was $[ ] per Common Share. The net asset
value (&#147;NAV&#148;) of the Common Shares at the close of business on [ ], was $[ ] per Common Share. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Investment in the Fund&#146;s common shares
involves substantial risks arising from, among other strategies, the Fund&#146;s ability to invest in debt instruments that are, at the time of purchase, rated below investment grade (below Baa3 by Moody&#146;s Investors Service, Inc.
(&#147;Moody&#146;s&#148;) or below <FONT STYLE="white-space:nowrap">BBB-</FONT> by either Standard&nbsp;&amp; Poor&#146;s Ratings Services, a division of The McGraw-Hill Company, Inc. (&#147;S&amp;P&#148;) or Fitch, Inc. (&#147;Fitch&#148;)) or
unrated but determined by PIMCO to be of comparable quality, the Fund&#146;s exposure to foreign and emerging markets securities and currencies and to mortgage-related and other asset-backed securities, and the Fund&#146;s anticipated use of
leverage. Debt securities of below investment grade quality are regarded as having predominantly speculative characteristics with respect to capacity to pay interest and to repay principal, and are commonly referred to as &#147;high yield&#148;
securities or &#147;junk bonds.&#148; The Fund&#146;s exposure to foreign securities and currencies, and particularly to emerging markets securities and currencies, involves special risks, including foreign currency risk and the risk that the
securities may decline in response to unfavorable political and legal developments, unreliable or untimely information or economic and financial instability. Mortgage-related and other asset-backed securities are subject to extension and prepayment
risk and often have complicated structures that make them difficult to value. Because of the risks associated with investing in high yield securities, foreign and emerging market securities (and related exposure to foreign currencies) and
mortgage-related and other asset-backed securities, and using leverage, an investment in the Fund should </B></P>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>

 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>
be considered speculative. Before investing in the Common Shares, you should read the discussion of the principal risks of investing in the Fund in &#147;Principal Risks of the Fund.&#148;
Certain of these risks are summarized in &#147;Prospectus Summary&#151;Principal Risks of the Fund.&#148; </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>The Securities and Exchange Commission
(&#147;SEC&#148;) has not approved or disapproved of these securities or determined that this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><I>(continued from previous page) </I></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Under normal
circumstances, the Fund will have a short to intermediate average portfolio duration (<I>i.e.</I>, within a zero to eight year range), as calculated by the Investment Manager, although it may be shorter or longer at any time or from time to time
depending on market conditions and other factors. PIMCO believes that maintaining duration within this range offers flexibility and the opportunity for above-average returns while potentially limiting exposure to interest rate volatility and related
risks. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><I>Portfolio Contents.</I>&nbsp;The Fund normally invests worldwide in a portfolio of debt obligations and other income-producing securities of
any type and credit quality and with varying maturities and related derivative instruments. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may invest in investment grade debt securities and
below investment grade debt securities (commonly referred to as &#147;high yield&#148; securities or &#147;junk bonds&#148;), including securities of stressed issuers. The Fund may invest without limit in securities of U.S. issuers and without limit
in securities of foreign <FONT STYLE="white-space:nowrap">(non-U.S.)</FONT> issuers, securities traded principally outside of the United States, and securities denominated in currencies other than the U.S. dollar. The Fund may invest without limit
in investment grade sovereign debt, including sovereign debt issued by emerging market issuers, denominated in the relevant country&#146;s local currency with less than 1 year remaining to maturity (&#147;investment grade sovereign debt&#148;). The
Fund may invest up to 40% of its total assets in securities and instruments that are economically tied to &#147;emerging market&#148; countries other than investments in investment grade sovereign debt, where as noted above there is no limit. The
Fund may also invest directly in foreign currencies, including local emerging market currencies. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund will not normally invest directly in common
stocks of operating companies. However, the Fund may own and hold common stocks in its portfolio from time to time in connection with a corporate action, the restructuring of a debt instrument, or through the conversion of a convertible security
held by the Fund. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may utilize various derivative strategies (both long and short positions) involving the purchase or sale of futures and
forward contracts (including foreign currency exchange contracts), call and put options, credit default swaps, total return swaps, basis swaps and other swap agreements and other derivative instruments for investment purposes, leveraging purposes or
in an attempt to hedge against market, credit, interest rate, currency and other risks in the portfolio. The Fund may purchase and sell securities on a when-issued, delayed delivery or forward commitment basis and may engage in short sales. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Substantially all of the Fund&#146;s portfolio may consist of below investment-grade securities and/or mortgage-related or other types of asset backed
securities. The Fund will not normally invest more than 20% of its total assets in debt instruments, other than mortgage-related or asset-backed securities, that are, at the time of purchase, rated CCC+ or lower by S&amp;P and Fitch and Caa1 or
lower by Moody&#146;s, or that are unrated but determined by PIMCO to be of comparable quality to securities so rated. The Fund may invest without limit in mortgage-related and other asset-backed securities regardless of rating&#151;<I>i.e</I>., of
any credit quality. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may invest in securities that have not been registered for public sale in the U.S. or relevant <FONT
STYLE="white-space:nowrap">non-U.S.</FONT> jurisdictions, including without limit securities eligible for purchase and sale pursuant to Rule 144A under the Securities Act of 1933, as amended (the &#147;Securities Act&#148;), or relevant provisions
of applicable <FONT STYLE="white-space:nowrap">non-U.S.</FONT> law, and other securities issued in private placements. The Fund may also invest in securities of other investment companies, including, without limit, exchange-traded funds
(&#147;ETFs&#148;), and may invest in foreign ETFs. The Fund may invest in real estate investment trusts (&#147;REITs&#148;). The Fund may invest in securities of companies with any market capitalization, including small and medium capitalizations.
</P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">-ii- </P>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>

 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may normally invest up to 40% of its total assets in bank loans (including, among others, senior loans,
delayed funding loans, revolving credit facilities and loan participations and assignments). The Fund will not normally invest more than 10% of its total assets in convertible debt securities, including synthetic convertible debt securities. The
Fund may also invest in preferred securities. </P> <P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">As a matter of fundamental policy, the Fund will normally invest at least 25% of its total assets in
privately-issued (commonly known as <FONT STYLE="white-space:nowrap">&#147;non-agency&#148;)</FONT> mortgage-related securities. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may invest
without limit in illiquid securities (i.e., securities that cannot be disposed of within seven days in the ordinary course of business at approximately the value at which the Fund has valued the securities). </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><I>Leverage. </I>The Fund has historically added leverage to its portfolio principally by utilizing reverse repurchase agreements and credit default swaps.
The Fund may also obtain leverage through dollar rolls or borrowings, such as through bank loans or commercial paper and/or other credit facilities. The Fund may also enter into transactions other than those noted above that may give rise to a form
of leverage including, among others, futures and forward contracts (including foreign currency exchange contracts), total return swaps and other derivative transactions, loans of portfolio securities, short sales and when-issued, delayed delivery
and forward commitment transactions. Although it has no current intention to do so, the Fund may also determine to issue preferred shares or other types of senior securities to add leverage to its portfolio. Depending upon market conditions and
other factors, the Fund may or may not determine to add leverage following an offering to maintain or increase the total amount of leverage (as a percentage of the Fund&#146;s total assets) that the Fund currently maintains, taking into account the
additional assets raised through the issuance of Common Shares in such offering. The Fund utilizes certain kinds of leverage, such as reverse repurchase agreements and credit default swaps, opportunistically and may choose to increase or decrease,
or eliminate entirely, its use of such leverage over time and from time to time based on PIMCO&#146;s assessment of the yield curve environment, interest rate trends, market conditions and other factors. If the Fund determines to add leverage
following an offering, it is not possible to predict with accuracy the precise amount of leverage that would be added, in part because it is not possible to predict the number of Common Shares that ultimately will be sold in an offering or series of
offerings. To the extent that the Fund does not add additional leverage following an offering, the Fund&#146;s total amount of leverage as a percentage of its total assets will decrease, which could result in a reduction of investment income
available for distribution to Common Shareholders. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Under normal market conditions, the Fund will limit its use of leverage from any combination of
reverse repurchase agreements or dollar roll transactions (whether or not these instruments are covered), borrowings (i.e., loans or lines of credit from banks or other credit facilities), any future issuance of preferred shares and, to the extent
described in this prospectus under the section entitled &#147;Use of Leverage,&#148; credit default swaps, other swap agreements and futures contracts such that the assets attributable to the use of such leverage will not exceed 50% of the
Fund&#146;s total assets (including, for purposes of the 50% limit, the amounts of leverage obtained through the use of such instruments). The Investment Company Act of 1940, as amended, and the rules and regulations promulgated thereunder, also
generally limits the extent to which the Fund may utilize uncovered reverse repurchase agreements and borrowings, together with any other senior securities representing indebtedness, to 33 1/3% of the Fund&#146;s total net assets at the time
utilized. See &#147;Use of Leverage.&#148; By using leverage, the Fund will seek to obtain a higher return for holders of common shares than if the Fund did not use leverage. Leveraging is a speculative technique and there are special risks and
costs involved. There can be no assurance that a leveraging strategy will be used or that it will be successful during any period in which it is employed. See &#147;Use of Leverage&#148; and &#147;Principal Risks of the Fund&#151;Leverage
Risk.&#148; </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">This prospectus is part of a registration statement that the Fund has filed with the U.S. Securities and Exchange Commission (the
&#147;SEC&#148;), using the &#147;shelf&#148; registration process. The Fund may offer, from time to time, in one or more offerings, up to $[&nbsp;&nbsp;] of the Common Shares on terms to be determined at the time of the offering. This prospectus
provides you with a general description of the Common Shares that the Fund may offer. Each time the Fund uses this prospectus to offer Common Shares, the Fund will provide a prospectus supplement that will contain specific information about the
terms of that offering. The prospectus supplement may also add, update or change information contained in this prospectus. You should read this prospectus and the applicable prospectus supplement, which contain important information about the Fund,
carefully before you invest in the Common Shares. Common Shares may be offered directly to one or more purchasers, through agents designated from time to time by the Fund, or to or through underwriters or dealers. The prospectus supplement relating
to an offering will </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">-iii- </P>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>

 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
identify any agents, underwriters or dealers involved in the sale of Common Shares, and will set forth any applicable purchase price, fee, commission or discount arrangement between the Fund and
its agents or underwriters, or among the Fund&#146;s underwriters, or the basis upon which such amount may be calculated. See &#147;Plan of Distribution.&#148; The Fund may not sell any Common Shares through agents, underwriters or dealers without
delivery or deemed delivery of a prospectus supplement describing the method and terms of the particular offering of the Common Shares. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">You should retain
this prospectus and any prospectus supplement for future reference. A Statement of Additional Information, dated [&nbsp;&nbsp;], containing additional information about the Fund has been filed with the SEC and is incorporated by reference in its
entirety into this prospectus. You can review the table of contents of the Statement of Additional Information on page [&nbsp;&nbsp;] of this prospectus. You may request a free copy of the Statement of Additional Information, request the Fund&#146;s
most recent annual and semiannual reports, request information about the Fund and make shareholder inquiries by calling toll-free <FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">(844)-337-4626</FONT></FONT> or by writing to the
Fund at c/o Pacific Investment Management Company LLC, 1633 Broadway, New York, New York 10019. You may also obtain a copy of the Statement of Additional Information (and other information regarding the Fund) from the SEC&#146;s Public Reference
Room in Washington, D.C. by calling (202) <FONT STYLE="white-space:nowrap">551-8090.</FONT> The SEC charges a fee for copies. The Fund&#146;s Statement of Additional Information and most recent annual and semiannual reports are available, free of
charge, on the Fund&#146;s website (http://www.pimco.com). You can obtain the same information, free of charge, from the SEC&#146;s web site (http://www.sec.gov). </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Common Shares do not represent a deposit or obligation of, and are not guaranteed or endorsed by, any bank or other insured depository institution, and
are not federally insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other government agency. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">Prospectus dated [&nbsp;&nbsp; ] </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">-iv- </P>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>

 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>TABLE OF CONTENTS [To be updated] </B></P>
<P STYLE="font-size:4pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P> <P STYLE="line-height:1.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">


<TR>
<TD WIDTH="96%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>


<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#pro302337_1">Prospectus Summary</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">1</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;&nbsp;</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#pro302337_2">Summary of Fund Expenses</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">33</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;&nbsp;</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#pro302337_3">Financial Highlights</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">35</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;&nbsp;</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#pro302337_4">Use of Proceeds</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">35</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;&nbsp;</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#pro302337_5">The Fund</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">35</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;&nbsp;</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#pro302337_6">Investment Objectives and Policies</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">35</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;&nbsp;</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#pro302337_7">Portfolio Contents</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">37</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;&nbsp;</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#pro302337_8">Use of Leverage</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">60</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;&nbsp;</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#pro302337_9">Principal Risks of the Fund</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">63</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;&nbsp;</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#pro302337_10">How the Fund Manages Risk</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">87</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;&nbsp;</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#pro302337_11">Management of the Fund</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">88</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;&nbsp;</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#pro302337_12">Net Asset Value</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">91</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;&nbsp;</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#pro302337_13">Distributions</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">92</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;&nbsp;</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#pro302337_14">Dividend Reinvestment Plan</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">94</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;&nbsp;</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#pro302337_15">Description of Capital Structure</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">95</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;&nbsp;</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#pro302337_16">Plan of Distribution</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">96</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;&nbsp;</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#pro302337_17">Market and Net Asset Value Information</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">97</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;&nbsp;</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#pro302337_18">Anti-Takeover Provisions in the Declaration of Trust</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">98</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;&nbsp;</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#pro302337_19">Repurchase of Common Shares; Conversion to <FONT STYLE="white-space:nowrap">Open-End
</FONT> Fund</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">99</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;&nbsp;</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#pro302337_20">Tax Matters</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">99</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;&nbsp;</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#pro302337_21">Shareholder Servicing Agent, Custodian and Transfer Agent</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">105</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;&nbsp;</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#pro302337_22">Independent Registered Public Accounting Firm</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">105</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;&nbsp;</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#pro302337_23">Legal Matters</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">105</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;&nbsp;</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#pro302337_24">Table of Contents for Statement of Additional Information</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">106</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;&nbsp;</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#pro302337_25">Appendix A&#151;Description of Securities Ratings</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">107</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;&nbsp;</TD></TR>
</TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P> <P STYLE="line-height:1.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>You should rely only on the information contained or incorporated by reference in this prospectus and any related prospectus supplement. The Fund has not
authorized any other person to provide you with inconsistent information. If anyone provides you with inconsistent information, you should not assume that the Fund has authorized or verified it. The Fund is not making an offer to sell these
securities in any jurisdiction where the offer or sale is not permitted. You should not assume that the information contained in this prospectus or any prospectus supplement is accurate as of any date other than the dates on their respective front
covers. The Fund&#146;s business, financial condition, results of operations and prospects may have changed since the date of this prospectus or the date of any prospectus supplement. </B></P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">-v- </P>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>

 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:18pt; font-family:Times New Roman"><A NAME="pro302337_1"></A>Prospectus Summary </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><I>This is only a summary. This summary may not contain all of the information that you should consider before investing in the Fund&#146;s common shares of
beneficial interest (the &#147;Common Shares&#148;). You should review the more detailed information contained in this prospectus and in any related prospectus supplement and in the Statement of Additional Information, especially the information set
forth under the heading &#147;Principal Risks of the Fund.&#148; </I></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>THE FUND </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">PIMCO Dynamic Income Fund (the &#147;Fund&#148;) is a diversified, <FONT STYLE="white-space:nowrap">closed-end</FONT> management investment company. The Fund
commenced operations on May&nbsp;30, 2012, following the initial public offering of its Common Shares. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Common Shares are listed on the New York Stock
Exchange (&#147;NYSE&#148;) under the symbol &#147;PDI.&#148; As of [&nbsp;&nbsp;], the net assets of the Fund attributable to Common Shares were $[&nbsp;&nbsp;] and the Fund had outstanding [&nbsp;&nbsp;] Common Shares. The last reported sale price
of the Common Shares, as reported by the NYSE on [&nbsp;&nbsp;], was $[&nbsp;&nbsp;] per Common Share. The net asset value (&#147;NAV&#148;) of the Common Shares at the close of business on [&nbsp;&nbsp;], was $[&nbsp;&nbsp;] per Common Share. See
&#147;Description of Capital Structure.&#148; </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>THE OFFERING </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may offer, from time to time, in one or more offerings, up to $[ ] of the Common Shares on terms to be determined at the time of the offering. The
Common Shares may be offered at prices and on terms to be set forth in one or more prospectus supplements. You should read this prospectus and the applicable prospectus supplement carefully before you invest in the Common Shares. Common Shares may
be offered directly to one or more purchasers, through agents designated from time to time by the Fund, or to or through underwriters or dealers. The prospectus supplement relating to an offering will identify any agents, underwriters or dealers
involved in the sale of Common Shares, and will set forth any applicable purchase price, fee, commission or discount arrangement between the Fund and its agents or underwriters, or among the Fund&#146;s underwriters, or the basis upon which such
amount may be calculated. See &#147;Plan of Distribution.&#148; The Fund may not sell any Common Shares through agents, underwriters or dealers without delivery or deemed delivery of a prospectus supplement describing the method and terms of the
particular offering of the Common Shares. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>USE OF PROCEEDS </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The net proceeds of an offering will be invested in accordance with the Fund&#146;s investment objectives and policies as set forth below. It is presently
anticipated that the Fund will be able to invest substantially all of the net proceeds of an offering in investments that meet its investment objectives and policies within [ ] days of receipt by the Fund. See &#147;Use of Proceeds.&#148; </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>INVESTMENT OBJECTIVES AND POLICIES </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund seeks
current income as a primary objective and capital appreciation as a secondary objective. The Fund will seek to achieve its investment objectives by utilizing a dynamic asset allocation strategy among multiple fixed-income sectors in the global
credit markets, including corporate debt (including, among other things, fixed-, variable- and floating-rate bonds, bank loans, convertible securities and stressed debt securities issued by U.S. or foreign
<FONT STYLE="white-space:nowrap">(non-U.S.)</FONT> corporations or other business entities, including emerging market issuers), mortgage-related and other asset-backed securities, government and sovereign debt, taxable municipal bonds and other
fixed-, variable- and floating-rate income-producing securities of U.S. and foreign issuers, including emerging market issuers. The Fund may invest in investment grade debt securities and below investment grade debt securities (commonly referred to
as &#147;high yield&#148; securities or &#147;junk bonds&#148;), including securities of stressed issuers. The types of securities and instruments in which the Fund may invest are summarized under &#147;Portfolio Contents&#148; below. The Fund
cannot assure you that it will achieve its investment objectives, and you could lose all of your investment in the Fund. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">1 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>PORTFOLIO MANAGEMENT STRATEGIES </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><I>Dynamic Allocation Strategy.</I></B><I>&nbsp;&nbsp;&nbsp;&nbsp;</I>On behalf of the Fund, the Fund&#146;s investment manager, Pacific Investment
Management Company LLC (&#147;PIMCO&#148; or the &#147;Investment Manager&#148;), employs an active approach to allocation among multiple fixed income sectors based on, among other things, market conditions, valuation assessments, economic outlook,
credit market trends and other economic factors. With PIMCO&#146;s macroeconomic analysis as the basis for <FONT STYLE="white-space:nowrap">top-down</FONT> investment decisions, including geographic and credit sector emphasis, the Fund will focus on
seeking the best income generating investment ideas across multiple fixed income sectors, with an emphasis on seeking opportunities in developed and emerging global credit markets. PIMCO may choose to focus on particular countries/regions (e.g.,
U.S. vs. foreign), asset classes, industries and sectors to the exclusion of others at any time and from time to time based on market conditions and other factors. The relative value assessment within fixed-income sectors draws on PIMCO&#146;s
regional and sector specialist expertise. As a matter of fundamental policy, the Fund will normally invest at least 25% of its total assets in privately issued (commonly known as <FONT STYLE="white-space:nowrap">&#147;non-agency&#148;)</FONT>
mortgage-related securities. The Fund will observe other guidelines with respect to certain asset classes as summarized below. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><I>Investment Selection
Strategies.</I></B><I>&nbsp;&nbsp;&nbsp;&nbsp;</I>Once the Fund&#146;s <FONT STYLE="white-space:nowrap">top-down,</FONT> portfolio positioning decisions have been made as described above, PIMCO selects particular investments for the Fund by
employing a <FONT STYLE="white-space:nowrap">bottom-up,</FONT> disciplined credit approach which is driven by fundamental, independent research within each sector/asset class represented in the Fund, with a focus on identifying securities and other
instruments with solid and/or improving fundamentals. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">PIMCO utilizes strategies that focus on credit quality analysis, duration management and other risk
management techniques. PIMCO attempts to identify, through fundamental research driven by independent credit analysis and proprietary analytical tools, debt obligations and other income-producing securities that provide current income and/or
opportunities for capital appreciation based on its analysis of the issuer&#146;s credit characteristics and the position of the security in the issuer&#146;s capital structure. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Consideration of yield is only one component of the portfolio managers&#146; approach in managing the Fund. PIMCO also attempts to identify investments that
may appreciate in value based on PIMCO&#146;s assessment of the issuer&#146;s credit characteristics, forecast for interest rates and outlook for particular countries/regions, currencies, industries, sectors and the global economy and bond markets
generally. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><I>Credit Quality.</I></B>&nbsp;The Fund may invest in debt instruments that are, at the time of purchase, rated below investment grade, or
unrated but determined by PIMCO to be of comparable quality. However, the Fund will not normally invest more than 20% of its total assets in debt instruments, other than mortgage-related and other asset-backed securities, that are, at the time of
purchase, rated CCC+ or lower by Standard&nbsp;&amp; Poor&#146;s Financial Services, LLC (&#147;S&amp;P&#148;) and Fitch, Inc. (&#147;Fitch&#148;) and Caa1 or lower by Moody&#146;s Investors Services Inc. (&#147;Moody&#146;s&#148;), or that are
unrated but determined by PIMCO to be of comparable quality to securities so rated. The Fund may invest without limit in mortgage-related and other asset-backed securities regardless of rating&#151;<I>i.e.</I>, of any credit quality. For purposes of
applying the foregoing policies, in the case of securities with split ratings (<I>i.e.</I>, a security receiving two different ratings from two different rating agencies), the Fund will apply the higher of the applicable ratings. Subject to the
aforementioned investment restrictions, the Fund may invest in securities of stressed issuers, which include securities at risk of being in default as to the repayment of principal and/or interest at the time of acquisition by the Fund or that are
rated in the lower rating categories by one or more nationally recognized statistical rating organizations (for example, Ca or lower by Moody&#146;s or CC or lower by S&amp;P or Fitch) or, if unrated, are determined by PIMCO to be of comparable
quality. Debt instruments of below investment grade quality are regarded as having predominantly speculative characteristics with respect to capacity to pay interest and to repay principal, and are commonly referred to as &#147;high yield&#148;
securities or &#147;junk bonds.&#148; Debt instruments in the lowest investment grade category also may be considered to possess some speculative characteristics. The Fund may, for hedging, investment or leveraging purposes, make use of credit
default swaps, which are contracts whereby one party makes periodic payments to a counterparty in exchange for the right to receive from the counterparty a payment equal to the par (or other agreed-upon) value of a referenced debt obligation in the
event of a default or other credit event by the issuer of the debt obligation. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><I>Independent Credit Analysis.</I></B><I> </I>PIMCO relies primarily
on its own analysis of the credit quality and risks associated with individual debt instruments considered for the Fund, rather than relying exclusively on rating agencies or third-party research. The Fund&#146;s portfolio managers utilize this
information in an attempt to minimize credit risk and to identify issuers, industries or sectors that are undervalued or that offer attractive yields relative to PIMCO&#146;s assessment of their credit characteristics. This aspect of PIMCO&#146;s
capabilities will be particularly important to the extent that the Fund invests in high yield securities and in securities of emerging market issuers. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">2 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><I>Duration Management.</I></B>&nbsp;It is expected that the Fund normally will have a short to intermediate
average portfolio duration (<I>i.e.</I>, within a zero to eight year (0 to 8) range), as calculated by PIMCO, although it may be shorter or longer at any time or from time to time depending on market conditions and other factors. While the Fund
seeks to maintain a short to intermediate average portfolio duration, there is no limit on the maturity or duration of any individual security in which the Fund may invest. PIMCO believes that maintaining duration within this range offers
flexibility and the opportunity for above-average returns while potentially limiting exposure to interest rate volatility and related risk. Duration is a measure used to determine the sensitivity of a security&#146;s price to changes in interest
rates. The Fund&#146;s duration strategy may entail maintaining a negative average portfolio duration from time to time, which would potentially benefit the portfolio in an environment of rising market interest rates, but would generally adversely
impact the portfolio in an environment of falling or neutral market interest rates. PIMCO may also utilize certain strategies, including without limit investments in structured notes or interest rate futures contracts or swap, cap, floor or collar
transactions, for the purpose of reducing the interest rate sensitivity of the Fund&#146;s portfolio, although there is no assurance that it will do so or that such strategies will be successful. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>PORTFOLIO CONTENTS </B></P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund normally invests worldwide
in a portfolio of debt obligations and other income-producing securities of any type and credit quality, with varying maturities and related derivative instruments. The Fund&#146;s portfolio of debt obligations and income-producing securities may
include, without limitation, bonds, debentures, notes, and other debt securities of U.S. and foreign <FONT STYLE="white-space:nowrap">(non-U.S.)</FONT> corporate and other issuers, including commercial paper; asset-backed securities issued on a
public or private basis; U.S. Government securities; obligations of foreign governments or their <FONT STYLE="white-space:nowrap">sub-divisions,</FONT> agencies and government sponsored enterprises and obligations of international agencies and
supranational entities; municipal securities and other debt securities issued by states or local governments and their agencies, authorities and other government-sponsored enterprises, including taxable municipal securities (such as Build America
Bonds); <FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">payment-in-kind</FONT></FONT> securities; <FONT STYLE="white-space:nowrap">zero-coupon</FONT> bonds; inflation-indexed bonds issued by both governments and corporations;
structured notes, including hybrid or indexed securities; catastrophe bonds and other event-linked bonds; credit-linked notes; structured credit products; bank loans (including, among others, senior loans, delayed funding loans, revolving credit
facilities and loan participations and assignments); preferred securities; convertible debt securities (i.e., debt securities that may be converted at either a stated price or stated rate into underlying shares of common stock), including synthetic
convertible debt securities (i.e., instruments created through a combination of separate securities that possess the two principal characteristics of a traditional convertible security, such as an income-producing security and the right to acquire
an equity security); and bank certificates of deposit, fixed time deposits and bankers&#146; acceptances. The rate of interest on an income-producing security may be fixed, floating or variable. Certain corporate income-producing securities, such as
convertible bonds, also may include the right to participate in equity appreciation, and PIMCO will generally evaluate those instruments based primarily on their debt characteristics. The Fund may invest in debt securities of stressed issuers.
Subject to the investment limitations described under &#147;Credit Quality&#148; above, at any given time and from time to time, substantially all of the Fund&#146;s portfolio may consist of below investment grade securities and/or mortgage-related
or other types of asset backed securities. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may invest without limit in securities of U.S. issuers and without limit in securities of foreign <FONT
STYLE="white-space:nowrap">(non-U.S.)</FONT> issuers, securities traded principally outside of the United States, and securities denominated in currencies other than the U.S. dollar. The Fund may invest without limit in investment grade sovereign
debt. The Fund may invest up to 40% of its total assets in securities and instruments that are economically tied to &#147;emerging market&#148; countries other than investments in investment grade sovereign debt, where as noted above there is no
limit. The Fund may also invest directly in foreign currencies, including local emerging market currencies. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may normally invest up to 40% of its
total assets in bank loans (including, among others, senior loans, delayed funding loans, revolving credit facilities and loan participations and assignments). The Fund will not normally invest more than 10% of its total assets in convertible debt
securities (<I>i.e.</I>, debt securities that may be converted at either a stated price or stated rate into underlying shares of common stock), including synthetic convertible debt securities (<I>i.e.</I>, instruments created through a combination
of separate securities that possess the two principal characteristics of a traditional convertible security, <I>i.e.</I>, an income-producing security and the right to acquire an equity security). The Fund may also invest in preferred securities. As
a matter of fundamental policy, the Fund will normally invest at least 25% of its total assets in privately-issued (commonly known as <FONT STYLE="white-space:nowrap">&#147;non-agency&#148;)</FONT> mortgage-related securities. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">3 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may utilize various derivative strategies (both long and short positions) involving the purchase or sale
of futures and forward contracts (including foreign currency exchange contracts), call and put options, credit default swaps, total return swaps, basis swaps and other swap agreements and other derivative instruments for investment purposes,
leveraging purposes or in an attempt to hedge against market, credit, interest rate, currency and other risks in the portfolio. The Fund may purchase and sell securities on a when-issued, delayed delivery or forward commitment basis and may engage
in short sales. </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund will not normally invest directly in common stocks of operating companies. However, the Fund may own and hold common stocks in
its portfolio from time to time in connection with a corporate action or the restructuring of a debt instrument, or through the conversion of a convertible security held by the Fund. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may invest in securities that have not been registered for public sale in the U.S. or relevant <FONT STYLE="white-space:nowrap">non-U.S.</FONT>
jurisdiction, including without limit securities eligible for purchase and sale pursuant to Rule 144A under the Securities Act of 1933, as amended (the &#147;Securities Act&#148;), or relevant provisions of applicable
<FONT STYLE="white-space:nowrap">non-U.S.</FONT> law, and other securities issued in private placements. The Fund may also invest in securities of other investment companies, including, without limit, exchange-traded funds (&#147;ETFs&#148;), and
may invest in foreign ETFs. The Fund may invest in real estate investment trusts (&#147;REITs&#148;). The Fund may invest in securities of companies with any market capitalization, including small and medium capitalizations. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may invest without limit in illiquid securities (i.e., securities that cannot be disposed of within seven days in the ordinary course of business at
approximately the value at which the Fund has valued the securities). </P> <P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>LEVERAGE </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund currently utilizes leverage through the use of reverse repurchase agreements and credit default swaps. As of [&nbsp;&nbsp;], 2016, the Fund&#146;s
total effective leverage represented approximately [ ]% of the Fund&#146;s total assets (including assets attributable to such leverage). </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may
also obtain leverage through dollar rolls or borrowings, such as through bank loans or commercial paper or other credit facilities. The Fund may also enter into transactions other than those noted above that may give rise to a form of leverage
including, among others, futures and forward contracts (including foreign currency exchange contracts), total return swaps and other derivative transactions, loans of portfolio securities, short sales and when-issued, delayed delivery and forward
commitment transactions. Although it has no current intention to do so, the Fund may also determine to issue preferred shares or other types of senior securities to add leverage to its portfolio. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Under normal market conditions, the Fund will limit its use of leverage from any combination of (i)&nbsp;reverse repurchase agreements or dollar roll
transactions (whether or not these instruments are covered as discussed below), (ii), borrowings (i.e., loans or lines of credit from banks or other credit facilities), (iii) any future issuance of preferred shares, and (iv)&nbsp;to the extent
described below, credit default swaps, other swap agreements and futures contracts (whether or not these instruments are covered with segregated assets as discussed below) such that the assets attributable to the use of such leverage will not exceed
50% of the Fund&#146;s total assets (including, for purposes of the 50% limit, the amounts of leverage obtained through the use of such instruments) (the &#147;50% policy&#148;). For these purposes, assets attributable to the use of leverage from
credit default swaps, other swap agreements and futures contracts will be determined based on the current market value of the instrument if it is cash settled or based on the notional value of the instrument if it is not cash settled. In addition,
assets attributable to credit default swaps, other swap agreements or futures contracts will not be counted towards the 50% policy to the extent that the Fund owns offsetting positions or enters into offsetting transactions. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Depending upon market conditions and other factors, the Fund may or may not determine to add leverage following an offering to maintain or increase the total
amount of leverage (as a percentage of the Fund&#146;s total assets) that the Fund currently maintains, taking into account the additional assets raised through the issuance of Common Shares in such offering. The Fund utilizes certain kinds of
leverage, such as reverse repurchase agreements and credit default </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">4 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
swaps, opportunistically and may choose to increase or decrease, or eliminate entirely, its use of such leverage over time and from time to time based on PIMCO&#146;s assessment of the yield
curve environment, interest rate trends, market conditions and other factors. If the Fund determines to add leverage following an offering, it is not possible to predict with accuracy the precise amount of leverage that would be added, in part
because it is not possible to predict the number of Common Shares that ultimately will be sold in an offering or series of offerings. To the extent that the Fund does not add additional leverage following an offering, the Fund&#146;s total amount of
leverage as a percentage of its total assets will decrease, which could result in a reduction of investment income available for distribution to holders of the Fund&#146;s Common Shares (&#147;Common Shareholders&#148;). </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The net proceeds the Fund obtains from reverse repurchase agreements, credit default swaps or other forms of leverage utilized, if any, will be invested in
accordance with the Fund&#146;s investment objectives and policies as described in this prospectus and any prospectus supplement. So long as the rate of return, net of applicable Fund expenses, on the debt obligations and other investments purchased
by the Fund exceeds the costs to the Fund of the leverage it utilizes, the investment of the Fund&#146;s net assets attributable to leverage will generate more income than will be needed to pay the costs of the leverage. If so, and all other things
being equal, the excess may be used to pay higher dividends to Common Shareholders than if the Fund were not so leveraged. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Investment Company Act of
1940, as amended, and the rules and regulations thereunder (the &#147;1940 Act&#148;), generally prohibits the Fund from engaging in most forms of leverage representing indebtedness other than preferred shares (including the use of reverse
repurchase agreements, dollar rolls, bank loans, commercial paper or other credit facilities, credit default swaps, total return swaps and other derivative transactions, loans of portfolio securities, short sales and when-issued, delayed delivery
and forward commitment transactions, to the extent that these instruments are not covered as described below) unless immediately after the issuance of the leverage the Fund has satisfied the asset coverage test with respect to senior securities
representing indebtedness prescribed by the 1940 Act; that is, the value of the Fund&#146;s total assets less all liabilities and indebtedness not represented by senior securities (for these purposes, &#147;total net assets&#148;) is at least 300%
of the senior securities representing indebtedness (effectively limiting the use of leverage through senior securities representing indebtedness to
33<SUP STYLE="font-size:85%; vertical-align:top"></SUP><SUP STYLE="font-size:85%; vertical-align:top">&nbsp;1</SUP>/3% of the Fund&#146;s total net assets, including assets attributable to such leverage). In addition, the Fund is not permitted to
declare any cash dividend or other distribution on its Common Shares unless, at the time of such declaration, this asset coverage test is satisfied. The Fund may (but is not required to) cover its commitments under reverse repurchase agreements,
dollar rolls, derivatives and certain other instruments by the segregation of liquid assets, or by entering into offsetting transactions or owning positions covering its obligations. To the extent that certain of these instruments are so covered,
they will not be considered &#147;senior securities&#148; under the 1940 Act and therefore will not be subject to the 1940 Act 300% asset coverage requirement otherwise applicable to forms of leverage used by the Fund. However, reverse repurchase
agreements and other such instruments, even if covered, represent a form of economic leverage and create special risks. The use of these forms of leverage increases the volatility of the Fund&#146;s investment portfolio and could result in larger
losses to Common Shareholders than if these strategies were not used. See &#147;Principal Risks of the Fund&#151;Leverage Risk.&#148; To the extent that the Fund engages in borrowings, it may prepay a portion of the principal amount of the borrowing
to the extent necessary in order to maintain the required asset coverage. Failure to maintain certain asset coverage requirements could result in an event of default. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Leveraging is a speculative technique and there are special risks and costs involved. There is no assurance that the Fund will utilize reverse repurchase
agreements, credit default swaps, dollar rolls or borrowings, issue preferred shares or utilize any other forms of leverage (such as the use of derivatives strategies). If used, there can be no assurance that the Fund&#146;s leveraging strategies
will result in a higher yield on your Common Shares. When leverage is used, the NAV and market price of the Common Shares and the yield to Common Shareholders will be more volatile. See &#147;Principal Risks of the Fund&#151;Leverage Risk.&#148; In
addition, dividend interest and other expenses borne by the Fund with respect to its use of reverse repurchase agreements, credit default swaps, dollar rolls, borrowings or any other forms of leverage are borne by the Common Shareholders and result
in a reduction of the NAV of the Common Shares. In addition, because the fees received by the Investment Manager are based on the Fund&#146;s average daily &#147;total managed assets&#148; (including any assets attributable to any reverse repurchase
agreements, dollar rolls, borrowings and preferred shares that may be outstanding) minus accrued liabilities (other than liabilities representing reverse repurchase agreements, dollar rolls and borrowings), the Investment Manager has a financial
incentive for the Fund to use certain forms of leverage (<I>e.g.</I>, reverse repurchase agreements, dollar rolls, borrowings and preferred shares), which may create a conflict of interest between the Investment Manager, on the one hand, and the
Common Shareholders, on the other hand. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">5 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Please see &#147;Use of Leverage&#148; and &#147;Principal Risks of the Fund&#151;Leverage Risk&#148; in the body
of this prospectus for additional information regarding leverage and related risks. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>INVESTMENT MANAGER </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Pacific Investment Management Company LLC (&#147;PIMCO&#148; or the &#147;Investment Manager&#148;) serves as the investment manager of the Fund. Subject to
the supervision of the Board of Trustees of the Fund (the &#147;Board&#148;). PIMCO is responsible for managing the investment activities of the Fund and the Fund&#146;s business affairs and other administrative matters. [Dan Ivascyn, Alfred Murata
and Joshua Anderson are primarily responsible for the <FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">day-to-day</FONT></FONT> management of the Fund.] </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Investment Manager receives an annual fee from the Fund, payable monthly, in an amount equal to 1.150% of the Fund&#146;s average daily total managed
assets. Total managed assets includes total assets of the Fund (including any assets attributable to any reverse repurchase agreements, dollar rolls, borrowings and preferred shares that may be outstanding) minus accrued liabilities (other than
liabilities representing reverse repurchase agreements, dollar rolls and borrowings). 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 [&nbsp;&nbsp;], PIMCO
had approximately $[&nbsp;&nbsp;] in assets under management. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>DIVIDENDS AND DISTRIBUTIONS </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund makes regular monthly cash distributions to Common Shareholders at a rate based upon the past and projected net income of the Fund. Subject to
applicable law, the Fund may fund a portion of its distributions with gains from the sale of portfolio securities and other sources. The dividend rate that the Fund pays on its Common Shares may vary as portfolio and market conditions change, and
will depend on a number of factors, including without limit the amount of the Fund&#146;s undistributed net investment income and net short- and long-term capital gains, as well as the costs of any leverage obtained by the Fund (including interest
or other expenses on any reverse repurchase agreements, credit default swaps, dollar rolls and borrowings and dividends payable on any preferred shares issued by the Fund). As portfolio and market conditions change, the rate of distributions on the
Common Shares and the Fund&#146;s dividend policy could change. For a discussion of factors that may cause the Fund&#146;s income and capital gains (and therefore the dividend) to vary, see &#147;Principal Risks of the Fund.&#148; There can be no
assurance that a change in market conditions or other factors will not result in a change in the Fund distribution rate or that the rate will be sustainable in the future. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund generally distributes each year all of its net investment income and net short-term capital gains. In addition, at least annually, the Fund generally
distributes net realized long-term capital gains not previously distributed, if any. The net investment income of the Fund consists of all income (other than net short-term and long-term capital gains) less all expenses of the Fund (after it pays
accrued dividends on any outstanding preferred shares). The Fund may distribute less than the entire amount of net investment income earned in a particular period. The undistributed net investment income would be available to supplement future
distributions. As a result, the distributions paid by the Fund for any particular monthly period may be more or less than the amount of net investment income actually earned by the Fund during the period. Undistributed net investment income will be
added to the Fund&#146;s NAV and, correspondingly, distributions from undistributed net investment income will be deducted from the Fund&#146;s NAV. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The
tax treatment and characterization of the Fund&#146;s distributions may vary significantly from time to time because of the varied nature of the Fund&#146;s investments. The Fund may enter into opposite sides of interest rate swap and other
derivatives for the principal purpose of generating distributable gains on the one side (characterized as ordinary income for tax purposes) that are not part of the Fund&#146;s duration or yield curve management strategies (&#147;paired swap
transactions&#148;), and with a substantial possibility that the Fund will experience a corresponding capital loss and decline in NAV with respect to the opposite side transaction (to the extent it does not have corresponding offsetting capital
gains). Consequently, common shareholders may receive distributions and owe tax at a time when their investment in the Fund has declined in value, which tax may be at ordinary income rates, and which may be economically similar to a taxable return
of capital. The tax treatment of certain derivatives may be open to different interpretations. Any recharacterization of payments made or received by the Fund pursuant to derivatives potentially </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">6 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
could affect the amount, timing or character of Fund distributions. In addition, the tax treatment of such investment strategies may be changed by regulation or otherwise. To the extent required
by the 1940 Act and other applicable laws, absent an exemption, a notice will accompany each monthly distribution with respect to the estimated source (as between net income and gains) of the distribution made. To determine the sources of the
Fund&#146;s distributions during the reporting period, the Fund references its internal accounting records at the time the distribution is paid and generally bases its projections of the final tax character of those distributions on the tax
characteristics of the distribution reflected in its internal accounting records at the time of such payment. If, based on such records, a particular distribution does not include capital gains or <FONT STYLE="white-space:nowrap">paid-in</FONT>
surplus or other capital sources, a Section&nbsp;19 Notice generally would not be issued. It is important to note that differences exist between the Fund&#146;s daily internal accounting records, the Fund&#146;s financial statements presented in
accordance with U.S. GAAP, and recordkeeping practices under income tax regulations. Examples of such differences may include, among others, the treatment of paydowns on mortgage-backed securities purchased at a discount and periodic payments under
interest rate swap contracts. Notwithstanding the Fund&#146;s estimates and projections, it is possible that the Fund may not issue a Section&nbsp;19 Notice in situations where the Fund&#146;s financial statements prepared later and in accordance
with U.S. GAAP or the final tax character of those distributions might later report that the sources of those distributions included capital gains and/or a return of capital. Additionally, given differences in tax and U.S. GAAP treatment of certain
distributions, the Fund may not issue a Section&nbsp;19 Notice in situations where the Fund&#146;s financial statements prepared later and in accordance with U.S. GAAP might report that the sources of these distributions included capital gains
and/or a return of capital. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The tax characterization of the Fund&#146;s distributions made in a taxable year cannot finally be determined until at or
after the end of the year. As a result, there is a possibility that the Fund may make total distributions during a taxable year in an amount that exceeds the Fund&#146;s net investment income and net realized capital gains for the relevant year
(including as reduced by any capital loss carry-forwards). For example, the Fund may distribute amounts early in the year that are derived from short-term capital gains, but incur net short-term capital losses later in the year, thereby offsetting
short-term capital gains out of which distributions have already been made by the Fund. In such a situation, the amount by which the Fund&#146;s total distributions exceed net investment income and net realized capital gains would generally be
treated as a <FONT STYLE="white-space:nowrap">tax-free</FONT> return of capital up to the amount of a shareholder&#146;s tax basis in his or her Common Shares, with any amounts exceeding such basis treated as gain from the sale of Common Shares. In
general terms, a return of capital would occur where the Fund distribution (or portion thereof) represents a return of a portion of your investment, rather than net income or capital gains generated from your investment during a particular period.
Although return of capital distributions may not be taxable, such distributions would reduce the basis of a shareholder&#146;s Common Shares and therefore may increase a shareholder&#146;s capital gains, or decrease a shareholder&#146;s capital
loss, thereby potentially increasing a shareholder&#146;s tax liability upon a sale of Common Shares. The Fund will send shareholders detailed tax information with respect to the Fund&#146;s distributions annually. See &#147;Tax Matters.&#148; </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The 1940 Act currently limits the number of times the Fund may distribute long-term capital gains in any tax year, which may increase the variability of the
Fund&#146;s distributions and result in certain distributions being comprised more or less heavily than others of long-term capital gains currently eligible for favorable income tax rates. </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Unless a Common Shareholder elects to receive distributions in cash, all distributions of Common Shareholders whose shares are registered with the plan agent
will be automatically reinvested in additional Common Shares of the Fund under the Fund&#146;s Dividend Reinvestment Plan. See &#147;Distributions&#148; and &#147;Dividend Reinvestment Plan.&#148; </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>CUSTODIAN AND TRANSFER AGENT </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">State Street Bank and
Trust Company serves as custodian of the Fund&#146;s assets and also provides certain fund accounting, <FONT STYLE="white-space:nowrap">sub-administrative</FONT> and compliance services to the Investment Manager on behalf of the Fund. American Stock
Transfer&nbsp;&amp; Trust Company, LLC serves as the Fund&#146;s transfer agent and dividend disbursement agent. See &#147;Custodian and Transfer Agent.&#148; </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>LISTING </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund&#146;s outstanding Common Shares are
listed on the NYSE under the trading or &#147;ticker&#148; symbol PDI, as will be the Common Shares offered in this prospectus, subject to notice of issuance. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">7 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>MARKET PRICE OF SHARES </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Shares of <FONT STYLE="white-space:nowrap">closed-end</FONT> investment companies frequently trade at prices lower than NAV. Shares of <FONT
STYLE="white-space:nowrap">closed-end</FONT> investment companies have during some periods traded at prices higher than NAV and during other periods traded at prices lower than NAV. The Fund cannot assure you that Common Shares will trade at a price
equal to or higher than NAV in the future. NAV will be reduced immediately following an offering by any sales load and/or commissions and the amount of offering expenses paid or reimbursed by the Fund. See &#147;Use of Proceeds.&#148; In addition to
NAV, market price may be affected by factors relating to the Fund such as dividend levels and stability (which will in turn be affected by Fund expenses, including the costs of any leverage used by the Fund, levels of interest payments by the
Fund&#146;s portfolio holdings, levels of appreciation/depreciation of the Fund&#146;s portfolio holdings, regulation affecting the timing and character of Fund distributions and other factors), portfolio credit quality, liquidity, call protection,
market supply and demand and similar factors relating to the Fund&#146;s portfolio holdings. See &#147;Use of Leverage,&#148; &#147;Principal Risks of the Fund,&#148; &#147;Description of Shares&#148; and &#147;Repurchase of Common Shares;
Conversion to <FONT STYLE="white-space:nowrap">Open-End</FONT> Fund&#148; in this prospectus, and see &#147;Repurchase of Common Shares; Conversion to <FONT STYLE="white-space:nowrap">Open-End</FONT> Fund&#148; in the Statement of Additional
Information. The Common Shares are designed for long-term investors and should not be treated as trading vehicles. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>PRINCIPAL RISKS OF THE FUND
</B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The following is a summary of the principal risks associated with an investment in Common Shares of the Fund. Investors should also refer to
&#147;Principal Risks of the Fund&#148; in this prospectus and &#147;Investment Objectives and Policies&#148; in the Statement of Additional Information for a more detailed explanation of these and other risks associated with investing in the Fund.
</P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Market Discount Risk </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">As with any stock, the price
of the Fund&#146;s Common Shares will fluctuate with market conditions and other factors. If you sell your Common Shares, the price received may be more or less than your original investment. Net asset value of the Fund&#146;s Common Shares will be
reduced immediately following an offering by any sales load and/or commissions and offering expenses paid or reimbursed by the Fund in connection with such offering. The completion of an offering may result in an immediate dilution of the NAV per
Common Share for all existing Common Shareholders. The Common Shares are designed for long-term investors and should not be treated as trading vehicles. Shares of <FONT STYLE="white-space:nowrap">closed-end</FONT> management investment companies
frequently trade at a discount from their NAV. The Common Shares may trade at a price that is less than the offering price for Common Shares issued pursuant to an offering. This risk may be greater for investors who sell their Common Shares
relatively shortly after completion of an offering. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Market Risk </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The market price of securities owned by the Fund may go up or down, sometimes rapidly or unpredictably. Securities may decline in value due to factors
affecting securities markets generally or particular industries 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. Equity securities generally have greater price volatility than fixed income securities. Credit ratings downgrades may also negatively affect securities held by the Fund. Even when markets perform well, there is no
assurance that the investments held by the Fund will increase in value along with the broader market. In addition, market risk includes the risk that geopolitical events will disrupt the economy on a national or global level. For instance,
terrorism, market manipulation, government defaults, government shutdowns, political changes or diplomatic developments, and natural/environmental disasters can all negatively impact the securities markets, which could cause the Fund to lose value.
Any market disruptions could also prevent the Fund from executing advantageous investment decisions in a timely manner. To the extent the Fund focuses its investments in a region enduring geopolitical market disruption, it will face higher risks of
loss. Thus, investors should closely monitor current market conditions to determine whether a specific Fund meets their individual financial needs and tolerance for risk. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">8 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Current market conditions may pose heightened risks with respect to funds that invest in fixed income securities.
As discussed more under &#147;Principal Risks of the Fund&#151;Interest Rate Risk,&#148; interest rates in the U.S. are near historically low levels. However, continued economic recovery, the end of the Federal Reserve Board&#146;s quantitative
easing program, and an increased likelihood of a rising interest rate environment increase the risk that interest rates will continue to rise in the near future. Any further interest rate increases in the future could cause the value of the Fund to
decrease. As such, fixed income securities markets may experience heightened levels of interest rate, volatility and liquidity risk. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Exchanges and
securities markets may close early, close late or issue trading halts on specific securities, which may result in, among other things, the Fund being unable to buy or sell certain securities or financial instruments at an advantageous time or
accurately price its portfolio investments. In addition, the Fund may rely on various third-party sources to calculate its NAV. As a result, the Fund is subject to certain operational risks associated with reliance on service providers and service
providers&#146; data sources. In particular, errors or systems failures and other technological issues may adversely impact the Fund&#146;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. The Fund may be unable to recover any losses associated with such failures. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Asset Allocation Risk </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund&#146;s investment
performance depends upon how its assets are allocated and reallocated. A principal risk of investing in the Fund is that PIMCO may make less than optimal or poor asset allocation decisions. PIMCO employs an active approach to allocation among
multiple fixed-income sectors, but there is no guarantee that such allocation techniques will produce the desired results. It is possible that PIMCO will focus on an investment that performs poorly or underperforms other investments under various
market conditions. You could lose money on your investment in the Fund as a result of these allocation decisions. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Management Risk </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund 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 Fund, but there can be no guarantee that these decisions will produce the desired results. Certain securities or other instruments in which the Fund seeks to invest may
not be available in the quantities desired. 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 Fund. To the extent the Fund 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 Fund. 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 Fund and may also adversely affect the ability of the Fund to achieve its 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 the services of one or more key employees of PIMCO could have an adverse impact on the Fund&#146;s ability to realize its investment objective. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Issuer Risk </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The value of a security may decline for a
number of reasons that directly relate to the issuer, such as management performance, financial leverage and reduced demand for the issuer&#146;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 securities markets as a whole. These risks can apply to the Common Shares issued by the Fund and to the issuers of securities and other instruments in which the Fund
invests. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">9 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Interest Rate Risk </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Interest rate risk is the risk that fixed income securities and other instruments in the Fund&#146;s portfolio will decline in value because of a change in
interest rates. As nominal interest rates rise, the value of certain fixed income securities held by the Fund 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 the Fund may lose money as a result of movements in interest rates. The Fund 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. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">A wide variety of factors can cause interest rates to rise (e.g., central bank monetary policies,
inflation rates, general economic conditions). <B>This risk may be particularly acute in the current market environment because market interest rates are currently at historically low levels.</B> This, combined with recent economic recovery, the
Federal Reserve Board&#146;s conclusion of its quantitative easing program, and recent increases in the interest rates for the first time since 2006, could potentially increase the probability of an upward interest rate environment in the near
future. To the extent the Federal Reserve Board continues to raise interest rates, there is a risk that rates across the financial system may rise. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">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. Duration is a measure used to determine the sensitivity of a security&#146;s
price to changes in interest rates that incorporates a security&#146;s yield, coupon, final maturity and call features, among other characteristics. Duration is useful primarily as a measure of the sensitivity of a fixed income security&#146;s
market price to interest rate (i.e. yield) movements. All other things remaining equal, for each one percentage point increase in interest rates, the value of a portfolio of fixed income investments would generally be expected to decline by one
percent for every year of the portfolio&#146;s average duration above zero. For example, the value of a portfolio of fixed income securities with an average duration of eight years would generally be expected to decline by approximately 8% if
interest rates rose by one percentage point. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">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 than a fixed rate obligation with similar credit quality. When the Fund 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 Fund&#146;s shares. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">During periods of very low or negative interest rates, the Fund may be unable to maintain positive returns. Interest rates in the United States and many parts
of the world, including certain European countries, are at or near historically low levels. Certain European countries have recently 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 Fund performance to the extent the Fund is exposed
to such interest rates. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Measures such as average duration may not accurately reflect the true interest rate sensitivity of the Fund. This is especially
the case if the Fund consists of securities with widely varying durations. Therefore, if the Fund has an average duration that suggests a certain level of interest rate risk, the Fund may in fact be subject to greater interest rate risk than the
average would suggest. This risk is greater to the extent the Fund uses leverage or derivatives in connection with the management of the Fund. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Convexity
is an additional measure used to understand a security&#146;s or Fund&#146;s interest rate sensitivity. Convexity measures the rate of change of duration in response to changes in interest rates. With respect to a security&#146;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 the Fund holds such securities, the Fund may be subject to a greater risk of losses in periods of rising interest rates. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">10 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Rising interest rates may result in a decline in value of the Fund&#146;s fixed-income investments and in periods
of volatility. Further, while U.S. bond markets have steadily grown over the past three decades, dealer &#147;market making&#148; 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 &#147;make markets,&#148; 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 the Fund to lose value. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Credit Risk </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund 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, 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 downgrade of the credit of a security held by the Fund 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 the Fund. This is especially the case if the Fund consists of securities with widely varying credit ratings. Therefore, if the Fund has an
average credit rating that suggests a certain credit quality, the Fund may in fact be subject to greater credit risk than the average would suggest. This risk is greater to the extent the Fund uses leverage or derivatives in connection with the
management of the Fund. 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&#146;s
ability to make payments of principal and/or interest. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Mortgage-Related and Other Asset-Backed Securities Risk </B></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may invest in a variety of mortgage-related and other asset-backed securities issued by government agencies or other governmental entities or by
private originators or issuers. </P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">As a matter of fundamental policy, the Fund will normally invest at least 25% of its total assets in privately-issued
(commonly known as <FONT STYLE="white-space:nowrap">&#147;non-agency&#148;)</FONT> mortgage-related securities. </P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The mortgage-related securities in which
the Fund may invest include, without limitation, mortgage pass-through securities, collateralized mortgage obligations (&#147;CMOs&#148;), commercial or residential mortgage-backed securities, mortgage dollar rolls, CMO residuals, stripped
mortgage-backed securities (&#147;SMBSs&#148;) and other securities that directly or indirectly represent a participation in, or are secured by and payable from, mortgage loans on real property. The Fund may also invest in other types of
asset-backed securities, including collateralized debt obligations (&#147;CDOs&#148;), which include collateralized bond obligations (&#147;CBOs&#148;), collateralized loan obligations (&#147;CLOs&#148;) and other similarly structured securities.
See &#147;Portfolio Contents&#150;&#150;Mortgage-Related and Other Asset-Backed Securities&#148; in this prospectus and &#147;Investment Objectives and Policies&#150;&#150;Mortgage-Related and Other Asset-Backed Securities&#148; in the Statement of
Additional Information for a description of the various mortgage-related and other asset-backed securities in which the Fund may invest and their related risks. </P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Mortgage-related and other asset-backed securities represent interests in &#147;pools&#148; 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. As a result, in a period of rising interest rates, the Fund 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 the Fund 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 the Fund to lose value. Mortgage-backed securities, and in particular those not backed by a government guarantee, are subject to credit risk. When interest rates decline, borrowers may pay off their mortgages sooner than
expected. This can reduce the returns of the Fund because the Fund may have to reinvest that money at the lower prevailing interest rates. The Fund&#146;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. 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. See &#147;Principal Risks of the Fund&#151;Mortgage Market/Subprime Risk.&#148; See also
&#147;Principal Risks of the Fund&#151;Recent Economic Conditions Risk.&#148; </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">11 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Privately Issued Mortgage-Related Securities Risk </B></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">There are no direct or indirect government or agency guarantees of payments in pools created by <FONT STYLE="white-space:nowrap">non-governmental</FONT>
issuers. Privately issued mortgage-related securities are also 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. </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">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 the Fund&#146;s portfolio may be particularly difficult to value because of the
complexities involved in assessing the value of the underlying mortgage loans. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Mortgage Market/Subprime Risk </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The mortgage markets in the United States and in various foreign countries have experienced extreme difficulties in the past that may adversely affect the
performance and market value of certain of the Fund&#146;s mortgage-related investments. Delinquencies and losses on residential and commercial mortgage loans (especially subprime and second-lien mortgage loans) generally increased during that
period and may continue to increase, and a decline in or flattening of housing and other real property values (as has been experienced during that period and may continue to be experienced in many real estate markets) may exacerbate such
delinquencies and losses. Borrowers with adjustable rate mortgage loans are more sensitive to changes in interest rates, which affect their monthly mortgage payments, and may be unable to secure replacement mortgages at comparably low interest
rates. Also, a number of mortgage loan originators have experienced serious financial difficulties or bankruptcy in recent periods. Owing largely to the foregoing, reduced investor demand for mortgage loans and mortgage-related securities and
increased investor yield requirements have caused limited liquidity in the secondary market for mortgage-related securities, which can adversely affect the market value of mortgage-related securities. It is possible that such limited liquidity in
such secondary markets could continue or worsen. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>High Yield Risk </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">In general, lower rated debt securities carry a greater degree of risk that the issuer will lose its ability to make interest and principal payments, which
could have a negative effect on the NAV of the Fund&#146;s Common Shares or Common Share dividends. Securities of below investment grade quality are regarded as having predominantly speculative characteristics with respect to capacity to pay
interest and repay principal, and are commonly referred to as &#147;high yield&#148; securities or &#147;junk bonds.&#148; High yield securities involve a greater risk of default and their prices are generally more volatile and sensitive to actual
or perceived negative developments, such as a decline in the issuer&#146;s revenues or revenues of underlying borrowers or a general economic downturn, than are the prices of higher grade securities. Debt securities in the lowest investment grade
category also may be considered to possess some speculative characteristics by certain rating agencies. The Fund may purchase distressed securities that are in default or the issuers of which are in bankruptcy, which involve heightened risks. See
&#147;Principal Risks of the Fund&#151;Distressed and Defaulted Securities Risk.&#148; An economic downturn could severely affect the ability of issuers (particularly those that are highly leveraged) to service their debt obligations or to repay
their obligations upon maturity. Lower-rated securities are generally less liquid than higher-rated securities, which may have an adverse effect on the Fund&#146;s ability to dispose of a particular security. For example, under adverse market or
economic conditions, the secondary market for below investment grade securities could contract further, independent of any specific adverse changes in the condition of a particular issuer, and certain securities in the Fund&#146;s portfolio may
become illiquid or less liquid. As a result, the Fund could find it more difficult to sell these securities or may be able to sell these securities only at prices lower than if such securities were widely traded. See &#147;Principal Risks of the
Fund&#151;Liquidity Risk.&#148; To the extent the Fund focuses on below investment grade debt obligations, PIMCO&#146;s capabilities in analyzing credit quality and associated risks will be particularly important, and there can be no assurance that
PIMCO will be successful in this regard. See &#147;Portfolio Contents&#151;High Yield Securities (&#145;Junk Bonds&#146;)&#148; for additional information. Due to the risks involved in investing in high yield securities, an investment in the Fund
should be considered speculative. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">12 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund&#146;s credit quality policies apply only at the time a security is purchased, and the Fund is not
required to dispose of a security in the event that a rating agency or PIMCO downgrades its assessment of the credit characteristics of a particular issue. In determining whether to retain or sell such a security, PIMCO may consider factors
including, but not limited to, PIMCO&#146;s assessment of the credit quality of the issuer of such security, the price at which such security could be sold and the rating, if any, assigned to such security by other rating agencies. Analysis of
creditworthiness may be more complex for issuers of high yield securities than for issuers of higher quality debt securities. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Distressed and Defaulted
Securities Risk </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">As noted above, the Fund may invest in the debt securities of financially distressed issuers, including those that are in default or
the issuers of which are in bankruptcy. Investments in the securities of financially distressed issuers involve substantial risks. These securities may present a substantial risk of default or may be in default at the time of investment. The Fund
may incur additional expenses to the extent it is required to seek recovery upon a default in the payment of principal or interest on its portfolio holdings. In any reorganization or liquidation proceeding relating to an investment, the Fund may
lose its entire investment or may be required to accept cash or securities with a value substantially less than its original investment. Among the risks inherent in investments in a troubled issuer is that it frequently may be difficult to obtain
information as to the true financial condition of such issuer. PIMCO&#146;s judgments about the credit quality of a financially distressed issuer and the relative value of its securities may prove to be wrong. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Municipal Bond Risk </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Investing in the municipal bond
market involves the risks of investing in debt securities generally and certain other risks. The amount of public information available about the municipal bonds in which the Fund may invest is generally less than that for corporate equities or
bonds, and the investment performance of the Fund&#146;s investment in municipal bonds may therefore be more dependent on the analytical abilities of PIMCO than its investments in taxable bonds. The secondary market for municipal bonds also tends to
be less well developed or liquid than many other securities markets, which may adversely affect the Fund&#146;s ability to sell municipal bonds at attractive prices. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The ability of municipal issuers to make timely payments of interest and principal may be diminished during general economic downturns, by litigation,
legislation or political events, or by the bankruptcy of the issuer. Laws, referenda, ordinances or regulations enacted in the future by Congress or state legislatures or the applicable governmental entity 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 also might seek protection under the bankruptcy laws. In the event of
bankruptcy of such an issuer, the Fund could experience delays in collecting principal and interest and the Fund 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, the Fund may take possession of and manage the assets securing the issuer&#146;s obligations on such securities, which may increase the Fund&#146;s operating expenses. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may invest in revenue bonds, which are typically issued to fund a wide variety of capital projects including electric, gas, water and sewer systems;
highways, bridges and tunnels; port and airport facilities; colleges and universities; and hospitals. Because the principal security for a revenue bond is generally the net revenues derived from a particular facility or group of facilities or, in
some cases, from the proceeds of a special excise or other specific revenue source, there is no guarantee that the particular project will generate enough revenue to pay its obligations, in which case the Fund&#146;s performance may be adversely
affected. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may invest in taxable municipal bonds, such as Build America Bonds. Build America Bonds are tax credit bonds created by the American
Recovery and Reinvestment Act of 2009, which authorized state and local governments to issue Build America Bonds as taxable bonds in 2009 and 2010, without volume limitations, to finance any capital expenditures for which such issuers could
otherwise issue traditional <FONT STYLE="white-space:nowrap">tax-exempt</FONT> bonds. The Fund&#146;s investments in Build America Bonds or similar taxable municipal bonds will result in taxable income and the Fund may elect to pass through to
Common Shareholders the corresponding tax credits. The tax credits can generally be used to offset federal income taxes and the alternative minimum tax, but such credits are generally not refundable. Taxable municipal bonds involve similar risks as <FONT
STYLE="white-space:nowrap">tax-exempt</FONT> municipal bonds, including credit and market risk. See &#147;Principal Risks of the Fund&#151;Credit Risk&#148; and &#147;Principal Risks of the Fund&#151;Market Risk.&#148; </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">13 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Inflation-Indexed Security Risk </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Inflation-indexed debt securities are subject to the effects of changes in market interest rates caused by factors other than inflation (real interest rates).
In general, the value of an inflation-indexed security, including TIPS, tends to decrease when real interest rates increase and can increase when real interest rates decrease. Thus generally, during periods of rising inflation, the value of
inflation-indexed securities will tend to increase and during periods of deflation, their value will tend to decrease. Interest payments on inflation-indexed securities are unpredictable and will fluctuate as the principal and interest are adjusted
for inflation. There can be no assurance that the inflation index used (i.e., the CPI) will accurately measure the real rate of inflation in the prices of goods and services. Increases in the principal value of TIPS due to inflation are considered
taxable ordinary income for the amount of the increase in the calendar year. Any increase in the principal amount of an inflation-indexed debt security will be considered taxable ordinary income, even though the Fund will not receive the principal
until maturity. Additionally, a CPI swap can potentially lose value if the realized rate of inflation over the life of the swap is less than the fixed market implied inflation rate (fixed breakeven rate) that the investor agrees to pay at the
initiation of the swap. With municipal inflation-indexed securities, the inflation adjustment is integrated into the coupon payment, which is federally tax exempt (and may be state tax exempt). For municipal inflation-indexed securities, there is no
adjustment to the principal value. Because municipal inflation-indexed securities are a small component of the municipal bond market, they may be less liquid than conventional municipal bonds.. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Senior Debt Risk </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Because it may invest in
below-investment grade senior debt, the Fund may be subject to greater levels of credit risk than funds that do not invest in such debt. The Fund may also be subject to greater levels of liquidity risk than funds that do not invest in senior debt.
Restrictions on transfers in loan agreements, a lack of publicly available information and other factors may, in certain instances, make senior debt more difficult to sell at an advantageous time or price than other types of securities or
instruments. Additionally, if the issuer of senior debt prepays, the Fund will have to consider reinvesting the proceeds in other senior debt or similar instruments that may pay lower interest rates. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Loan Participations and Assignments Risk </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The
Fund&#146;s investments in fixed and floating rate loans arranged through private negotiations between an issuer and one or more financial institutions may be in the form of participations in loans or assignments of all or a portion of loans from
third parties. In connection with purchasing loan participations, the Fund generally will have no right to enforce compliance by the borrower with the terms of the loan agreement relating to the loan, nor any rights of
<FONT STYLE="white-space:nowrap">set-off</FONT> against the borrower, and the Fund may not directly benefit from any collateral supporting the loan in which it has purchased the loan participation. As a result, the Fund may be subject to the credit
risk of both the borrower and the lender that is selling the participation. In the event of the insolvency of the lender selling a participation, the Fund may be treated as a general creditor of the lender and may not benefit from any <FONT
STYLE="white-space:nowrap">set-off</FONT> between the lender and the borrower. Certain loan participations may be structured in a manner designed to prevent purchasers of participations from being subject to the credit risk of the lender with
respect to the participation, but even under such a structure, in the event of the lender&#146;s insolvency, the lender&#146;s servicing of the participation may be delayed and the assignability of the participation impaired. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may have difficulty disposing of loans and loan participations because to do so it will have to assign or sell such securities to a third party.
Because there is no liquid market for many such securities, the Fund anticipates that such securities could be sold only to a limited number of institutional investors. The lack of a liquid secondary market may have an adverse impact on the value of
such securities and the Fund&#146;s ability to dispose of particular loans and loan participations when that would be desirable, including in response to a specific economic event such as a deterioration in the creditworthiness of the borrower. The
lack of a liquid secondary market for loans and loan participations also may make it more difficult for the Fund to assign a value to these securities for purposes of valuing the Fund&#146;s portfolio. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Reinvestment Risk </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Income from the Fund&#146;s portfolio
will decline if and when the Fund invests the proceeds from matured, traded or called debt obligations at market interest rates that are below the portfolio&#146;s current earnings rate. For instance, during periods of declining interest rates, an
issuer of debt obligations may exercise an option to redeem securities prior to maturity, forcing the Fund to invest in lower-yielding securities. The Fund also may choose to sell higher </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">14 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
yielding portfolio securities and to purchase lower yielding securities to achieve greater portfolio diversification, because the portfolio managers believe the current holdings are overvalued or
for other investment-related reasons. A decline in income received by the Fund from its investments is likely to have a negative effect on dividend levels and the market price, NAV and/or overall return of the Common Shares. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Call Risk </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Call risk refers to the possibility that an
issuer may exercise its right to redeem a fixed income security earlier than expected (a call). Issuers may call outstanding securities prior to their maturity for a number of reasons (e.g., declining interest rates, changes in credit spreads and
improvements in the issuer&#146;s credit quality). If an issuer calls a security in which the Fund has invested, the Fund may not recoup the full amount of its initial investment and may be forced to reinvest in lower-yielding securities, securities
with greater credit risks or securities with other, less favorable features. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Foreign <FONT STYLE="white-space:nowrap">(Non-U.S.)</FONT> Investment
Risk </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may invest in foreign <FONT STYLE="white-space:nowrap">(non-U.S.)</FONT> securities and may experience more rapid and extreme changes
in value than the Fund that invests exclusively in securities of U.S. companies. The securities markets of many foreign countries are relatively small, with a limited number of companies representing a small number of industries. Additionally,
issuers of foreign <FONT STYLE="white-space:nowrap">(non-U.S.)</FONT> securities are usually not subject to the same degree of regulation as U.S. issuers. Reporting, accounting, auditing and custody 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. Also, nationalization, expropriation or confiscatory taxation, currency blockage, political changes or diplomatic developments could adversely affect the Fund&#146;s investments in a foreign country. In the event of
nationalization, expropriation or other confiscation, the Fund could lose its entire investment in foreign <FONT STYLE="white-space:nowrap">(non-U.S.)</FONT> securities. Adverse conditions in a certain region can adversely affect securities of other
countries whose economies appear to be unrelated. To the extent that the Fund invests a significant portion of its assets in a specific geographic region, the Fund will generally have more exposure to regional economic risks associated with foreign <FONT
STYLE="white-space:nowrap">(non-U.S.)</FONT> investments. Foreign <FONT STYLE="white-space:nowrap">(non-U.S.)</FONT> securities may also be less liquid and more difficult to value than securities of U.S. issuers. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The global economic crisis brought several small economies in Europe to the brink of bankruptcy and many other economies into recession and weakened the
banking and financial sectors of many European countries. For example, the governments of Greece, Spain, Portugal, and the Republic of Ireland have all experienced large public budget deficits, the effects of which are still yet unknown and may slow
the overall recovery of the European economies from the global economic crisis. In addition, due to large public deficits, some European countries may be dependent on assistance from other European governments and institutions or other central banks
or supranational agencies such as the International Monetary Fund. Assistance may be dependent on a country&#146;s implementation of reforms or reaching a certain level of performance. Failure to reach those objectives or an insufficient level of
assistance could result in a deep economic downturn which could significantly affect the value of the Fund&#146;s European investments. It is possible that one or more Economic and Monetary Union member countries could abandon the euro and return to
a national currency and/or that the euro will cease to exist as a single currency in its current form. The exit of any country out of the euro may have an extremely destabilizing effect on other eurozone countries and their economies and a negative
effect on the global economy as a whole. Such an exit by one country may also increase the possibility that additional countries may exit the euro should they face similar financial difficulties. In June 2016, the United Kingdom approved a
referendum to leave the European Union. Significant uncertainty remains in the market regarding the ramifications of that development, and the range and potential implications of possible political, regulatory, economic and market outcomes are
difficult to predict. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may invest in securities and instruments that are economically tied to Russia. Investments in Russia are subject to
various risks such as political, economic, legal, market and currency risks. The risks include uncertain political and economic policies, short term market volatility, poor accounting standards, corruption and crime, an inadequate regulatory system,
and unpredictable taxation. Investments in Russia are particularly subject to the risk that economic sanctions may be imposed by the United States and/or other countries. Such sanctions &#151; which may impact companies in many sectors, including
energy, financial services and defense, among others &#151; may negatively impact the Fund&#146;s performance and/or ability to achieve its investment objectives. The Russian securities </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">15 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
market is characterized by limited volume of trading, resulting in difficulty in obtaining accurate prices. The Russian securities market, as compared to U.S. markets, has significant price
volatility, less liquidity, a smaller market capitalization and a smaller number of traded securities. There may be little publicly available information about issuers. Settlement, clearing and registration of securities transactions are subject to
risks because of registration systems that may not be subject to effective government supervision. This may result in significant delays or problems in registering the transfer of securities. Russian securities laws may not recognize foreign nominee
accounts held with a custodian bank, and therefore the custodian may be considered the ultimate owner of securities they hold for their clients. Ownership of securities issued by Russian companies is recorded by companies themselves and by
registrars instead of through a central registration system. It is possible that the ownership rights of the Fund could be lost through fraud or negligence. While applicable Russian regulations impose liability on registrars for losses resulting
from their errors, it may be difficult for the Fund to enforce any rights it may have against the registrar or issuer of the securities in the event of loss of share registration. Adverse currency exchange rates are a risk and there may be a lack of
available currency hedging instruments. Investments in Russia may be subject to the risk of nationalization or expropriation of assets. Oil, natural gas, metals, and timber account for a significant portion of Russia&#146;s exports, leaving the
country vulnerable to swings in world prices. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Emerging Markets Risk </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Foreign investment risk may be particularly high to the extent that the Fund invests in securities of issuers based in or doing business in emerging market
countries or invests in securities denominated in the currencies of emerging market countries. Investing in securities of issuers based in or doing business in emerging markets entails all of the risks of investing in foreign securities noted above,
but to a heightened degree. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Investments in emerging market countries pose a greater degree of systemic risk (<I>i.e.</I>, the risk of a cascading
collapse of multiple institutions within a country, and even multiple national economies). The inter-relatedness of economic and financial institutions within and among emerging market economies has deepened over the years, with the effect that
institutional failures and/or economic difficulties that are of initially limited scope may spread throughout a country, a region or even among all or most emerging market countries. This may undermine any attempt by the Fund to reduce risk through
geographic diversification of its portfolio investments among emerging market countries. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">There is a heightened possibility of imposition of withholding
taxes on interest or dividend income generated from emerging market securities. Governments of emerging market countries may engage in confiscatory taxation or expropriation of income and/or assets to raise revenues or to pursue a domestic political
agenda. In the past, emerging market countries have nationalized assets, companies and even entire sectors, including the assets of foreign investors, with inadequate or no compensation to the prior owners. There can be no assurance that the Fund
will not suffer a loss of any or all of its investments or, interest or dividends thereon, due to adverse fiscal or other policy changes in emerging market countries. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">There is also a greater risk that an emerging market government may take action that impedes or prevents the Fund from taking income and/or capital gains
earned in the local currency and converting into U.S. dollars (<I>i.e.</I>, &#147;repatriating&#148; local currency investments or profits). Certain emerging market countries have sought to maintain foreign exchange reserves and/or address the
economic volatility and dislocations caused by the large international capital flows by controlling or restricting the conversion of the local currency into other currencies. This risk tends to become more acute when economic conditions otherwise
worsen. There can be no assurance that if the Fund earns income or capital gains in an emerging market currency or PIMCO otherwise seeks to withdraw the Fund&#146;s investments from a given emerging market country, capital controls imposed by such
country will not prevent, or cause significant expense in, doing so. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Bankruptcy law and creditor reorganization processes may differ substantially from
those in the United States, resulting in greater uncertainty as to the rights of creditors, the enforceability of such rights, reorganization timing and the classification, seniority and treatment of claims. In certain emerging market countries,
although bankruptcy laws have been enacted, the process for reorganization remains highly uncertain. In addition, it may be impossible to seek legal redress against an issuer that is a sovereign state. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">16 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Other heightened risks associated with emerging markets investments include without limit: (i)&nbsp;risks due to
less social, political and economic stability; (ii)&nbsp;the smaller size of the market for such securities and a lower volume of trading, resulting in a lack of liquidity and in price volatility; (iii)&nbsp;certain national policies which may
restrict the Fund&#146;s investment opportunities, including restrictions on investing in issuers or industries deemed sensitive to relevant national interests and requirements that government approval be obtained prior to investment by foreign
persons; (iv)&nbsp;certain national policies that may restrict the Fund&#146;s repatriation of investment income, capital or the proceeds of sales of securities, including temporary restrictions on foreign capital remittances; (v)&nbsp;the lack of
uniform accounting and auditing standards and/or standards that may be significantly different from the standards required in the United States; (vi)&nbsp;less publicly available financial and other information regarding issuers;
(vii)&nbsp;potential difficulties in enforcing contractual obligations; and (viii)&nbsp;higher rates of inflation, higher interest rates and other economic concerns. The Fund may invest to a substantial extent in emerging market securities that are
denominated in local currencies, subjecting the Fund to a greater degree of foreign currency risk. See &#147;&#151;Currency Risk.&#148; Also, investing in emerging market countries may entail purchases of securities of issuers that are insolvent,
bankrupt or otherwise of questionable ability to satisfy their payment obligations as they become due, subjecting the Fund to a greater amount of credit risk and/or high yield risk. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Currency Risk </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may engage in practices and
strategies that will result in exposure to fluctuations in foreign exchange rates, in which case the Fund will be subject to foreign currency risk. The Fund&#146;s Common Shares are priced in U.S. dollars and the distributions paid by the Fund to
Common Shareholders are paid in U.S. dollars. However, a substantial portion of the Fund&#146;s assets may be denominated directly in foreign <FONT STYLE="white-space:nowrap">(non-U.S.)</FONT> currencies or in securities that trade in, and receive
revenues in, foreign <FONT STYLE="white-space:nowrap">(non-U.S.)</FONT> currencies, or in derivatives that provide exposure to foreign <FONT STYLE="white-space:nowrap">(non-U.S.)</FONT> 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. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Currency rates in foreign <FONT STYLE="white-space:nowrap">(non-U.S.)</FONT> 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 <FONT STYLE="white-space:nowrap">(non-U.S.)</FONT>
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. These fluctuations may have a significant adverse
impact on the value of the Fund&#146;s portfolio and/or the level of Fund distributions made to Common Shareholders. As noted above, the Fund may (but is not required to) seek exposure to foreign currencies, or attempt to hedge exposure to reduce
the risk of loss due to fluctuations in currency exchange rates relative to the U.S. dollar. There is no assurance, however, that these strategies will be available or will be used by the Fund or, if used, that they will be successful. As a result,
the Fund&#146;s investments in foreign currency-denominated securities may reduce the returns of the Fund. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Currency risk may be particularly high to the
extent that the Fund invests in foreign <FONT STYLE="white-space:nowrap">(non-U.S.)</FONT> 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 <FONT STYLE="white-space:nowrap">(non-U.S.)</FONT> currencies or engaging in foreign currency
transactions that are economically tied to developed foreign countries. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Redenomination Risk </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Continuing uncertainty as to the status of the euro and the European Monetary Union (the &#147;EMU&#148;) has 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 the Fund&#146;s portfolio investments. If one or more EMU countries were to
stop using the euro as its primary currency, the Fund&#146;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 foreign currency risk, liquidity risk and valuation risk to a greater extent than similar investments currently denominated in euros. See &#147;Principal Risks of the
Fund&#151;Currency Risk,&#148; &#147;Principal Risks of the Fund&#151;Liquidity Risk&#148; and &#147;Principal Risks of the Fund&#151;Valuation Risk.&#148; To the extent a currency used for redenomination purposes is not specified in respect of
certain <FONT STYLE="white-space:nowrap">EMU-related</FONT> 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. The Fund may incur additional expenses to the extent it is required to seek judicial or other clarification of the denomination or value of such securities. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">17 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Real Estate Risk </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">To the extent that the Fund invests in real estate related investments, including REITs or real-estate linked derivative instruments, it will be subject to
the risks associated with owning real estate and with the real estate industry generally. These include difficulties in valuing and disposing of real estate, the possibility of declines in the value of real estate, risks related to general and local
economic conditions, the possibility of adverse changes in the climate for real estate, environmental liability risks, the risk of increases in property taxes and operating expenses, possible adverse changes in zoning laws, the risk of casualty or
condemnation losses, limitations on rents, the possibility of adverse changes in interest rates and in the credit markets and the possibility of borrowers paying off mortgages sooner than expected, which may lead to reinvestment of assets at lower
prevailing interest rates. To the extent that the Fund invests in REITs, it will also be subject to the risk that a REIT may default on its obligations or go bankrupt. By investing in REITs indirectly through the Fund, a shareholder will bear not
only his or her proportionate share of the expenses of the Fund, but also, indirectly, similar expenses of the REITs. The Fund&#146;s investments in REITs could cause the Fund to recognize income in excess of cash received from those securities and,
as a result, the Fund may be required to sell portfolio securities, including when it is not advantageous to do so, in order to make distributions. An investment in a REIT or a real estate-linked derivative instrument that is linked to the value of
a REIT is subject to additional risks, such as poor performance by the manager of the REIT, adverse changes to the tax laws or failure by the REIT to qualify for <FONT STYLE="white-space:nowrap">tax-free</FONT> pass-through of income under the
Internal Revenue Code of 1986 as amended (the &#147;Code&#148;). In addition, some REITs have limited diversification because they invest in a limited number of properties, a narrow geographic area, or a single type of property. Also, the
organizational documents of a REIT may contain provisions that make changes in control of the REIT difficult and time-consuming. Finally, private REITs are not traded on a national securities exchange. As such, these products are generally illiquid.
This reduces the ability of the Fund to redeem its investment early. Private REITs are also generally harder to value and may bear higher fees than public REITs. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">18 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>U.S. Government Securities Risk </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may invest in debt securities issued or guaranteed by agencies, instrumentalities and sponsored enterprises of the U.S. Government. Some U.S.
Government securities, such as U.S. Treasury bills, notes and bonds, and mortgage-related securities guaranteed by the Government National Mortgage Association (&#147;GNMA&#148;), are supported by the full faith and credit of the United States;
others, such as those of the Federal Home Loan Banks or the Federal Home Loan Mortgage Corporation (&#147;FHLMC&#148;), are supported by the right of the issuer to borrow from the U.S. Treasury; others, such as those of the Federal National Mortgage
Association (&#147;FNMA&#148;), are supported by the discretionary authority of the U.S. Government to purchase the agency&#146;s obligations; and still others, such as those of the Student Loan Marketing Association, are supported only by the
credit of the issuing agency, instrumentality or enterprise. Although U.S. Government-sponsored enterprises, such as the Federal Home Loan Banks, FHLMC, FNMA and the Student Loan Marketing Association, may be chartered or sponsored by Congress, they
are not funded by Congressional appropriations, and their securities are not issued by the U.S. Treasury or supported by the full faith and credit of the U.S. Government and involve increased credit risks. Although legislation has been enacted to
support certain government sponsored entities, including the Federal Home Loan Banks, FHLMC and FNMA, there is no assurance that the obligations of such entities will be satisfied in full, or that such obligations will not decrease in value or
default. It is difficult, if not impossible, to predict the future political, regulatory or economic changes that could impact the government sponsored entities and the values of their related securities or obligations. In addition, certain
governmental entities, including FNMA and FHLMC, have been subject to regulatory scrutiny regarding their accounting policies and practices and other concerns that may result in legislation, changes in regulatory oversight and/or other consequences
that could adversely affect the credit quality, availability or investment character of securities issued by these entities. See &#147;Investment Objectives and Policies&#151;Mortgage-Related and Other Asset-Backed Securities&#148; in the Statement
of Additional Information. U.S. Government debt securities generally involve lower levels of credit risk than other types of debt securities of similar maturities, although, as a result, the yields available from U.S. Government debt securities are
generally lower than the yields available from such other securities. Like other debt securities, the values of U.S. Government securities change as interest rates fluctuate. Fluctuations in the value of portfolio securities will not affect interest
income on existing portfolio securities but will be reflected in the Fund&#146;s NAV. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Foreign <FONT STYLE="white-space:nowrap">(Non-U.S.)</FONT>
Government Securities Risk </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund&#146;s investments in debt obligations of foreign <FONT STYLE="white-space:nowrap">(non-U.S.)</FONT> governments
or their <FONT STYLE="white-space:nowrap">sub-divisions,</FONT> agencies and government sponsored enterprises and obligations of international agencies and supranational entities (together &#147;Foreign Government Securities&#148;) can involve a
high degree of risk. The foreign governmental entity that controls the repayment of debt may not be able or willing to repay the principal and/or interest when due in accordance with the terms of such debt. A governmental entity&#146;s willingness
or ability to repay principal and interest due in a timely manner may be affected by, among other factors, its cash flow situation, the extent of its foreign reserves, the availability of sufficient foreign exchange on the date a payment is due, the
relative size of the debt service burden to the economy as a whole, the governmental entity&#146;s policy towards the International Monetary Fund and the political constraints to which a governmental entity may be subject. Foreign governmental
entities also may be dependent on expected disbursements from other governments, multilateral agencies and others abroad to reduce principal and interest arrearages on their debt. The commitment on the part of these governments, agencies and others
to make such disbursements may be conditioned on the implementation of economic reforms and/or economic performance and the timely service of such debtor&#146;s obligations. Failure to implement such reforms, achieve such levels of economic
performance or repay principal or interest when due may result in the cancellation of such third parties&#146; commitments to lend funds to the foreign governmental entity, which may further impair such debtor&#146;s ability or willingness to timely
service its debts. Consequently, foreign governmental entities may default on their debt. Holders of Foreign Government Securities may be requested to participate in the rescheduling of such debt and to extend further loans to governmental entities.
In the event of a default by a governmental entity, there may be few or no effective legal remedies for collecting on such debt. These risks are particularly severe with respect to the Fund&#146;s investments in Foreign Government Securities of
emerging market countries. See &#147;Principal Risks of the Fund&#151;Emerging Markets Risk.&#148; Among other risks, if the Fund&#146;s investments in Foreign Government Securities issued by an emerging market country need to be liquidated quickly,
the Fund could sustain significant transaction costs. Also, governments in many emerging market countries participate to a significant degree in their economies and securities markets, which may impair investment and economic growth, and which may
in turn diminish the value of the Fund&#146;s holdings in emerging market Foreign Government Securities and the currencies in which they are denominated and/or pay revenues. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">19 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Convertible Securities Risk </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Convertible securities are fixed income securities, preferred stocks or other securities that are convertible into or exercisable for common stock of the
issuer (or cash or securities of equivalent value) at either a stated price or a stated rate. The market values of convertible securities may decline as interest rates increase and, conversely, may increase as interest rates decline. A convertible
security&#146;s market value, however, tends to reflect the market price of the common stock of the issuing company when that stock price approaches or is greater than the convertible security&#146;s &#147;conversion price.&#148; The conversion
price is defined as the predetermined price at which the convertible security could be exchanged for the associated stock. As the market price of the underlying common stock declines, the price of the convertible security tends to be influenced more
by the yield of the convertible security. Thus, it may not decline in price to the same extent as the underlying common stock. In the event of a liquidation of the issuing company, holders of convertible securities may be paid before the
company&#146;s common stockholders but after holders of any senior debt obligations of the company. Consequently, the issuer&#146;s convertible securities generally entail less risk than its common stock but more risk than its debt obligations.
Convertible securities are often rated below investment grade or not rated because they fall below debt obligations and just above common equity in order of preference or priority on the issuer&#146;s balance sheet. See &#147;Principal Risks of the
Fund&#151;High Yield Risk.&#148; </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Synthetic Convertible Securities Risk </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may invest in synthetic convertible securities, which are created through a combination of separate securities that possess the two principal
characteristics of a traditional convertible security, i.e., an income-producing security (&#147;income-producing component&#148;) and the right to acquire an equity security (&#147;convertible component&#148;). The income-producing component is
achieved by investing in <FONT STYLE="white-space:nowrap">non-convertible,</FONT> income-producing securities such as bonds, preferred stocks and money market instruments. The convertible component is achieved by purchasing warrants or options to
buy common stock at a certain exercise price, or options on a stock index. The values of synthetic convertible securities will respond differently to market fluctuations than a traditional convertible security because a synthetic convertible is
composed of two or more separate securities or instruments, each with its own market value. Synthetic convertible securities are also subject to the risks associated with derivatives. See &#147;Principal Risks of the Fund&#151;Derivatives
Risk.&#148; In addition, if the value of the underlying common stock or the level of the index involved in the convertible element falls below the strike price of the warrant or option, the warrant or option may lose all value. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Valuation Risk </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">When market quotations are not readily
available or are deemed to be unreliable, the Fund values its investments at fair value as determined in good faith pursuant to policies and procedures approved by the Board of Trustees. See &#147;Net Asset Value.&#148; Fair value pricing may
require subjective determinations about the value of a security or other asset. As a result, there can be no assurance that fair value pricing will result in adjustments to the prices of securities or other assets, or that fair value pricing will
reflect actual market value, and it is possible that the fair value determined for a security or other asset will be materially different from quoted or published prices, from the prices used by others for the same security or other asset and/or
from the value that actually could be or is realized upon the sale of that security or other asset. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Leverage Risk </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund&#146;s use of leverage (as described under &#147;Use of Leverage&#148; in the body of this prospectus) creates the opportunity for increased Common
Share net income, but also creates special risks for Common Shareholders. To the extent used, there is no assurance that the Fund&#146;s leveraging strategies will be successful. Leverage is a speculative technique that may expose the Fund to
greater risk and increased costs. The net proceeds that the Fund obtains from its use of reverse repurchase agreements, credit default swaps, dollar rolls and/or borrowings (as well as from any future issuance of preferred shares) will be invested
in accordance with the Fund&#146;s investment objectives and policies as described in this prospectus and any prospectus supplement. Interest or other expenses payable by the Fund with respect to its reverse repurchase agreements, credit default
swaps, dollar rolls and borrowings for dividends payable with respect to any outstanding preferred shares will generally be based on </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">20 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
shorter-term interest rates that would be periodically reset. So long as the Fund&#146;s portfolio investments provide a higher rate of return (net of applicable Fund expenses) than the interest
rates and other costs to the Fund of such leverage, the investment of the proceeds thereof will generate more income than will be needed to pay the costs of the leverage. If so, and all other things being equal, the excess may be used to pay higher
dividends to Common Shareholders than if the Fund were not so leveraged. If, however, shorter-term interest rates rise relative to the rate of return on the Fund&#146;s portfolio, the interest and other costs to the Fund of leverage (including
interest expenses on reverse repurchase agreements, dollar rolls and borrowings and the dividend rate on any outstanding preferred shares) could exceed the rate of return on the debt obligations and other investments held by the Fund, thereby
reducing return to Common Shareholders. In addition, fees and expenses of any form of leverage used by the Fund will be borne entirely by the Common Shareholders (and not by preferred shareholders, if any) and will reduce the investment return of
the Common Shares. Therefore, there can be no assurance that the Fund&#146;s use of leverage will result in a higher yield on the Common Shares, and it may result in losses. In addition, any preferred shares issued by the Fund are expected to pay
cumulative dividends, which may tend to increase leverage risk. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Leverage creates several major types of risks for Common Shareholders, including: </P>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">the likelihood of greater volatility of NAV and market price of the Common Shares, and of the investment return to Common Shareholders, than a comparable portfolio without leverage; </TD></TR></TABLE>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">the possibility either that the Common Share dividends will fall if the interest and other costs of leverage rise, or that dividends paid on Common Shares will fluctuate because such costs vary over time; and
</TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">the effects of leverage in a declining market or a rising interest rate environment, as leverage is likely to cause a greater decline in the NAV of the Common Shares than if the Fund were not leveraged and may result in
a greater decline the market value of the Common Shares. </TD></TR></TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">In addition, the counterparties to the Fund&#146;s leveraging transactions and any
preferred shareholders of the Fund will have priority of payment over the Fund&#146;s Common Shareholders. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The use by the Fund of reverse repurchase
agreements and dollar rolls to obtain leverage also involves special risks. For instance, the market value of the securities that the Fund is obligated to repurchase under a reverse repurchase agreement or dollar roll may decline below the
repurchase price. See &#147;The Fund&#146;s Investment Objectives and Policies&#151;Portfolio Contents and Other Information&#150;&#150;Reverse Repurchase Agreements and Dollar Rolls.&#148; </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">In addition to reverse repurchase agreements, dollar rolls and/or borrowings (or a future issuance of preferred shares), the Fund may engage in other
transactions that may give rise to a form of leverage including, among others, futures and forward contracts (including foreign currency exchange contracts), credit default swaps, total return swaps, basis swaps and other derivative transactions,
loans of portfolio securities, short sales and when-issued, delayed delivery and forward commitment transactions). The Fund&#146;s use of such transactions gives rise to associated leverage risks described above, and may adversely affect the
Fund&#146;s income, distributions and total returns to Common Shareholders. The Fund manages some of its derivative positions by segregating an amount of cash or liquid securities equal to the notional value or the market value, as applicable, of
those positions. See &#147;Principal Risks of the Fund&#151;Segregation and Coverage Risk.&#148; The Fund may also offset derivatives positions against one another or against other assets to manage effective market exposure resulting from
derivatives in its portfolio. To the extent that any offsetting positions do not behave in relation to one another as expected, the Fund may perform as if it is leveraged through use of these derivative strategies. See &#147;Use of Leverage.&#148;
</P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Because the fees received by the Investment Manager are based on the average daily &#147;total managed assets&#148; of the Fund (including assets
attributable to any reverse repurchase agreements, dollar rolls, borrowings and preferred shares that may be outstanding) minus accrued liabilities (other than liabilities representing reverse repurchase agreements, dollar rolls and borrowings), the
Investment Manager have a financial incentive for the Fund to use reverse repurchase agreements, dollar rolls and borrowings or to issue preferred shares, which may create a conflict of interest between the Investment Manager, on the one hand, and
the Common Shareholders, on the other hand. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">21 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Segregation and Coverage Risk </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Certain portfolio management techniques, such as, among other things, using reverse repurchase agreements or dollar rolls, purchasing securities on a
when-issued or delayed delivery basis, entering into swap agreements, futures contracts or other derivative transactions, or engaging in short sales, may be considered senior securities unless steps are taken to segregate the Fund&#146;s assets or
otherwise cover its obligations. To avoid having these instruments considered senior securities, the Fund may segregate liquid assets with a value equal (on a daily
<FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">mark-to-market</FONT></FONT> basis) to its obligations under these types of leveraged transactions, enter into offsetting transactions or otherwise cover such transactions. See
&#147;Use of Leverage&#148; in this prospectus. The Fund may be unable to use such segregated assets for certain other purposes, which could result in the Fund earning a lower return on its portfolio than it might otherwise earn if it did not have
to segregate those assets in respect of, or otherwise cover such portfolio positions. To the extent the Fund&#146;s assets are segregated or committed as cover, it could limit the Fund&#146;s investment flexibility. Segregating assets and covering
positions will not limit or offset losses on related positions. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Focused Investment Risk </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">To the extent that the Fund focuses its investments in a particular industry, the NAV of the common shares will be more susceptible to events or factors
affecting companies in that industry. These may 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 regulation and other economic, market, political or other
developments specific to that industry. Also, the Fund 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 events and factors described above, which will subject the Fund to greater risk. The Fund also will be subject to focused investment risk to the extent that it invests a substantial portion of its
assets in a particular country or geographic region. See &#147;Principal Risks of the Fund&#151;Foreign <FONT STYLE="white-space:nowrap">(Non-U.S.)</FONT> Investment Risk,&#148; &#147;Principal Risks of the Fund&#151;Emerging Markets Risk&#148; and
&#147;Principal Risks of the Fund&#151;Currency Risk.&#148; </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">As a matter of fundamental policy, the Fund will normally invest at least 25% of its total
assets in privately-issued (commonly known as <FONT STYLE="white-space:nowrap">&#147;non-agency&#148;)</FONT> mortgage-related securities, and therefore will be particularly susceptible to the risks associated with these securities. See
&#147;Principal Risks of the Fund&#151;Privately Issued Mortgage-Related Securities Risk.&#148; </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Derivatives Risk </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may utilize a variety of derivative instruments (both long and short positions) for investment or risk management purposes, as well as to leverage
its portfolio. The Fund may use derivatives to gain exposure to securities markets in which it may invest (e.g., pending investment of the proceeds of this offering in individual securities, as well as on an ongoing basis). The Fund may also use
derivatives to add leverage to its portfolio. See &#147;Principal Risks of the Fund&#151;Leverage Risk.&#148; Derivatives transactions that the Fund may utilize include, but are not limited to, purchases or sales of futures and forward contracts
(including foreign currency exchange contracts), call and put options, credit default swaps, total return swaps, basis swaps and other swap agreements. The Fund may also have exposure to derivatives, such as interest rate or credit-default swaps,
through investment in credit-linked trust certificates and other securities issued by special purpose or structured vehicles. The Fund&#146;s use of derivative instruments involves risks different from, and 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 prospectus, such as liquidity risk, interest rate risk, issuer risk, credit risk, leveraging
risk, counterparty risk, management risk and, if applicable, smaller company risk. See &#147;Principal Risks of the Fund&#151;Segregation and Coverage Risk.&#148; They also involve the risk of mispricing or improper valuation, the risk of
unfavorable or ambiguous documentation and the risk that changes in the value of the derivative may not correlate perfectly with the underlying asset, rate or index. If the Fund invests in a derivative instrument, it could lose more than the
principal amount invested. Also, suitable derivative transactions may not be available in all circumstances and there can be no assurance that the Fund will engage in these transactions to reduce exposure to other risks when that would be
beneficial. The Fund&#146;s use of derivatives also may increase the amount and affect the character and/or timing of taxes payable by Common Shareholders. See &#147;Tax Matters.&#148; </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">22 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">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 of the Fund&#146;s derivative transactions and cause the Fund to lose value. For instance, in December 2015, the SEC proposed new regulations applicable to a registered investment company&#146;s use of
derivatives and related instruments. If adopted as proposed, these regulations could significantly limit or impact the Fund&#146;s ability to invest in derivatives and other instruments, limit the Fund&#146;s ability to employ certain strategies
that use derivatives and/or adversely affect the Fund&#146;s performance, efficiency in implementing their strategy, liquidity and/or ability to pursue their investment objectives. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Credit Default Swaps Risk </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Credit default swap
agreements may involve greater risks than if the Fund had invested in the reference obligation directly since, in addition to general market risks, credit default swaps are subject to illiquidity risk, counterparty risk and credit risk. A buyer
generally also will lose its investment and recover nothing should no credit event occur and the swap is held to its termination date. If a credit event were to occur, the value of any deliverable obligation received by the seller (if any), coupled
with the upfront or periodic payments previously received, may be less than the full notional value it pays to the buyer, resulting in a loss of value to the seller. When the Fund acts as a seller of a credit default swap, it is exposed to many of
the same risks of leverage described herein since if an event of default occurs, the seller must pay the buyer the full notional value of the reference obligation. See &#147;Principal Risks of the Fund&#151;Leverage Risk.&#148; </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Although the Fund may seek to realize gains by selling credit default swaps that increase in value, to realize gains on selling credit default swaps, an
active secondary market for such instruments must exist or the Fund must otherwise be able to close out these transactions at advantageous times. In addition to the risk of losses described above, if no such secondary market exists or the Fund is
otherwise unable to close out these transactions at advantageous times, selling credit default swaps may not be profitable for the Fund. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The market for
credit default swaps has become more volatile in recent years as the creditworthiness of certain counterparties has been questioned and/or downgraded. The Fund will be subject to credit risk with respect to the counterparties to the derivative
contract (whether a clearing corporation in the case of a cleared credit default swap or another third party in the case of an uncleared credit default swap). If a counterparty&#146;s credit becomes significantly impaired, multiple requests for
collateral posting in a short period of time could increase the risk that the Fund may not receive adequate collateral. The Fund may exit its obligations under a credit default swap only by terminating the contract and paying applicable breakage
fees, or by entering into an offsetting credit default swap position, which may cause the Fund to incur more losses. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Counterparty Risk </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund will be subject to credit risk with respect to the counterparties to the derivative contracts and other instruments entered into by the Fund or held
by special purpose or structured vehicles in which the Fund invests. In the event that the Fund enters into a derivative transaction with a counterparty that subsequently becomes insolvent or becomes the subject of a bankruptcy case, the derivative
transaction may be terminated in accordance with its terms and the Fund&#146;s ability to realize its rights under the derivative instrument and its ability to distribute the proceeds could be adversely affected. If a counterparty becomes bankrupt
or otherwise fails to perform its obligations under a derivative contract due to financial difficulties, the Fund may experience significant delays in obtaining any recovery (including recovery of any collateral it has provided to the counterparty)
in a dissolution, assignment for the benefit of creditors, liquidation, <FONT STYLE="white-space:nowrap">winding-up,</FONT> bankruptcy, or other analogous proceeding. In addition, in the event of the insolvency of a counterparty to a derivative
transaction, the derivative transaction would typically be terminated at its fair market value. If the Fund is owed this fair market value in the termination of the derivative transaction and its claim is unsecured, the Fund will be treated as a
general creditor of such counterparty, and will not have any claim with respect to any underlying security or asset. The Fund may obtain only a limited recovery or may obtain no recovery in such circumstances. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Failure of Futures Commission Merchants and Clearing Organizations </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may deposit funds required to margin open positions in the derivative instruments subject to the CEA with a clearing broker registered as a
&#147;futures commission merchant&#148; (&#147;FCM&#148;). The CEA requires an FCM to segregate all funds received from customers with respect to any orders for the purchase or sale of U.S. domestic futures
</P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
contracts and cleared swaps from the FCM&#146;s proprietary assets. Similarly, the CEA requires each FCM to hold in a separate secure account all funds received from customers with respect to any
orders for the purchase or sale of foreign futures contracts and segregate any such funds from the funds received with respect to domestic futures contracts. However, all funds and other property received by a clearing broker from its customers are
held by the clearing broker on a commingled basis in an omnibus account and may be freely accessed by the clearing broker, which may also invest any such funds in certain instruments permitted under the applicable regulation. There is a risk that
assets deposited by the Fund with any swaps or futures clearing broker as margin for futures contracts or cleared swaps may, in certain circumstances, be used to satisfy losses of other clients of the Fund&#146;s clearing broker. In addition, the
assets of the Fund may not be fully protected in the event of the clearing broker&#146;s bankruptcy, as the Fund would be limited to recovering only a pro rata share of all available funds segregated on behalf of the clearing broker&#146;s combined
domestic customer accounts. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Similarly, the CEA requires a clearing organization approved by the U.S. Commodity Futures Trading Commission
(&#147;CFTC&#148;) as a derivatives clearing organization to segregate all funds and other property received from a clearing member&#146;s clients in connection with domestic futures, swaps and options contracts from any funds held at the clearing
organization to support the clearing member&#146;s proprietary trading. Nevertheless, with respect to futures and options contracts, a clearing organization may use assets of a <FONT STYLE="white-space:nowrap">non-defaulting</FONT> customer held in
an omnibus account at the clearing organization to satisfy payment obligations of a defaulting customer of the clearing member to the clearing organization. As a result, in the event of a default or the clearing broker&#146;s other clients or the
clearing broker&#146;s failure to extend own funds in connection with any such default, the Fund would not be able to recover the full amount of assets deposited by the clearing broker on its behalf with the clearing organization. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Equity Securities and Related Market Risk </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Subject to
the Fund&#146;s investment policies, the Fund may hold common stocks and other equity securities from time to time, including without limit those it has received through the conversion of a convertible security held by the Fund or in connection with
the restructuring of a debt security. The market price of common stocks and other equity securities may go up or down, sometimes rapidly or unpredictably. Equity securities may decline in value due to factors affecting equity securities markets
generally, particular industries represented in those markets, or the issuer itself. See &#147;Principal Risks of the Fund &#150;&#150;Issuer Risk.&#148; The values of equity securities 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 or adverse investor sentiment generally. They 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. Equity securities generally have greater price volatility than bonds and
other debt securities. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Preferred Securities Risk </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">In addition to equity securities risk (see &#147;Principal Risks of the Fund&#151;Equity Securities and Related Market Risk&#148;), credit risk (see
&#147;Principal Risks of the Fund&#151;Credit Risk&#148;) and possibly high yield risk (see &#147;Principal Risks of the Fund&#151;High Yield Risk&#148;), investment in preferred securities involves certain other risks. Certain preferred securities
contain provisions that allow an issuer under certain conditions to skip or defer distributions. If the Fund owns a preferred security that is deferring its distribution, the Fund may be required to include the amount of the deferred distribution in
its taxable income for tax purposes despite the fact that it does not currently receive such amount. In order to receive the special treatment accorded to RICs and their shareholders under the Code and to avoid U.S. federal income and/or excise
taxes at the Fund level, the Fund may be required to distribute this income to shareholders in the tax year in which the income is recognized (without a corresponding receipt of cash). Therefore, the Fund may be required to pay out as an income
distribution in any such tax year an amount greater than the total amount of cash income the Fund actually received, and to sell portfolio securities, including at potentially disadvantageous times or prices, to obtain cash needed for these income
distributions. Preferred securities often are subject to legal provisions that allow for redemption in the event of certain tax or legal changes or at the issuer&#146;s call. In the event of redemption, the Fund may not be able to reinvest the
proceeds at comparable rates of return. Preferred securities are subordinated to bonds and other debt securities in an issuer&#146;s capital structure in terms of priority for corporate income and liquidation payments, and therefore will be subject
to greater credit risk than those debt securities. Preferred securities may trade less frequently and in a more limited volume and may be subject to more abrupt or erratic price movements than many other securities, such as common stocks, corporate
debt securities and U.S. Government securities. </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Smaller Company Risk </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The general risks associated with debt instruments or equity securities are particularly pronounced for securities issued by companies with small market
capitalizations. Small capitalization companies involve certain special risks. They are more likely than larger companies to have limited product lines, markets or financial resources, or to depend on a small, inexperienced management group.
Securities of smaller companies may trade less frequently and in lesser volume than more widely held securities and their values may fluctuate more sharply than other securities. They may also have limited liquidity. These securities may therefore
be more vulnerable to adverse developments than securities of larger companies, and the Fund may have difficulty purchasing or selling securities positions in smaller companies at prevailing market prices. Also, there may be less publicly available
information about smaller companies or less market interest in their securities as compared to larger companies. Companies with <FONT STYLE="white-space:nowrap">medium-sized</FONT> market capitalizations may have risks similar to those of smaller
companies. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Confidential Information Access Risk </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">In
managing the Fund, PIMCO may from time to time have the opportunity to receive material, <FONT STYLE="white-space:nowrap">non-public</FONT> information (&#147;Confidential Information&#148;) about the issuers of certain investments, including,
without limit, senior floating rate loans, other bank loans and related investments being considered for acquisition by the Fund or held in the Fund&#146;s portfolio. For example, a bank issuer of privately placed senior floating rate loans
considered by the Fund may offer to provide PIMCO with financial information and related documentation regarding the bank issuer that is not publicly available. Pursuant to applicable policies and procedures, PIMCO may (but is not required to) seek
to avoid receipt of Confidential Information from the issuer so as to avoid possible restrictions on its ability to purchase and sell investments on behalf of the Fund and other clients to which such Confidential Information relates (e.g., other
securities issued by the bank used in the example above). In such circumstances, the Fund (and other PIMCO clients) may be disadvantaged in comparison to other investors, including with respect to the price the Fund pays or receives when it buys or
sells an investment. Further, PIMCO&#146;s and the Fund&#146;s abilities to assess the desirability of proposed consents, waivers or amendments with respect to certain investments may be compromised if they are not privy to available Confidential
Information. PIMCO may also determine to receive such Confidential Information in certain circumstances under its applicable policies and procedures. If PIMCO intentionally or unintentionally comes into possession of Confidential Information, it may
be unable, potentially for a substantial period of time, to purchase or sell investments to which such Confidential Information relates. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Short Sale
Risk </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund&#146;s short sales, if any, are subject to special risks. A short sale involves the sale by the Fund of a security that it does not own
with the hope of purchasing the same security at a later date at a lower price. The Fund may also enter into a short position through a forward commitment or a short derivative position through a futures contract or swap agreement. If the price of
the security or derivative has increased during this time, then the Fund will incur a loss equal to the increase in price from the time that the short sale was entered into plus any premiums and interest paid to the third party. Therefore, short
sales involve the risk that losses may be exaggerated, potentially losing more money than the actual cost of the investment. By contrast, a loss on a long position arises from decreases in the value of the security and is limited by the fact that a
security&#146;s value cannot decrease below zero. By investing the proceeds received from selling securities short, the Fund could be deemed to be employing a form of leverage, which creates special risks. The use of leverage may increase the
Fund&#146;s exposure to long securities positions and make any change in the Fund&#146;s NAV greater than it would be without the use of leverage. This could result in increased volatility of returns. There is no guarantee that any leveraging
strategy the Fund employs will be successful during any period in which it is employed. In times of unusual or adverse market, economic, regulatory or political conditions, the Fund may not be able, fully or partially, to implement its short selling
strategy. Periods of unusual or adverse market, economic, regulatory or political conditions generally may exist for as long as six months and, in some cases, much longer. Also, there is the risk that the third party to the short sale may fail to
honor its contract terms, causing a loss to the Fund. See &#147;Principal Risks of the Fund&#151;Leverage Risk.&#148; Also, there is the risk that the counterparty to a short sale may fail to honor its contractual terms, causing a loss to the Fund.
See &#147;Principal Risks of the Fund&#151;Counterparty Risk.&#148; To the extent the Fund seeks to obtain some or all of its short exposure by using derivative instruments instead of engaging directly in short sales on individual securities, it
will be subject to many of the foregoing risks, as well as to those described under &#147;Principal Risks of the Fund&#151;Derivatives Risk.&#148; See also &#147;Principal Risks of the Fund&#151;Segregation and Coverage Risk.&#148; </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Other Investment Companies Risk </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may invest in securities of other open- or <FONT STYLE="white-space:nowrap">closed-end</FONT> investment companies, including without limit ETFs and
money market funds, to the extent that such investments are consistent with the Fund&#146;s investment objectives and policies and permissible under the 1940 Act. As a shareholder in an investment company, the Fund will bear its ratable share of
that investment company&#146;s expenses, and would remain subject to payment of the Fund&#146;s investment management fees with respect to the assets so invested. Common Shareholders would therefore be subject to duplicative expenses to the extent
the Fund invests in other investment companies. In addition, these other investment companies may utilize leverage, in which case an investment would subject the Fund to additional risks associated with leverage. Money market mutual funds in which
the Fund may invest are subject to Rule <FONT STYLE="white-space:nowrap">2a-7</FONT> of the 1940 Act, and invest in a variety of short-term, high quality, dollar-denominated money market instruments. Money market funds are not designed to offer
capital appreciation. Effective October&nbsp;14, 2016, amendments to money market fund regulations could affect a money market fund&#146;s operations and possibly negatively affect its return. In addition, certain money market funds may impose a fee
upon the sale of shares or may temporarily suspend the ability of investors to redeem shares if such fund&#146;s liquidity falls below required minimums, which may adversely affect the Fund&#146;s returns or liquidity. Due to its own financial
interest or other business considerations, the Investment Manager may choose to invest a portion of the Fund&#146;s assets in investment companies sponsored or managed by the Investment Manager or its related parties in lieu of investments by the
Fund directly in portfolio securities, or may choose to invest in such investment companies over investment companies sponsored or managed by others. Applicable law may limit the Fund&#146;s ability to invest in other investment companies. See
&#147;Principal Risks of the Fund &#151;Leverage Risk.&#148; </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Private Placements Risk </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">A private placement involves the sale of securities that have not been registered under the Securities Act, or relevant provisions of applicable <FONT
STYLE="white-space:nowrap">non-U.S.</FONT> law, to certain institutional and qualified individual purchasers, such as the Fund. In addition to the general risks to which all securities are subject, securities received in a private placement
generally are subject to strict restrictions on resale, and there may be no liquid secondary market or ready purchaser for such securities. See &#147;Principal Risks of the Fund&#151;Liquidity Risk.&#148; Therefore, the Fund may be unable to dispose
of such securities when it desires to do so, or at the most favorable time or price. Private placements may also raise valuation risks. See &#147;Principal Risks of the Fund&#151;Valuation Risk.&#148; </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Inflation/Deflation Risk </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Inflation risk is the risk
that the value of assets or income from the Fund&#146;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 the Fund&#146;s portfolio could 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 the
Fund&#146;s portfolio and Common Shares. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Legal and Regulatory Risk </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Legal, tax and regulatory changes could occur and may adversely affect the Fund and its ability to pursue its investment strategies and/or increase the costs
of implementing such strategies. New (or revised) laws or regulations may be imposed by CFTC, the SEC, the U.S. Internal Revenue Service (&#147;IRS&#148;), the U.S. Federal Reserve or other banking regulators, other governmental regulatory
authorities or self-regulatory organizations that supervise the financial markets that could adversely affect the Fund. In particular, these agencies are implementing a variety of new rules pursuant to financial reform legislation in the United
States. The EU (and some other countries) are implementing similar requirements. The Fund also may be adversely affected by changes in the enforcement or interpretation of existing statutes and rules by these governmental regulatory authorities or
self-regulatory organizations. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">In addition, the securities and futures markets are subject to comprehensive statutes, regulations and margin
requirements. The CFTC, the SEC, the Federal Deposit Insurance Corporation, other regulators and self-regulatory organizations and exchanges are authorized under these statutes, regulations and otherwise to take extraordinary actions in the event of
market emergencies. The Fund and the Investment Manager have historically been eligible for exemptions from certain regulations. However, there is no assurance that the Fund and the Investment Manager will continue to be eligible for such
exemptions. </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The CFTC and certain futures exchanges have established limits, referred to as &#147;position limits,&#148; on
the maximum net long or net short positions which any person may hold or control in particular options and futures contracts. The CFTC has proposed position limits for certain swaps. All positions owned or controlled by the same person or entity,
even if in different accounts, may be aggregated for purposes of determining whether the applicable position limits have been exceeded. Thus, even if the Fund do not intend to exceed applicable position limits, it is possible that different clients
managed by the Investment Manager and their related parties may be aggregated for this purpose. Therefore it is possible that the trading decisions of Investment Manager may have to be modified and that positions held by the Fund may have to be
liquidated in order to avoid exceeding such limits. The modification of investment decisions or the elimination of open positions, if it occurs, may adversely affect the performance of the Fund. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The SEC has in the past adopted interim rules requiring reporting of all short positions above a certain<I>&nbsp;de minimis</I>&nbsp;threshold and may adopt
rules requiring monthly public disclosure in the future. In addition, other <FONT STYLE="white-space:nowrap">non-U.S.</FONT> jurisdictions where the Fund may trade have adopted reporting requirements. If the Fund&#146;s short positions or its
strategy become generally known, it could have a significant effect on the Investment Manager&#146;s ability to implement its investment strategy. In particular, it would make it more likely that other investors could cause a short squeeze in the
securities held short by the Fund forcing the Fund to cover its positions at a loss. Such reporting requirements may also limit the Investment Manager&#146;s ability to access management and other personnel at certain companies where the Investment
Manager seeks to take a short position. In addition, if other investors engage in copycat behavior by taking positions in the same issuers as the Fund, the cost of borrowing securities to sell short could increase drastically and the availability of
such securities to the Fund could decrease drastically. Such events could make the Fund unable to execute its investment strategy. In addition, if the SEC were to adopt restrictions regarding short sales, they could restrict the Fund&#146;s ability
to engage in short sales in certain circumstances, and the Fund may be unable to execute their investment strategies as a result. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The SEC and regulatory
authorities in other jurisdictions may adopt (and in certain cases, have adopted) bans on short sales of certain securities in response to market events. Bans on short selling may make it impossible for the Fund to execute certain investment
strategies and may have a material adverse effect on the Fund&#146;s ability to generate returns. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Recently adopted rules implementing the credit risk
retention requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the &#147;Dodd-Frank Act&#148;), for asset-backed securities will require the sponsor of certain securitization vehicles (or a majority owned affiliate of such
sponsor) to retain, and to refrain from transferring, selling, conveying to a third party, or hedging 5% of the credit risk in assets transferred, sold, or conveyed through the issuance of the asset-backed securities of such vehicle, subject to
certain exceptions. The rules apply to offerings of residential mortgage-backed securities (RMBS) occurring on and after December&nbsp;24, 2015 and to offerings of other types of asset-backed securities occurring on and after December&nbsp;24, 2016,
subject to certain exceptions. In addition, a refinancing of, or a significant amendment to, a securitization that closed prior to such date may in certain cases result in the application of the rules to a securitization that was previously not
subject to the Dodd-Frank risk retention requirements. The impact of the risk retention rules on the securitization markets is uncertain. These requirements may increase the costs to originators, securitizers, and, in certain cases, collateral
managers of securitization vehicles in which the Fund may invest, which costs could be passed along to such Fund as an investor in such vehicles. In addition, the costs imposed by the risk retention rules on originators, securitizers and/or
collateral managers may result in a reduction of the number of new offerings of asset-backed securities and thus in fewer investment opportunities for the Fund. A reduction in the number of new securitizations could also reduce liquidity in the
markets for certain types of financial assets that are typically held by securitization vehicles, which in turn could negatively affect the returns on the Fund&#146;s investment in asset-backed securities. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Regulatory Risk&#151;Commodity Pool Operator </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The CFTC
has adopted regulations that subject registered investment companies and their investment advisers to regulation by the CFTC if the registered investment company invests more than a prescribed level of its liquidation value in commodity futures,
options on commodities or commodity futures, swaps, or other financial instruments regulated under the Commodity Exchange Act (&#147;commodity interests&#148;), or if the Fund markets itself as providing
</P>
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investment exposure to such instruments. The Investment Manager is registered with the National Futures Association (&#147;NFA&#148;) as a &#147;commodity pool operator&#148; (&#147;CPO&#148;)
under the CEA with respect to certain registered funds it manages other than the Fund. The Investment Manager has claimed an exclusion from CPO registration pursuant to CFTC Rule 4.5 with respect to the Fund. For the Investment Manager to remain
eligible for this exclusion, the Fund must comply with certain limitations, including limits on its ability to use any commodity interests and limits on the manner in which the Fund holds out its use of such commodity interests. These limitations
may restrict the Fund&#146;s ability to pursue its investment objective and strategies, increase the costs of implementing its strategies, result in higher expenses for the Fund, and/or adversely affect the Fund&#146;s total return. Further, in the
event the Investment Manager becomes unable to rely on the exclusion in CFTC Rule 4.5 with respect to the Fund and is required to register as a CPO with respect to the Fund, the Fund will be subject to additional regulation and its expenses may
increase. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Liquidity Risk </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may invest
without limit in illiquid securities securities (i.e., securities that cannot be disposed of within seven days in the ordinary course of business at approximately the value at which the Fund has valued the securities). Liquidity risk exists when
particular investments are difficult to purchase or sell. Many of the Fund&#146;s investments may be illiquid. Illiquid securities may become harder to value, especially in changing markets. The Fund&#146;s investments in illiquid securities may
reduce the returns of the Fund because it may be unable to sell the illiquid securities at an advantageous time or price or possibly require the Fund to dispose of other investments at unfavorable times or prices in order to satisfy its obligations,
which could prevent the Fund 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 &#147;make markets,&#148; 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, the Fund, due to limitations on investments in illiquid securities 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 the Fund&#146;s principal investment strategies involve securities of companies with smaller market capitalizations, foreign <FONT STYLE="white-space:nowrap">(non-U.S.)</FONT> securities, Rule 144A securities,
senior loans, illiquid sectors of fixed income securities, derivatives or securities with substantial market and/or credit risk, the Fund 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. It may also be the case that other market participants may be attempting to liquidate fixed income
holdings at the same time as the Fund, causing increased supply in the market and contributing to liquidity risk and downward pricing pressure. See &#147;Principal Risks of the Fund&#151;Valuation Risk.&#148; </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Tax Risk </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">[The Fund has elected to be treated as a
&#147;regulated investment company&#148; under the Code and each year to qualify and be eligible to be treated as such. If the Fund qualifies as a regulated investment company, it generally will not be subject to U.S. federal income tax on its net
investment income or net short-term or long-term capital gains, distributed (or deemed distributed, as described below) to shareholders, provided that, for each taxable year, the Fund distributes (or is treated as distributing) to its shareholders
an amount equal to or exceeding 90% of its &#147;investment company taxable income&#148; as that term is defined in the Code (which includes, among other things, dividends, taxable interest and the excess of any net short-term capital gains over net
long-term capital losses, as reduced by certain deductible expenses). The Fund generally distributes all or substantially all of its investment company taxable income and net capital gain each year. In order for the Fund to qualify as a regulated
investment company in any taxable year, the Fund must meet certain asset diversification tests and at least 90% of its gross income for such year must be certain types of qualifying income. Foreign currency gains will generally be treated as
qualifying income for purposes of the 90% gross income requirement. However, the U.S. Treasury Department has authority to issue regulations in the future that could treat some or all of the Fund&#146;s foreign currency gains as <FONT
STYLE="white-space:nowrap">non-qualifying</FONT> income, thereby jeopardizing the Fund&#146;s status as a regulated investment company for all years to which </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">28 </P>


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the regulations are applicable. Income derived from some commodity-linked derivatives is not qualifying income, and the treatment of income from some other commodity-linked derivatives is
uncertain, for purposes of the 90% gross income test. If for any taxable year the Fund were to fail to meet the income or diversification test described above, the Fund could in some cases cure such failure, including by paying a fund-level tax and,
in the case of a diversification test failure, disposing of certain assets. If the Fund were ineligible to or otherwise did not cure such failure for any year, or were otherwise to fail to qualify as a regulated investment company accorded special
tax treatment in any taxable year, it would be treated as a corporation subject to U.S. federal income tax, thereby subjecting any income earned by the Fund to tax at the corporate level (currently at a 35% U.S. federal tax rate) and, when such
income is distributed, to a further tax at the shareholder level to the extent of the Fund&#146;s current or accumulated earnings and profits.] </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Recent
Economic Conditions Risk </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The debt and equity capital markets in the United States and in foreign countries in the recent past were negatively
affected by significant write-offs in the banking and financial services sectors relating to subprime mortgages and the <FONT STYLE="white-space:nowrap">re-pricing</FONT> of credit risk in the broadly syndicated market, among other things. These
events, along with the deterioration of housing markets, the failure of banking and other major financial institutions and resulting governmental actions led to worsening general economic conditions, which materially and adversely affected the
broader financial and credit markets and reduced the availability of debt and equity capital for the market as a whole and financial firms in particular. These developments may increase the volatility of the value of securities owned by the Fund,
and also may make it more difficult for the Fund to accurately value securities or to sell securities on a timely basis. These developments adversely affected the broader global economy, and may continue to do so, which in turn may adversely affect
the ability of issuers of securities owned by the Fund to make payments of principal and interest when due, lead to lower credit ratings and increase the rate of defaults. Such developments could, in turn, reduce the value of securities owned by the
Fund and adversely affect the NAV and/or market value of the Fund&#146;s Common Shares. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The instability in the financial markets discussed above has led
the U.S. and certain foreign governments to take a number of unprecedented actions designed to support certain banking and other financial institutions and segments of the financial markets that have experienced extreme volatility, and in some cases
a lack of liquidity. Federal, state and other governments and their regulatory agencies or self-regulatory organizations may take actions that affect the regulation of the instruments in which the Fund invests, or the issuers of such instruments, in
ways that are unforeseeable or not fully understood or anticipated. Governments or their agencies have and may in the future acquire distressed assets from financial institutions and acquire ownership interests in those institutions. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">U.S. legislation or regulation may also change the way in which the Fund itself is regulated. Such legislation or regulation could limit or preclude the
Fund&#146;s ability to achieve its investment objective. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">According to various reports, certain financial institutions, commencing as early as 2005 and
throughout the global financial crisis, routinely made artificially low submissions in the LIBOR rate setting process. In June 2012, one such financial institution was fined a significant amount by various financial regulators in connection with
allegations of manipulation of LIBOR rates, and other financial institutions in various countries are being investigated for similar actions. These developments may have adversely affected the interest rates on securities whose interest payments
were determined by reference to LIBOR. Any future similar developments could, in turn, adversely affect the value of securities owned by the Fund. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Global
economies and financial markets are increasingly interconnected, which increases the possibility that conditions in one country or region might adversely impact issuers in a different country or region or across the globe. For instance, a
significant slowdown in China&#146;s economy is adversely affecting worldwide commodity prices and the economies of many countries, especially those that depend heavily on commodity production and/or trade with China. The severity or duration of
adverse economic conditions may also be affected by policy changes made by governments or quasi-governmental organizations. The imposition of sanctions by the United States or another government on a country could cause disruptions to the
country&#146;s financial system and economy, which could negatively impact the value of securities. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">29 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Market Disruption and Geopolitical Risk </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The wars with Iraq and Afghanistan and similar conflicts and geopolitical developments, their aftermath and substantial military presence in Afghanistan,
along with instability in Pakistan, Egypt, Libya, Syria, Russia, Ukraine, Yemen and the Middle East, possible terrorist attacks in the United States and around the world, growing social and political discord in the United States, the European debt
crisis, the response of the international community&#151;through economic sanctions and otherwise&#151;to Russia&#146;s recent annexation of the Crimea region of Ukraine and posture
<FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">vis-a-vis</FONT></FONT> Ukraine, further downgrade of U.S. Government securities, the outbreak of infectious diseases such as Ebola and other similar events may have long-term effects
on the U.S. and worldwide financial markets and may cause further economic uncertainties in the United States and worldwide. The potential costs of rebuilding infrastructure cannot be predicted with any certainty. Terrorist attacks on the World
Trade Center and the Pentagon on September&nbsp;11, 2001 closed some of the U.S. securities markets for a <FONT STYLE="white-space:nowrap">four-day</FONT> period and similar future events cannot be ruled out. The war and occupation, terrorism and
related geopolitical risks have led, and may in the future lead, to increased short-term market volatility and may have adverse long-term effects on U.S. and world economies and markets generally. Likewise, natural and environmental disasters, such
as the earthquake and tsunami in Japan in early 2011, and systemic market dislocations of the kind surrounding the insolvency of Lehman Brothers in 2008, if repeated, could be highly disruptive to economies and markets. Those events, as well as
other changes in foreign and domestic economic and political conditions also could have an acute effect on individual issuers or related groups of issuers. These risks also could adversely affect individual issuers and securities markets, interest
rates, secondary trading, ratings, credit risk, inflation, deflation and other factors relating to the Fund&#146;s investments and the market value and NAV of the Fund&#146;s Common Shares. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">At a referendum in June 2016, the United Kingdom (the UK) voted to leave the European Union (EU). In connection with the British exit from the EU (commonly
known as &#147;Brexit&#148;), it is expected that the UK will invoke article 50 of the Treaty of Lisbon to withdraw from the EU in due course, however there is a significant degree of uncertainty about how negotiations relating to the UK&#146;s
withdrawal and new trade agreements will be conducted, as well as the potential consequences and precise timeframe for Brexit. It is expected that the UK&#146;s exit from the EU will take place within two years of the UK notifying the European
Council that it intends to withdraw from the EU. During this period and beyond, the impact of any partial or complete dissolution of the EU on the UK and European economies and the broader global economy could be significant, resulting in negative
impacts on currency and financial markets generally, such as increased volatility and illiquidity, and potentially lower economic growth in markets in the UK, Europe and globally, which may adversely affect the value of the Fund&#146;s portfolio
investments. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The UK has one of the largest economies in Europe, and member countries of the EU are substantial trading partners of the UK. The City of
London&#146;s economy is dominated by financial services, some of which may have to move outside of the UK post-referendum (e.g., currency trading, international settlement). Under the referendum, banks may be forced to move staff and comply with
two separate sets of rules or lose business to banks in Europe. Furthermore, the referendum creates the potential for decreased trade, the possibility of capital outflows, devaluation of the pound sterling, the cost of higher corporate bond spreads
due to uncertainty, and the risk that all the above could damage business and consumer spending as well as foreign direct investment. As a result of the referendum, the British economy and its currency may be negatively impacted by changes to its
economic and political relations with the EU. Any further exits from the EU, or the possibility of such exits, would likely cause additional market disruption globally and introduce new legal and regulatory uncertainties. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The impact of the referendum in the near- and long-term is still unknown and could have additional adverse effects on economies, financial markets, currencies
and asset valuations around the world. Any attempt by the Fund to hedge against or otherwise protect its portfolio or to profit from such circumstances may fail and, accordingly, an investment in the Fund could lose money over short or long periods.
</P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Portfolio Turnover Risk </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Investment Manager
manages the Fund without regard generally to restrictions on portfolio turnover. The use of futures contracts and other derivative instruments with relatively short maturities may tend to exaggerate the portfolio turnover rate for the Fund. Trading
in fixed income securities does not generally involve the payment of brokerage commissions, but does involve indirect transaction costs. The use of futures contracts and other derivative instruments may involve the payment of commissions to futures
commission merchants or other intermediaries. Higher portfolio turnover involves correspondingly greater expenses to the Fund, including brokerage commissions or dealer <FONT STYLE="white-space:nowrap">mark-ups</FONT> and other transaction costs on
the sale of securities and reinvestments in other securities. The </P>
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higher the rate of portfolio turnover of the Fund, the higher these transaction costs borne by the Fund generally will be. Such sales may result in realization of taxable capital gains (including
short-term capital gains, which are generally taxed to shareholders at ordinary income tax rates when distributed net of short-term capital losses and net long-term capital losses), and may adversely impact the Fund&#146;s <FONT
STYLE="white-space:nowrap">after-tax</FONT> returns. See &#147;Tax Matters.&#148; </P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Operational Risk </B></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">An investment in the Fund, like any fund, can involve operational risks arising from factors such as processing errors, human errors, inadequate or failed
internal or external processes, failures 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 material adverse effect on the Fund. While the Fund seeks to minimize such events through controls and oversight, there may still be failures that could cause losses
to the Fund. </P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Cyber Security Risk</B></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">As the use of
technology has become more prevalent in the course of business, the Fund has become potentially more susceptible to operational risks through breaches in cyber security. A breach in cyber security refers to both intentional and unintentional cyber
events that may cause the Fund to lose proprietary information, suffer data corruption, or lose operational capacity. Cyber security breaches may involve unauthorized access to the Fund&#146;s digital information systems (<I>e.g.,</I>&nbsp;through
&#147;hacking&#148; or malicious software coding), but may also result from outside attacks such as <FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">denial-of-service</FONT></FONT> attacks (<I>i.e.,</I>&nbsp;efforts to make network
services unavailable to intended users). In addition, cyber security breaches of the Fund&#146;s third party service providers (including but not limited to advisers, <FONT STYLE="white-space:nowrap">sub-advisers,</FONT> administrators, transfer
agents, custodians, distributors and other third parties) or issuers that the Fund invests in can also subject the Fund to many of the same risks associated with direct cyber security breaches. Cyber security failures or breaches may result in
financial losses to the Fund and its shareholders. These failures or breaches may also result in disruptions to business operations, potentially resulting in financial losses; interference with the Fund&#146;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; reputational damage; reimbursement or other compensation costs; or
additional compliance costs. In addition, substantial costs may be incurred in order to prevent any cyber incidents in the future. Like with operational risk in general, the Fund has established risk management systems and business continuity plans
designed to reduce the risks associated with cyber security. However, there is no guarantee that such efforts will succeed, especially since the Fund does not directly control the cyber security systems of issuers or third party service providers.
The Fund and its Common Shareholders could be negatively impacted as a result. </P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Potential Conflicts of Interest Risk&#151;Allocation of Investment
Opportunities </B></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Investment Manager is involved worldwide with a broad spectrum of financial services and asset management activities and may engage
in the ordinary course of business in activities in which their interests or the interests of their clients may conflict with those of the Fund. The Investment Manager may provide investment management services to other funds and discretionary
managed accounts that follow an investment program similar to that of the Fund. Subject to the requirements of the 1940 Act, the Investment Manager intends to engage in such activities and may receive compensation from third parties for their
services. The results of the Fund&#146;s investment activities may differ from those of the Fund&#146;s affiliates, or another account managed by the Fund&#146;s affiliates, and it is possible that the Fund could sustain losses during periods in
which one or more of the Fund&#146;s affiliates or and other accounts achieve profits on their trading for proprietary or other accounts. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Repurchase
Agreements Risk </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may enter into repurchase agreements, in which the Fund purchases a security from a bank or broker-dealer, which agrees to
repurchase the security at the Fund&#146;s cost plus interest within a specified time. If the party agreeing to repurchase should default, the Fund 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 maturing in more than seven days and which may not be terminated within seven days at approximately the amount at which the Fund has
valued the agreements are considered illiquid securities. These events could also trigger adverse tax consequences for the Fund. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">31 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Structured Investments Risk </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may invest in structured products, including, structured notes, credit-linked notes and other types of structured products. Holders of structured
products bear risks of the underlying investments, index or reference obligation and are subject to counterparty risk. The Fund may have the right to receive payments only from the structured product, and generally does not have direct rights
against the issuer or the entity that sold the assets to be securitized. While certain structured products enable the investor to acquire interests in a pool of securities without the brokerage and other expenses associated with directly holding the
same securities, investors in structured products generally pay their share of the structured product&#146;s administrative and other expenses. Although it is difficult to predict whether the prices of indices and securities underlying structured
products will rise or fall, these prices (and, therefore, the prices of structured products) are generally influenced by the same types of political and economic events that affect issuers of securities and capital markets generally. If the issuer
of a structured product uses shorter term financing to purchase longer term securities, the issuer may be forced to sell its securities at below market prices if it experiences difficulty in obtaining such financing, which may adversely affect the
value of the structured products owned by the Fund. Structured products generally entail risks associated with derivative instruments. See &#147;Principal Risks of the Fund&#151;Derivatives Risk.&#148; </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Collateralized Loan Obligations Risk </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may
invest in CLOs. A CLO is a trust typically collateralized by a pool of loans issued by banks, corporations or any other public or private entity or person, which may include, among others, domestic and foreign senior secured loans, senior unsecured
loans and subordinate or mezzanine loans, including loans that may be rated below investment grade or equivalent unrated loans. CLOs may charge management fees and administrative expenses. The cash flows from the trust are split into two or more
portions, called tranches, varying in risk and yield. The riskiest portion is the equity tranche which generally bears losses in connection with the first defaults, if any, on the bonds or loans in the trust and serves to provide some measure of
protection to the other, more senior tranches from defaults. The Fund will normally not invest in equity tranches of CLOs. A senior tranche from a CLO trust typically has higher ratings and lower yields than the 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 and 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 CLO in which the Fund invests. Normally, CLOs are privately
offered and sold, and thus are not registered under the securities laws. As a result, investments in CLOs may be characterized by the Fund as illiquid securities; however, an active dealer market may exist for CLOs allowing a CLO to qualify under
Rule&nbsp;144A under the Securities Act. In addition to the normal risks associated with debt instruments (e.g., interest rate risk and credit risk), CLOs carry additional risks including, but not limited to: (i)&nbsp;the possibility that
distributions from the collateral will not be adequate to make interest or other payments; (ii)&nbsp;the quality of the collateral may decline in value or default; (iii)&nbsp;that they may be subordinate to other classes; and (iv)&nbsp;the complex
structure of the security may not be fully understood at the time of investment and may produce disputes with the issuer or others and may produce unexpected investment results. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Certain Affiliations </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Certain broker-dealers may be
considered to be affiliated persons of the Fund or the Investment Manager due to their possible affiliations with Allianz SE, the ultimate parent of the Investment Manager. Absent an exemption from the SEC or other regulatory relief, the Fund is
generally precluded from effecting certain principal transactions with affiliated brokers, and its ability to purchase securities being underwritten by an affiliated broker or a syndicate including an affiliated broker, or to utilize affiliated
brokers for agency transactions, is subject to restrictions. This could limit the Fund&#146;s ability to engage in securities transactions and take advantage of market opportunities. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Anti-Takeover Provisions </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund&#146;s Amended and
Restated Agreement and Declaration of Trust (the &#147;Declaration&#148;) includes provisions that could limit the ability of other entities or persons to acquire control of the Fund or to convert the Fund to
<FONT STYLE="white-space:nowrap">open-end</FONT> status. See &#147;Anti-Takeover and Other Provisions in the Declaration of Trust.&#148; These provisions in the Declaration could have the effect of depriving the Common Shareholders of opportunities
to sell their Common Shares at a premium over the then-current market price of the Common Shares or at NAV. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">32 </P>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>

 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:18pt; font-family:Times New Roman"><A NAME="pro302337_2"></A>Summary of Fund Expenses </P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The following table is intended to assist investors in understanding the fees and expenses (annualized) that an investor in Common Shares of the Fund would
bear, directly or indirectly, as a result of an offering. The table assumes the use of leverage in the form of reverse repurchase agreements and credit default swaps in an amount equal to [&nbsp;&nbsp;]% of the Fund&#146;s total assets (including
the amount of leverage obtained through the use of such instruments), which reflects approximately the percentage of the Fund&#146;s total assets attributable to such leverage as of [&nbsp;&nbsp;], 2016, and shows Fund expenses as a percentage of
net assets attributable to Common Shares. The table and example below are based on the Fund&#146;s capital structure as of [&nbsp;&nbsp; ]. The extent of the Fund&#146;s assets attributable to leverage following an offering, and the Fund&#146;s
associated expenses, are likely to vary (perhaps significantly) from these assumptions. </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">


<TR>
<TD WIDTH="94%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>


<TR BGCOLOR="#cceeff" STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><B>Shareholder Transaction Expenses</B></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:3.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Sales load (as a percentage of offering price)
<SUP STYLE="font-size:85%; vertical-align:top">(1)</SUP></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">[&nbsp;&nbsp;&nbsp;]%</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:3.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Offering Expenses Borne by Common Shareholders (as a percentage of offering price) <SUP
STYLE="font-size:85%; vertical-align:top">(1),(2)</SUP></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">[&nbsp;&nbsp; ]%</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;&nbsp;</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:3.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Dividend Reinvestment Plan Fees <SUP STYLE="font-size:85%; vertical-align:top">(3)</SUP></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">None</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;&nbsp;</TD></TR>
</TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">


<TR>
<TD WIDTH="79%"></TD>
<TD VALIGN="bottom" WIDTH="10%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="10%"></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:8pt">
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="BORDER-BOTTOM:1px solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:8pt; font-family:Times New Roman" ALIGN="center"><B>Percentage&nbsp;of&nbsp;Net&nbsp;Assets</B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:8pt; font-family:Times New Roman" ALIGN="center"><B>Attributable to</B></P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:8pt; font-family:Times New Roman" ALIGN="center"><B>Common
Shares</B></P> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:8pt; font-family:Times New Roman" ALIGN="center"><B>(assuming&nbsp;leverage&nbsp;is&nbsp;utilized)</B></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD COLSPAN="2" VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD></TR>


<TR BGCOLOR="#cceeff" STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><B>Annual Expenses</B></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:3.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Management Fees <SUP STYLE="font-size:85%; vertical-align:top">(4)</SUP></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">[&nbsp;&nbsp;&nbsp;]%</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD></TR>
<TR BGCOLOR="#cceeff" STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:3.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Interest Payments on Borrowed Funds<SUP STYLE="font-size:85%; vertical-align:top">
(5)</SUP></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">[&nbsp;&nbsp;&nbsp;]%</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:3.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Other Expenses<SUP STYLE="font-size:85%; vertical-align:top">(6)</SUP></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">[&nbsp;&nbsp;&nbsp;]%</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD></TR>
<TR BGCOLOR="#cceeff" STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:1pt; margin-left:3.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Total Annual Expenses</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">[&nbsp;&nbsp;&nbsp;]%</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:6pt">
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD></TR>
<TR STYLE="font-size:1px; ">
<TD COLSPAN="8" VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD></TR>
</TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">


<TR>
<TD WIDTH="2%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD WIDTH="96%"></TD></TR>


<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">(1)</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">In the event that the Common Shares to which this prospectus relates are sold to or through underwriters or dealer managers, a corresponding prospectus supplement will disclose the applicable sales load and/or commission.</TD></TR>
</TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">


<TR>
<TD WIDTH="2%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD WIDTH="96%"></TD></TR>


<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">(2)</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">The related prospectus supplement will disclose the estimated amount of offering expenses, the offering price and the offering expenses borne by the Fund and indirectly by all of its Common Shareholders as a percentage of the
offering price.</TD></TR>
</TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">


<TR>
<TD WIDTH="2%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD WIDTH="96%"></TD></TR>


<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">(3)</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">You will pay brokerage charges if you direct your broker or the plan agent to sell your Common Shares that you acquired pursuant to a dividend reinvestment plan. You may also pay a pro rata share of brokerage commissions incurred in
connection with open-market purchases pursuant to the Fund&#146;s Dividend Reinvestment Plan. See &#147;Dividend Reinvestment Plan.&#148;</TD></TR></TABLE>
<P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">


<TR>
<TD WIDTH="2%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD WIDTH="96%"></TD></TR>

<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">(4)</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Management Fees include fees payable to the Investment Manager for advisory services and for supervisory, administrative and other services. The Fund pays for the advisory, supervisory and administrative services it requires under
what is essentially an <FONT STYLE="white-space:nowrap">all-in</FONT> fee structure. See &#147;Management of the Fund &#151; Investment Manager.&#148;</TD></TR>
</TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">


<TR>
<TD WIDTH="2%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD WIDTH="96%"></TD></TR>


<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">(5)</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Assumes the use of leverage in the form of reverse repurchase agreements and credit default swaps representing [&nbsp;&nbsp;]% of the Fund&#146;s total assets (including the amounts of leverage obtained through the use of such
instruments) at an annual interest rate cost to the Fund of [&nbsp;&nbsp;]%, which is based on current market conditions. See &#147;Leverage&#151;Effects of Leverage.&#148; The actual amount of interest expense borne by the Fund will vary over time
in accordance with the level of the Fund&#146;s use of reverse repurchase agreements, credit default swaps, dollar rolls and/or borrowings and variations in market interest rates. Borrowing expense is required to be treated as an expense of the Fund
for accounting purposes. Any associated income or gains (or losses) realized from leverage obtained through such instruments is not reflected in the Annual Expenses table above, but would be reflected in the Fund&#146;s performance
results.</TD></TR>
</TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">


<TR>
<TD WIDTH="2%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD WIDTH="96%"></TD></TR>


<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">(6)</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Other expenses are estimated for the Fund&#146;s current fiscal year ending June&nbsp;30, 2016.</TD></TR>
</TABLE>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">33 </P>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>

 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>EXAMPLE </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The following example illustrates the expenses that you would pay on a $1,000 investment in Common Shares of the Fund, assuming (1)&nbsp;that the Fund&#146;s
net assets do not increase or decrease, (2)&nbsp;that the Fund incurs total annual expenses of [ ]% of net assets attributable to Common Shares in years 1 through 10 (assuming assets attributable to reverse repurchase agreements and credit default
swaps representing [ ]% of the Fund&#146;s total ) and (3)&nbsp;a 5% annual return<SUP STYLE="font-size:85%; vertical-align:top">(1)</SUP>: </P> <P STYLE="font-size:18pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:8pt" ALIGN="center">


<TR>
<TD WIDTH="80%"></TD>
<TD VALIGN="bottom" WIDTH="3%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="3%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="3%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="3%"></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:8pt">
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"><B>1&nbsp;Year</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"><B>3&nbsp;Years</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"><B>5&nbsp;Years</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"><B>10&nbsp;Years</B></TD>
<TD VALIGN="bottom">&nbsp;</TD></TR>


<TR STYLE="font-size:1px; ">
<TD COLSPAN="16" VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Total Expenses Incurred</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">[&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">]&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">[&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">]&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">[&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">]&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">[&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">]&nbsp;</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:6pt">
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD></TR>
<TR STYLE="font-size:1px; ">
<TD COLSPAN="16" VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD></TR>
</TABLE>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">


<TR>
<TD WIDTH="1%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD WIDTH="97%"></TD></TR>


<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"><SUP STYLE="font-size:85%; vertical-align:top">(1)</SUP></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"><B>The example above should not be considered a representation of future expenses. Actual expenses may be higher or lower than those shown.</B> The example assumes that the estimated Interest Payments on Borrowed Funds and Other
Expenses set forth in the Annual Expenses table are accurate, that the rate listed under Total Annual Expenses remains the same each year and that all dividends and distributions are reinvested at NAV. Actual expenses may be greater or less than
those assumed. Moreover, the Fund&#146;s actual rate of return may be greater or less than the hypothetical 5% annual return shown in the example. The example does not include commissions or estimated offering expenses, which would cause the
expenses shown in the example to increase. In connection with an offering of Common Shares, the prospectus supplement will set forth an example including sales load and estimated offering costs.</TD></TR>
</TABLE>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">34 </P>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:18pt; font-family:Times New Roman"><A NAME="pro302337_3"></A>Financial Highlights </P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The information in the table below for the fiscal periods ended June&nbsp;30, 2016, June&nbsp;30, 2015<SUP STYLE="font-size:85%; vertical-align:top">(1)</SUP>,
March&nbsp;31, 2015, March&nbsp;31, 2014, and March&nbsp;31, 2013, is derived from the Fund&#146;s financial statements for the fiscal year ended June&nbsp;30, 2016 audited by [ ] (&#147;[ ]&#148;), whose report on such financial statements is
contained in the Fund&#146;s June&nbsp;30, 2016 Annual Report and is incorporated by reference into the Statement of Additional Information. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">[To be
updated.] </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><SUP STYLE="font-size:85%; vertical-align:top">(1)</SUP> On December&nbsp;16, 2014, the Board approved a change of the Fund&#146;s fiscal year
end from March&nbsp;31 to June 30. Information is provided for the &#147;stub&#148; period from April&nbsp;1, 2015 through the Fund&#146;s new fiscal year end of June&nbsp;30, 2015. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:18pt; font-family:Times New Roman"><A NAME="pro302337_4"></A>Use of Proceeds </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The net proceeds of
an offering will be invested in accordance with the Fund&#146;s investment objectives and policies as set forth below. It is presently anticipated that the Fund will be able to invest substantially all of the net proceeds of an offering in
investments that meet its investment objectives and policies within 30 days of receipt by the Fund. Pending such investment, it is anticipated that the proceeds of an offering will be invested in high grade, short-term securities, credit linked
trust certificates, and/or high yield securities index future contracts or similar derivative instruments designed to give the Fund exposure to the securities and markets in which it intends to invest while the Investment manager selects specific
investments. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:18pt; font-family:Times New Roman"><A NAME="pro302337_5"></A>The Fund </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund
is a diversified, <FONT STYLE="white-space:nowrap">closed-end</FONT> management investment company. The Fund was organized as a Massachusetts business trust on January&nbsp;19, 2011, pursuant to an Agreement and Declaration of Trust governed by the
laws of the Commonwealth of Massachusetts. The Fund commenced operations on May&nbsp;30, 2012, following the initial public offering of its Common Shares </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:18pt; font-family:Times New Roman"><A NAME="pro302337_6"></A>Investment Objectives and Policies </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund seeks current income as a primary objective and capital appreciation as a secondary objective. The Fund will seek to achieve its investment
objectives by utilizing a dynamic asset allocation strategy among multiple fixed-income sectors in the global credit markets, including corporate debt (including, among other things, fixed-, variable- and floating-rate bonds, bank loans, convertible
securities and stressed debt securities issued by U.S. or foreign <FONT STYLE="white-space:nowrap">(non-U.S.)</FONT> corporations or other business entities, including emerging market issuers), mortgage-related and other asset-backed securities,
government and sovereign debt, taxable municipal bonds and other fixed-, variable- and floating-rate income-producing securities of U.S. and foreign issuers, including emerging market issuers. The Fund may invest in investment grade debt securities
and below investment grade debt securities (commonly referred to as &#147;high yield&#148; securities or &#147;junk bonds&#148;), including securities of stressed issuers. The types of securities and instruments in which the Fund may invest are
summarized under &#147;Portfolio Contents&#148; below. The Fund cannot assure you that it will achieve its investment objectives, and you could lose all of your investment in the Fund. </P>
<P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Portfolio Management Strategies </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><I>Dynamic
Allocation Strategy.</I></B><I>&nbsp;&nbsp;&nbsp;&nbsp;</I>On behalf of the Fund, the Fund&#146;s investment manager, Pacific Investment Management Company LLC (&#147;PIMCO&#148; or the &#147;Investment Manager&#148;), employs an active approach to
allocation among multiple fixed income sectors based on, among other things, market conditions, valuation assessments, economic outlook, credit market trends and other economic factors. With PIMCO&#146;s macroeconomic analysis as the basis for <FONT
STYLE="white-space:nowrap">top-down</FONT> investment decisions, including geographic and credit sector emphasis, the Fund will focus on seeking the best income generating investment ideas across multiple fixed income sectors, with an emphasis on
seeking opportunities in developed and emerging global credit markets. PIMCO may choose to focus on particular </P>
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countries/regions (e.g., U.S. vs. foreign), asset classes, industries and sectors to the exclusion of others at any time and from time to time based on market conditions and other factors. The
relative value assessment within fixed-income sectors draws on PIMCO&#146;s regional and sector specialist expertise. As a matter of fundamental policy, the Fund will normally invest at least 25% of its total assets in privately issued (commonly
known as <FONT STYLE="white-space:nowrap">&#147;non-agency&#148;)</FONT> mortgage-related securities. The Fund will observe other guidelines with respect to certain asset classes as summarized below. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><I>Investment Selection Strategies.</I></B><I></I> Once the Fund&#146;s <FONT STYLE="white-space:nowrap">top-down,</FONT> portfolio positioning decisions
have been made as described above, PIMCO selects particular investments for the Fund by employing a <FONT STYLE="white-space:nowrap">bottom-up,</FONT> disciplined credit approach which is driven by fundamental, independent research within each
sector/asset class represented in the Fund, with a focus on identifying securities and other instruments with solid and/or improving fundamentals. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">PIMCO
utilizes strategies that focus on credit quality analysis, duration management and other risk management techniques. PIMCO attempts to identify, through fundamental research driven by independent credit analysis and proprietary analytical tools,
debt obligations and other income-producing securities that provide current income and/or opportunities for capital appreciation based on its analysis of the issuer&#146;s credit characteristics and the position of the security in the issuer&#146;s
capital structure. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Consideration of yield is only one component of the portfolio managers&#146; approach in managing the Fund. PIMCO also attempts to
identify investments that may appreciate in value based on PIMCO&#146;s assessment of the issuer&#146;s credit characteristics, forecast for interest rates and outlook for particular countries/regions, currencies, industries, sectors and the global
economy and bond markets generally. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><I>Credit Quality.</I></B>&nbsp;The Fund may invest in debt instruments that are, at the time of purchase, rated
below investment grade, or unrated but determined by PIMCO to be of comparable quality. However, the Fund will not normally invest more than 20% of its total assets in debt instruments, other than mortgage-related and other asset-backed securities,
that are, at the time of purchase, rated CCC+ or lower by S&amp;P and Fitch and Caa1 or lower by Moody&#146;s, or that are unrated but determined by PIMCO to be of comparable quality to securities so rated. The Fund may invest without limit in
mortgage-related and other asset-backed securities regardless of rating&#151;<I>i.e.</I>, of any credit quality. For purposes of applying the foregoing policies, in the case of securities with split ratings (<I>i.e.</I>, a security receiving two
different ratings from two different rating agencies), the Fund will apply the higher of the applicable ratings. Subject to the aforementioned investment restrictions, the Fund may invest in securities of stressed issuers, which include securities
at risk of being in default as to the repayment of principal and/or interest at the time of acquisition by the Fund or that are rated in the lower rating categories by one or more nationally recognized statistical rating organizations (for example,
Ca or lower by Moody&#146;s or CC or lower by S&amp;P or Fitch) or, if unrated, are determined by PIMCO to be of comparable quality. Debt instruments of below investment grade quality are regarded as having predominantly speculative characteristics
with respect to capacity to pay interest and to repay principal, and are commonly referred to as &#147;high yield&#148; securities or &#147;junk bonds.&#148; Debt instruments in the lowest investment grade category also may be considered to possess
some speculative characteristics. The Fund may, for hedging, investment or leveraging purposes, make use of credit default swaps, which are contracts whereby one party makes periodic payments to a counterparty in exchange for the right to receive
from the counterparty a payment equal to the par (or other agreed-upon) value of a referenced debt obligation in the event of a default or other credit event by the issuer of the debt obligation. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><I>Independent Credit Analysis.</I></B><I> </I>PIMCO relies primarily on its own analysis of the credit quality and risks associated with individual debt
instruments considered for the Fund, rather than relying exclusively on rating agencies or third-party research. The Fund&#146;s portfolio managers utilize this information in an attempt to minimize credit risk and to identify issuers, industries or
sectors that are undervalued or that offer attractive yields relative to PIMCO&#146;s assessment of their credit characteristics. This aspect of PIMCO&#146;s capabilities will be particularly important to the extent that the Fund invests in high
yield securities and in securities of emerging market issuers. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><I>Duration Management.</I></B>&nbsp;It is expected that the Fund normally will have a
short to intermediate average portfolio duration (<I>i.e.</I>, within a zero to eight year (0 to 8) range), as calculated by PIMCO, although it may be shorter or longer at any time or from time to time depending on market conditions and other
factors. While the Fund seeks to maintain a short to intermediate average portfolio duration, there is no limit on the maturity or duration of any individual security in which the Fund may invest. PIMCO believes that maintaining duration within this
range offers flexibility and the opportunity for above-average returns while potentially limiting exposure to interest rate </P>
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volatility and related risk. Duration is a measure used to determine the sensitivity of a security&#146;s price to changes in interest rates. The Fund&#146;s duration strategy may entail
maintaining a negative average portfolio duration from time to time, which would potentially benefit the portfolio in an environment of rising market interest rates, but would generally adversely impact the portfolio in an environment of falling or
neutral market interest rates. PIMCO may also utilize certain strategies, including without limit investments in structured notes or interest rate futures contracts or swap, cap, floor or collar transactions, for the purpose of reducing the interest
rate sensitivity of the Fund&#146;s portfolio, although there is no assurance that it will do so or that such strategies will be successful. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><A NAME="pro302337_7">
</A>PORTFOLIO CONTENTS </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund normally invests worldwide in a portfolio of debt obligations and other income-producing securities of any type and
credit quality, with varying maturities and related derivative instruments. The Fund&#146;s portfolio of debt obligations and income-producing securities may include, without limitation, bonds, debentures, notes, and other debt securities of U.S.
and foreign <FONT STYLE="white-space:nowrap">(non-U.S.)</FONT> corporate and other issuers, including commercial paper; asset-backed securities issued on a public or private basis; U.S. Government securities; obligations of foreign governments or
their <FONT STYLE="white-space:nowrap">sub-divisions,</FONT> agencies and government sponsored enterprises and obligations of international agencies and supranational entities; municipal securities and other debt securities issued by states or local
governments and their agencies, authorities and other government-sponsored enterprises, including taxable municipal securities (such as Build America Bonds);
<FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">payment-in-kind</FONT></FONT> securities; <FONT STYLE="white-space:nowrap">zero-coupon</FONT> bonds; inflation-indexed bonds issued by both governments and corporations; structured
notes, including hybrid or indexed securities; catastrophe bonds and other event-linked bonds; credit-linked notes; structured credit products; bank loans (including, among others, senior loans, delayed funding loans, revolving credit facilities and
loan participations and assignments); preferred securities; convertible debt securities (i.e., debt securities that may be converted at either a stated price or stated rate into underlying shares of common stock), including synthetic convertible
debt securities (i.e., instruments created through a combination of separate securities that possess the two principal characteristics of a traditional convertible security, such as an income-producing security and the right to acquire an equity
security); and bank certificates of deposit, fixed time deposits and bankers&#146; acceptances. The rate of interest on an income-producing security may be fixed, floating or variable. Certain corporate income-producing securities, such as
convertible bonds, also may include the right to participate in equity appreciation, and PIMCO will generally evaluate those instruments based primarily on their debt characteristics. The Fund may invest in debt securities of stressed issuers.
Subject to the investment limitations described under &#147;Credit Quality&#148; above, at any given time and from time to time, substantially all of the Fund&#146;s portfolio may consist of below investment grade securities and/or mortgage-related
or other types of asset backed securities. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may invest without limit in securities of U.S. issuers and without limit in securities of foreign <FONT
STYLE="white-space:nowrap">(non-U.S.)</FONT> issuers, securities traded principally outside of the United States, and securities denominated in currencies other than the U.S. dollar. The Fund may invest without limit in investment grade sovereign
debt. The Fund may invest up to 40% of its total assets in securities and instruments that are economically tied to &#147;emerging market&#148; countries other than investments in investment grade sovereign debt, where as noted above there is no
limit. The Fund may also invest directly in foreign currencies, including local emerging market currencies. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may normally invest up to 40% of its
total assets in bank loans (including, among others, senior loans, delayed funding loans, revolving credit facilities and loan participations and assignments). The Fund will not normally invest more than 10% of its total assets in convertible debt
securities (<I>i.e.</I>, debt securities that may be converted at either a stated price or stated rate into underlying shares of common stock), including synthetic convertible debt securities (<I>i.e.</I>, instruments created through a combination
of separate securities that possess the two principal characteristics of a traditional convertible security, <I>i.e.</I>, an income-producing security and the right to acquire an equity security). The Fund may also invest in preferred securities.
</P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">As a matter of fundamental policy, the Fund will normally invest at least 25% of its total assets in privately-issued (commonly known as <FONT
STYLE="white-space:nowrap">&#147;non-agency&#148;)</FONT> mortgage-related securities. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may utilize various derivative strategies (both long and
short positions) involving the purchase or sale of futures and forward contracts (including foreign currency exchange contracts), call and put options, credit default swaps, total return swaps, basis swaps and other swap agreements and other
derivative instruments for investment </P>
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purposes, leveraging purposes or in an attempt to hedge against market, credit, interest rate, currency and other risks in the portfolio. The Fund may purchase and sell securities on a
when-issued, delayed delivery or forward commitment basis and may engage in short sales. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund will not normally invest directly in common stocks of
operating companies. However, the Fund may own and hold common stocks in its portfolio from time to time in connection with a corporate action or the restructuring of a debt instrument, or through the conversion of a convertible security held by the
Fund. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may invest in securities that have not been registered for public sale in the U.S. or relevant
<FONT STYLE="white-space:nowrap">non-U.S.</FONT> jurisdiction, including without limit securities eligible for purchase and sale pursuant to Rule 144A under the Securities Act of 1933, as amended (the &#147;Securities Act&#148;), or relevant
provisions of applicable <FONT STYLE="white-space:nowrap">non-U.S.</FONT> law, and other securities issued in private placements. The Fund may also invest in securities of other investment companies, including, without limit, exchange-traded funds
(&#147;ETFs&#148;), and may invest in foreign ETFs. The Fund may invest in real estate investment trusts (&#147;REITs&#148;). The Fund may invest in securities of companies with any market capitalization, including small and medium capitalizations.
</P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may invest without limit in illiquid securities (i.e., securities that cannot be disposed of within seven days in the ordinary course of
business at approximately the value at which the Fund has valued the securities). </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><I>Temporary defensive investments.</I></B> Upon PIMCO&#146;s
recommendation, for temporary defensive purposes or in </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">order to keep its cash fully invested, including during the period in which the net proceeds of
this offering are being invested, the Fund may deviate from its investment strategy by investing some or all of its total assets in investments such as high grade debt securities, including high quality, short-term debt securities, and cash and cash
equivalents. The Fund may not achieve its investment objectives when it does so. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The following provides additional information regarding the types of
securities and other instruments in which the Fund will ordinarily invest. A more detailed discussion of these and other instruments and investment techniques that may be used by the Fund is provided under &#147;Investment Objectives and
Policies&#148; in the Statement of Additional Information. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>High Yield Securities </B></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may invest without limit in debt instruments that are rated below investment grade (below Baa3 by Moody&#146;s or below
<FONT STYLE="white-space:nowrap">BBB-</FONT> by either S&amp;P or Fitch) or unrated but determined by PIMCO to be of comparable quality. However, the Fund will not normally invest more than 20% of its total assets in debt instruments, other than
mortgage-related and other asset-backed securities, that are, at the time of purchase, rated CCC+ or lower by S&amp;P and Fitch and Caa1 or lower by Moody&#146;s or that are unrated but determined by PIMCO to be of comparable quality to securities
so rated. The Fund may invest in mortgage-related and other asset-backed securities regardless of rating (<I>i.e.</I>, of any credit quality). For purposes of applying the foregoing policies, in the case of securities with split ratings
(<I>i.e.</I>, a security receiving two different ratings from two different rating agencies), the Fund will apply the higher of the applicable ratings. The Fund may invest in debt securities of stressed issuers, which include securities at risk of
being in default as to the repayment of principal and/or interest at the time of acquisition by the Fund or that are rated in the lower rating categories by one or more nationally recognized statistical rating organizations (for example, Ca or lower
by Moody&#146;s or CC or lower by S&amp;P or Fitch) or, if unrated, are determined by PIMCO to be of comparable quality. Below investment grade securities are commonly referred to as &#147;high yield&#148; securities or &#147;junk bonds.&#148; High
yield securities involve a greater degree of risk (in particular, a greater risk of default) than, and special risks in addition to the risks associated with, investment grade debt obligations. While offering a greater potential opportunity for
capital appreciation and higher yields, high yield securities typically entail greater potential price volatility and may be less liquid than higher-rated securities. High yield securities may be regarded as predominantly speculative with respect to
the issuer&#146;s continuing ability to make timely principal and interest payments. They also may be more susceptible to real or perceived adverse economic and competitive industry conditions than higher-rated securities. Debt securities in the
lowest investment grade category also may be considered to possess some speculative characteristics by certain ratings agencies. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">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 the Fund 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. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">38 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><I>Credit ratings and unrated securities.</I></B><I>&nbsp;&nbsp;&nbsp;&nbsp;</I>Rating agencies are private
services that provide ratings of the credit quality of debt obligations. Appendix A to this prospectus describes the various ratings assigned to debt obligations by Moody&#146;s, S&amp;P and Fitch. As noted in Appendix A, Moody&#146;s, S&amp;P and
Fitch may modify their ratings of securities to show relative standing within a rating category, with the addition of numerical modifiers (1, 2 or 3) in the case of Moody&#146;s, and with the addition of a plus (+)&nbsp;or minus (-) sign in the case
of S&amp;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&#146;s current financial
condition may be better or worse than a rating indicates. The Fund will not necessarily sell a security when its rating is reduced below its rating at the time of purchase. PIMCO does not rely solely on credit ratings, and develops and relies
primarily on its own analysis of issuer credit quality. The ratings of a debt security may change over time. Moody&#146;s, S&amp;P and Fitch monitor and evaluate the ratings assigned to securities on an ongoing basis. As a result, debt instruments
held by the Fund could receive a higher rating (which would tend to increase their value) or a lower rating (which would tend to decrease their value) during the period in which they are held by the Fund. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may purchase unrated securities (which are not rated by a rating agency) if PIMCO determines that the securities are of comparable quality to rated
securities that the Fund may purchase. Unrated securities may be less liquid than comparable rated securities and involve the risk that PIMCO may not accurately evaluate the security&#146;s comparative credit rating. Analysis of the creditworthiness
of issuers of high yield securities may be more complex than for issuers of higher-quality debt obligations. The Fund&#146;s success in achieving its investment objectives may depend more heavily on PIMCO&#146;s credit analysis to the extent that
the Fund invests in below investment grade quality and unrated securities. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Foreign <FONT STYLE="white-space:nowrap">(non-U.S.)</FONT> investments
</B></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may invest without limit in instruments of corporate and other foreign <FONT STYLE="white-space:nowrap">(non-U.S.)</FONT> issuers, and in
instruments traded principally outside of the United States. The Fund may invest in sovereign and other debt securities issued by foreign government and their respective <FONT STYLE="white-space:nowrap">sub-divisions,</FONT> agencies or
instrumentalities, government sponsored enterprises and supranational government entities. Supranational entities include international organizations that are organized or supported by one or more government entities to promote economic
reconstruction or development and by international banking institutions and related governmental agencies. As a holder of such debt securities, the Fund may be requested to participate in the rescheduling of such debt and to extent further loans to
governmental entities. In addition, there are generally no bankruptcy proceedings similar to those in the United States by which defaulted foreign debt securities may be collected. Investing in foreign securities involves special risks and
considerations not typically associated with investing in U.S. securities. See &#147;Principal Risks of the Fund&#151;Foreign <FONT STYLE="white-space:nowrap">(Non-U.S.)</FONT> Investment Risk.&#148; </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund 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 the Fund may be subject to restructuring arrangements or to requests for new credit, which may cause the Fund to
realize a loss of interest or principal on any of its portfolio holdings. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The foreign securities in which the Fund may invest include without limit
Eurodollar obligations and &#147;Yankee Dollar&#148; obligations. Eurodollar obligations are U.S. dollar-denominated certificates of deposit and time deposits issued outside the U.S. capital markets by foreign branches of U.S. banks and by foreign
banks. Yankee Dollar obligations are U.S. dollar-denominated obligations issued in the U.S. capital markets by foreign banks. Eurodollar and Yankee Dollar obligations are generally subject to the same risks that apply to domestic debt issues,
notably credit risk, interest rate risk, market risk and liquidity risk. Additionally, Eurodollar (and to a limited extent, Yankee Dollar) obligations are subject to certain sovereign risks. One such risk is the possibility that a sovereign country
might prevent capital, in the form of U.S. dollars, from flowing across its borders. Other risks include adverse political and economic developments; the extent and quality of government regulation of financial markets and institutions; the
imposition of foreign withholding or other taxes; and the expropriation or nationalization of foreign issuers. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">39 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Emerging markets investments </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may invest without limit in investment grade sovereign debt. The Fund may invest up to 40% of its total assets in securities and instruments that are
economically tied to &#147;emerging market&#148; countries other than investments in investment grade sovereign debt, where as noted above there is no limit. PIMCO generally considers an instrument to be economically tied to an emerging market
country if the security&#146;s &#147;country of exposure&#148; is an emerging market country, as determined by the criteria set forth below. Alternatively, such as when a &#147;country of exposure&#148; is not available or when PIMCO believes the
following tests more accurately reflect which country the security is economically tied to, PIMCO may consider an instrument to be economically tied to an emerging market country if the issuer or guarantor is a government of an emerging market
country (or any political subdivision, agency, authority or instrumentality of such government), if the issuer or guarantor is organized under the laws of an emerging market country, or if the currency of settlement of the security is a currency of
an emerging market country. 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. An instrument&#146;s &#147;country of
exposure&#148; 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 &#147;country of
exposure.&#148; The factors, listed in the order in which they are applied, are: (i)&nbsp;if an asset-backed or other collateralized security, the country in which the collateral backing the security is located, (ii)&nbsp;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, (iii)&nbsp;the &#147;country of risk&#148;
of the issuer, (iv)&nbsp;the &#147;country of risk&#148; of the issuer&#146;s ultimate parent, or (v)&nbsp;the country where the issuer is organized or incorporated under the laws thereof. &#147;Country of risk&#148; is a separate four-part test
determined by the following factors, listed in order of importance: (i)&nbsp;management location, (ii)&nbsp;country of primary listing, (iii)&nbsp;sales or revenue attributable to the country, and (iv)&nbsp;reporting currency of the issuer. PIMCO
has broad discretion to identify countries that it considers to qualify as emerging markets. Emerging market countries are generally located in Asia, Africa, the Middle East, Latin America and Eastern Europe but may be in other regions as well.
PIMCO will consider emerging market 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. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The securities and currency markets of emerging market countries are generally
smaller, less developed, less liquid, and more volatile than the securities and currency markets of the United States and other developed markets and disclosure and regulatory standards in many respects are less stringent. There also may be a lower
level of monitoring and regulation of securities markets in emerging market countries and the activities of investors in such markets and enforcement of existing regulations may be extremely limited. Government enforcement of existing securities
regulations is limited, and any enforcement may be arbitrary and the results may be difficult to predict. In addition, reporting requirements of emerging market countries with respect to the ownership of securities are more likely to be subject to
interpretation or changes without prior notice to investors than more developed countries. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">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 such countries&#146; economies and securities markets. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Economies of emerging market countries generally are heavily dependent upon international trade and, accordingly, have been and may continue to be affected
adversely by trade barriers, exchange controls, managed adjustments in relative currency values, and other protectionist measures imposed or negotiated by the countries with which they trade. The economies of emerging market countries also have been
and may continue to be adversely affected by economic conditions in the countries with which they trade. The economies of emerging market countries may also be predominantly based on only a few industries or dependent on revenues from particular
commodities. In addition, custodial services and other investment-related costs may be more expensive in emerging markets than in many developed markets, which could reduce the Fund&#146;s income from securities or debt instruments of emerging
market country issuers. </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Governments of many emerging market countries have exercised and continue to exercise substantial influence over
many aspects of the private sector. In some cases, the government owns or controls many companies, including some of the largest in the country. Accordingly, government actions could have a significant effect on economic conditions in an emerging
country and on market conditions, prices and yields of securities in the Fund&#146;s portfolio. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Emerging market countries are more likely than developed
market countries to experience political uncertainty and instability, including the risk of war, terrorism, nationalization, limitations on the removal of funds or other assets, or diplomatic developments that affect investments in these countries.
No assurance can be given that adverse political changes will not cause the Fund to suffer a loss of any or all of its investments in emerging market countries or interest/dividend income thereon. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Foreign investment in certain emerging market country securities is restricted or controlled to varying degrees. These restrictions or controls may at times
limit or preclude foreign investment in certain emerging market country securities and increase the costs and expenses of the Fund. Certain emerging market countries require governmental approval prior to investments by foreign persons, limit the
amount of investment by foreign persons in a particular issuer, limit the investment by foreign persons only to a specific class of securities of an issuer that may have less advantageous rights than the classes available for purchase by
domiciliaries of the countries and/or impose additional taxes on foreign investors. Certain emerging market countries may also restrict investment opportunities in issuers in industries deemed important to national interests. Emerging market
countries may require governmental approval for the repatriation of investment income, capital or the proceeds of sales of securities by foreign investors. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Also, because publicly traded debt instruments of emerging market issuers represent a relatively recent innovation in the world debt markets, there is little
historical data or related market experience concerning the attributes of such instruments under all economic, market and political conditions. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">As
reflected in the above discussion, investments in emerging market securities involve a greater degree of risk than, and special risks in addition to the risks associated with, investments in domestic securities or in securities of foreign developed
countries. See &#147;Principal Risks of the Fund&#151;Emerging Markets Risk.&#148; </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Foreign currencies and related transactions </B></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund&#146;s Common Shares are priced in U.S. dollars and the distributions paid by the Fund to Common Shareholders are paid in U.S. dollars. However, a
significant portion of the Fund&#146;s assets may be denominated in foreign <FONT STYLE="white-space:nowrap">(non-U.S.)</FONT> currencies and the income received by the Fund from many foreign debt obligations will be paid in foreign currencies. The
Fund also may invest in or gain exposure to foreign currencies themselves for investment or hedging purposes. The Fund&#146;s investments in securities that trade in, or receive revenues in, foreign currencies will be subject to currency risk, which
is the risk that fluctuations in the exchange rates between the U.S. dollar and foreign currencies may negatively affect an investment. See &#147;Principal Risks of the Fund&#151;Currency Risk.&#148; The Fund may (but is not required to) hedge some
or all of its exposure to foreign currencies through the use of derivative strategies. For instance, the Fund may enter into forward foreign currency exchange contracts, and may buy and sell foreign currency futures contracts and options on foreign
currencies and foreign currency 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, may reduce the Fund&#146;s
exposure to changes in the value of the currency it will deliver and increase its exposure to changes in the value of the currency it will receive for the duration of the contract. The effect on the value of the Fund is similar to selling securities
denominated in one currency and purchasing securities denominated in another currency. Contracts to sell foreign currency would limit any potential gain that might be realized by the Fund if the value of the hedged currency increases. The Fund may
enter into these contracts to hedge against foreign exchange risk arising from the Fund&#146;s investment or anticipated investment in securities denominated in foreign currencies. Suitable hedging transactions may not be available in all
circumstances and there can be no assurance that the Fund will engage in such transactions at any given time or from time to time when they would be beneficial. Although PIMCO has the flexibility to engage in such transactions for the Fund, it may
determine not to do so or to do so only in unusual circumstances or market conditions. Also, these transactions may not be successful and may eliminate any chance for the Fund to benefit from favorable fluctuations in relevant foreign currencies.
</P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may also use derivatives contracts for purposes of increasing exposure to a foreign currency or to shift exposure to foreign currency
fluctuations from one currency to another. To the extent that it does so, the Fund will be subject to the additional risk that the relative value of currencies will be different than anticipated by PIMCO. </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Please see &#147;Investment Objectives and <FONT STYLE="white-space:nowrap">Policies&#151;Non-U.S.</FONT>
Securities,&#148; &#147;Investment Objectives and Policies&#151;Foreign Currency Transactions&#148; and &#147;Investment Objectives and Policies&#151;Foreign Currency Exchange-Related Securities&#148; in the Statement of Additional Information for a
more detailed description of the types of foreign investments and foreign currency transactions in which the Fund may invest or engage and their related risks. </P>
<P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Mortgage-related and other asset-backed securities </B></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The
Fund may invest in a variety of mortgage-related and other asset-backed securities issued by government agencies or other governmental entities or by private originators or issuers. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">As a matter of fundamental policy, the Fund will normally invest at least 25% of its total assets (<I>i.e.</I>, concentrate) in privately-issued (commonly
known as <FONT STYLE="white-space:nowrap">&#147;non-agency&#148;)</FONT> mortgage-related securities. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Mortgage-related securities include mortgage
pass-through securities, CMOs, commercial mortgage-backed securities (&#147;CMBSs&#148;), mortgage dollar rolls, CMO residuals, adjustable rate mortgage-backed securities (&#147;ARMs&#148;), SMBSs and other securities that directly or indirectly
represent a participation in, or are secured by and payable from, mortgage loans on real property. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><I>Mortgage Pass-Through
Securities.</I></B>&nbsp;&nbsp;&nbsp;&nbsp;Interests in pools of mortgage-related securities differ from other forms of debt securities, which normally provide for periodic payment of interest in fixed amounts with principal payments at maturity or
specified call dates. Instead, these securities provide a monthly payment which consists of both interest and principal payments. In effect, these payments are a &#147;pass through&#148; of the monthly payments made by the individual borrowers on
their residential or commercial mortgage loans, net of any fees paid to the issuer or guarantor of such securities. Additional payments are caused by repayments of principal resulting from the sale of the underlying property, refinancing or
foreclosure, net of fees or costs that may be incurred. Some mortgage-related securities (such as securities issued by GNMA) are described as &#147;modified pass-through.&#148; These securities entitle the holder to receive all interest and
principal payments owed on the mortgage pool, net of certain fees, at the scheduled payment dates regardless of whether or not the mortgagor actually makes the payment. </P>
<P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The rate of <FONT STYLE="white-space:nowrap">pre-payments</FONT> on underlying mortgages will affect the price and volatility of a mortgage-related security,
and may have the effect of shortening or extending the effective duration of the security relative to what was anticipated at the time of purchase. To the extent that unanticipated rates of prepayment on underlying mortgages increase the effective
duration of a mortgage-related security, the volatility of such security can be expected to increase. The mortgage market in the United States has experienced heightened difficulties over the past several years that may adversely affect the
performance and market value of mortgage-related investments. Delinquencies and losses on residential and commercial mortgage loans (especially subprime and second-lien residential mortgage loans) generally have increased recently and may continue
to increase, and a decline in or flattening of property values (as has recently been experienced and may continue to be experienced in many markets) may exacerbate such delinquencies and losses. Borrowers with adjustable-rate mortgage loans are more
sensitive to changes in interest rates, which affect their monthly mortgage payments, and may be unable to secure replacement mortgages at comparably low interest rates. Also, a number of residential mortgage loan originators have recently
experienced serious financial difficulties or bankruptcy. Owing largely to the foregoing, reduced investor demand for mortgage loans and mortgage-related securities and increased investor yield requirements have caused limited liquidity in the
secondary market for mortgage-related securities, which can adversely affect the market value of mortgage-related securities. It is possible that such limited liquidity in such secondary markets could continue or worsen. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The principal U.S. governmental guarantor of mortgage-related securities is GNMA. GNMA is a wholly owned U.S. Government corporation within the Department of
Housing and Urban Development. GNMA 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 (such as savings and loan
institutions, commercial banks and mortgage bankers) and backed by pools of mortgages insured by the Federal Housing Administration (the &#147;FHA&#148;), or guaranteed by the Department of Veterans Affairs (the &#147;VA&#148;). Government-related
guarantors (<I>i.e.</I>, not backed by the full faith and credit of the U.S. Government) include FNMA and FHLMC. FNMA is a government-sponsored corporation the common stock of which is owned entirely by private stockholders. FNMA purchases
conventional (<I>i.e.</I>, not insured or guaranteed by any government agency) residential mortgages from a list of approved seller/servicers which include state and federally chartered savings and loan associations, mutual savings banks,
</P>
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commercial banks and credit unions and mortgage bankers. 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 was created by Congress in 1970 for the purpose of increasing the availability of mortgage credit for residential housing. It is a government-sponsored corporation that issues Participation
Certificates (&#147;PCs&#148;), which are pass-through securities, each representing an undivided interest in a pool of residential mortgages. FHLMC guarantees the timely payment of interest and ultimate collection of principal, but PCs are not
backed by the full faith and credit of the U.S. Government. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">On September&nbsp;6, 2008, the Federal Housing Finance Agency (&#147;FHFA&#148;) placed FNMA
and FHLMC into conservatorship. As the conservator, FHFA succeeded to all rights, titles, powers and privileges of FNMA and FHLMC and of any stockholder, officer or director of FNMA and FHLMC with respect to FNMA and FHLMC and the assets of FNMA and
FHLMC. FHFA selected a new chief executive officer and chairman of the board of directors for each of FNMA and FHLMC. In connection with the conservatorship, the U.S. Treasury entered into a Senior Preferred Stock Purchase Agreement with each of
FNMA and FHLMC pursuant to which the U.S. Treasury will purchase up to an aggregate of $100&nbsp;billion of each of FNMA and FHLMC to maintain a positive net worth in each enterprise. This agreement contains various covenants that severely limit
each enterprise&#146;s operations. In exchange for entering into these agreements, the U.S. Treasury received $1&nbsp;billion of each enterprise&#146;s senior preferred stock and warrants to purchase 79.9% of each enterprise&#146;s common stock. On
February&nbsp;18, 2009, the U.S. Treasury announced that it was doubling the size of its commitment to each enterprise under the Senior Preferred Stock Program to $200&nbsp;billion. The U.S. Treasury&#146;s obligations under the Senior Preferred
Stock Program are for an indefinite period of time for a maximum amount of $200&nbsp;billion per enterprise. On December&nbsp;24, 2009, the U.S. Treasury announced further amendments to the Senior Preferred Stock Purchase Agreements which included
additional financial support to certain governmentally supported entities, including the FHLBs, FNMA and FHLMC. There is no assurance that the obligations of such entities will be satisfied in full, or that such obligations will not decrease in
value or default. It is difficult, if not impossible, to predict the future political, regulatory or economic changes that could impact the FNMA, FHLMC and the FHLBs, and the values of their related securities or obligations. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">FNMA and FHLMC are continuing to operate as going concerns while in conservatorship and each remain liable for all of its obligations, including its guaranty
obligations, associated with its mortgage-backed securities. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Under the Federal Housing Finance Regulatory Reform Act of 2008 (the &#147;Reform
Act&#148;), which was included as part of the Housing and Economic Recovery Act of 2008, FHFA, as conservator or receiver, has the power to repudiate any contract entered into by FNMA or FHLMC prior to FHFA&#146;s appointment as conservator or
receiver, as applicable, if FHFA determines, in its sole discretion, that performance of the contract is burdensome and that repudiation of the contract promotes the orderly administration of FNMA&#146;s or FHLMC&#146;s affairs. The Reform Act
requires FHFA to exercise its right to repudiate any contract within a reasonable period of time after its appointment as conservator or receiver. FHFA, in its capacity as conservator, has indicated that it has no intention to repudiate the guaranty
obligations of FNMA or FHLMC because FHFA views repudiation as incompatible with the goals of the conservatorship. However, in the event that FHFA, as conservator or if it is later appointed as receiver for FNMA or FHLMC, were to repudiate any such
guaranty obligation, the conservatorship or receivership estate, as applicable, would be liable for actual direct compensatory damages in accordance with the provisions of the Reform Act. Any such liability could be satisfied only to the extent of
FNMA&#146;s or FHLMC&#146;s assets available therefor. In the event of repudiation, the payments of interest to holders of FNMA or FHLMC mortgage-backed securities would be reduced if payments on the mortgage loans represented in the mortgage loan
groups related to such mortgage-backed securities are not made by the borrowers or advanced by the servicer. Any actual direct compensatory damages for repudiating these guaranty obligations may not be sufficient to offset any shortfalls experienced
by such mortgage-backed security holders. Further, in its capacity as conservator or receiver, FHFA has the right to transfer or sell any asset or liability of FNMA or FHLMC without any approval, assignment or consent. Although FHFA has stated that
it has no present intention to do so, if FHFA, as conservator or receiver, were to transfer any such guaranty obligation to another party, holders of FNMA or FHLMC mortgage-backed securities would have to rely on that party for satisfaction of the
guaranty obligation and would be exposed to the credit risk of that party. In addition, certain rights provided to holders of mortgage-backed securities issued by FNMA and FHLMC under the operative documents related to such securities may not be
enforced against FHFA, or enforcement of such rights may be delayed, during the conservatorship or any future receivership. The operative documents for FNMA and FHLMC mortgage-backed securities may provide (or with respect to securities issued prior
to the date of the appointment of the conservator may have provided) that upon the occurrence of an event of default on the part of </P>
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FNMA or FHLMC, in its capacity as guarantor, which includes the appointment of a conservator or receiver, holders of such mortgage-backed securities have the right to replace FNMA or FHLMC as
trustee if the requisite percentage of mortgage-backed securities holders consent. The Reform Act prevents mortgage-backed security holders from enforcing such rights if the event of default arises solely because a conservator or receiver has been
appointed. The Reform Act also provides that no person may exercise any right or power to terminate, accelerate or declare an event of default under certain contracts to which FNMA or FHLMC is a party, or obtain possession of or exercise control
over any property of FNMA or FHLMC, or affect any contractual rights of FNMA or FHLMC, without the approval of FHFA, as conservator or receiver, for a period of 45 or 90 days following the appointment of FHFA as conservator or receiver,
respectively. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">In addition, in a February 2011 report to Congress from the Treasury Department and the Department of Housing and Urban Development, the
Obama administration provided a plan to reform America&#146;s housing finance market. The plan would reduce the role of and eventually eliminate FNMA and FHLMC. Notably, the plan does not propose similar significant changes to GNMA, which guarantees
payments on mortgage-related securities backed by federally insured or guaranteed loans such as those issued by the Federal Housing Association or guaranteed by the VA. The report also identified three proposals for Congress and the administration
to consider for the long-term structure of the housing finance markets after the elimination of FNMA and FHLMC, including implementing: (i)&nbsp;a privatized system of housing finance that limits government insurance to very limited groups of
creditworthy <FONT STYLE="white-space:nowrap">low-</FONT> and moderate-income borrowers; (ii)&nbsp;a privatized system with a government backstop mechanism that would allow the government to insure a larger share of the housing finance market during
a future housing crisis; and (iii)&nbsp;a privatized system where the government would offer reinsurance to holders of certain highly-rated mortgage-related securities insured by private insurers and would pay out under the reinsurance arrangements
only if the private mortgage insurers were insolvent. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Commercial banks, savings and loan institutions, private mortgage insurance companies, mortgage
bankers and other secondary market issuers also create pass-through pools of conventional residential mortgage loans. Such issuers may be the originators and/or servicers of the underlying mortgage loans as well as the guarantors of the
mortgage-related securities. Pools created by such <FONT STYLE="white-space:nowrap">non-governmental</FONT> 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 the former pools. However, timely payment of interest and principal of these pools may be supported by various forms of insurance or guarantees, including individual loan, title, pool and hazard
insurance and letters of credit, which may be issued by governmental entities or private insurers. Such insurance and guarantees and the creditworthiness of the issuers thereof will be considered in determining whether a mortgage-related security
should be purchased for the Fund. There can be no assurance that the private insurers or guarantors can meet their obligations under the insurance policies or guarantee arrangements. The Fund may, however, invest in mortgage-related securities
without insurance or guarantees if PIMCO believes that the securities will help to achieve the Fund&#146;s investment objectives. Securities issued by certain private organizations may not be readily marketable. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><I>Collateralized Mortgage Obligations.</I></B>&nbsp;&nbsp;&nbsp;&nbsp;A CMO is a debt obligation of a legal entity that is collateralized by mortgages and
divided into classes. Similar to a bond, interest and prepaid principal is paid, in most cases, on a monthly basis. CMOs may be collateralized by whole mortgage loans or private mortgage bonds, but are generally collateralized by portfolios of
mortgage pass-through securities guaranteed by GNMA, FHLMC or FNMA and their income streams. CMOs are structured into multiple classes, often referred to as &#147;tranches,&#148; with each class bearing a different stated maturity and entitled to a
different schedule for payments of principal and interest, including prepayments. Actual maturity and average life will depend upon the <FONT STYLE="white-space:nowrap">pre-payment</FONT> experience of the collateral. In the case of certain CMOs
(known as &#147;sequential pay&#148; CMOs), payments of principal received from the pool of underlying mortgages, including prepayments, are applied to the classes of CMOs in the order of their respective final distribution dates. Thus, no payment
of principal will be made to any class of sequential pay CMOs until all other classes having an earlier final distribution date have been paid in full. CMOs may be less liquid and may exhibit greater price volatility than other types of mortgage- or
asset-backed securities. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><I>Commercial Mortgage-Backed Securities.</I></B>&nbsp;&nbsp;&nbsp;&nbsp;CMBSs 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. Commercial mortgage-backed securities may be less liquid and exhibit
greater price volatility than other types of mortgage- or asset-backed securities. </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><I>CMO Residuals.</I></B>&nbsp;&nbsp;&nbsp;&nbsp;CMO residuals are mortgage securities issued by agencies or
instrumentalities of the U.S. Government or by private originators of, or investors in, mortgage loans, including savings and loan associations, homebuilders, mortgage banks, commercial banks, investment banks and special purpose entities of the
foregoing. The cash flow generated by the mortgage assets underlying a series of a CMO is applied first to make required payments of principal and interest on the CMO and second to pay the related administrative expenses and any management fee of
the issuer. The residual in a CMO structure generally represents the interest in any excess cash flow remaining after making the foregoing payments. Each payment of such excess cash flow to a holder of the related CMO residual represents income
and/or a return of capital. The amount of residual cash flow resulting from a CMO will depend on, among other things, the characteristics of the mortgage assets, the coupon rate of each class of CMO, prevailing interest rates, the amount of
administrative expenses and the prepayment experience on the mortgage assets. In particular, the yield to maturity on CMO residuals is extremely sensitive to prepayments on the related underlying mortgage assets, in the same manner as an
interest-only (or IO) class of stripped mortgage-backed securities (described below). In addition, if a series of a CMO includes a class that bears interest at an adjustable rate, the yield to maturity on the related CMO residual will also be
extremely sensitive to changes in the level of the index upon which interest rate adjustments are based. As described below with respect to stripped mortgage-backed securities, in certain circumstances the Fund may fail to recoup fully its initial
investment in a CMO residual. CMO residuals are generally purchased and sold by institutional investors through several investment banking firms acting as brokers or dealers. CMO residuals may, or pursuant to an exemption therefrom, may not, have
been registered under the Securities Act. CMO residuals, whether or not registered under the Securities Act, may be subject to certain restrictions on transferability. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><I>Adjustable Rate Mortgage-Backed Securities.</I></B>&nbsp;&nbsp;&nbsp;&nbsp;ARMs have interest rates that reset at periodic intervals. Acquiring ARMs
permits the Fund to participate in increases in prevailing current interest rates through periodic adjustments in the coupons of mortgages underlying the pool on which ARMs are based. Such ARMs generally have higher current yield and lower price
fluctuations than is the case with more traditional fixed income debt securities of comparable rating and maturity. In addition, when prepayments of principal are made on the underlying mortgages during periods of rising interest rates, the Fund can
reinvest the proceeds of such prepayments at rates higher than those at which they were previously invested. Mortgages underlying most ARMs, however, have limits on the allowable annual or lifetime increases that can be made in the interest rate
that the mortgagor pays. Therefore, if current interest rates rise above such limits over the period of the limitation, the Fund, when holding an ARM, does not benefit from further increases in interest rates. Moreover, when interest rates are in
excess of coupon rates (<I>i.e</I>., the rates being paid by mortgagors) of the mortgages, ARMs behave more like fixed income securities and less like adjustable-rate securities and are subject to the risks associated with fixed income securities.
In addition, during periods of rising interest rates, increases in the coupon rate of adjustable-rate mortgages generally lag current market interest rates slightly, thereby creating the potential for capital depreciation on such securities. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><I>Stripped Mortgage-Backed Securities.</I></B>&nbsp;&nbsp;&nbsp;&nbsp;SMBSs are derivative multi-class mortgage securities. SMBSs may be issued by
agencies or instrumentalities of the U.S. Government, or by private originators of, or investors in, mortgage loans, including savings and loan associations, mortgage banks, commercial banks, investment banks and special purpose entities of the
foregoing. SMBSs are usually structured with two classes that receive different proportions of the interest and principal distributions on a pool of mortgage assets. A common type of SMBS will have one class receiving some of the interest and most
of the principal from the mortgage assets, while the other class will receive most of the interest and the remainder of the principal. In the most extreme case, one class will receive all of the interest (the 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 related underlying mortgage assets, and a rapid rate of
principal payments may have a material adverse effect on the Fund&#146;s yield to maturity from these securities. If the underlying mortgage assets experience greater than anticipated prepayments of principal, the Fund may fail to recoup some or all
of its initial investment in these securities even if the security is in one of the highest rating categories. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><I>Collateralized Debt
Obligations.</I></B>&nbsp;&nbsp;&nbsp;&nbsp;The Fund may invest CDOs which include CBOs, CLOs and other similarly structured securities. CBOs and CLOs are types of asset-backed securities. A CBO is a trust which is often backed by a diversified pool
of high risk, below investment grade fixed income securities. The collateral can be from many different types of fixed-income securities such as high-yield debt, residential privately-issued mortgage-related
</P>
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securities, commercial privately-issued mortgage-related securities, trust preferred securities and emerging market debt. 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. CDOs may charge management fees and
administrative expenses. For both CBOs and CLOs, the cash flows from the trust are split into two or more portions, called tranches, varying in risk and yield. The riskiest portion is the &#147;equity&#148; tranche which bears the bulk of defaults
from the bonds or loans in the trust and serves to protect the other, more senior tranches from default in all but the most severe circumstances. Since it is partially protected from defaults, a senior tranche from a CBO trust or CLO trust typically
has higher ratings and lower yields than the underlying securities, and can be rated investment grade. Despite the protection from the equity tranche, CBO or 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 and aversion to CBO or CLO securities as a class. The Fund may invest in any tranche, including the equity tranche, of a CBO
or CLO. The risks of an investment in a CDO depend largely on the type of the collateral securities and the class of the CDO in which the Fund invests. Normally, CBOs, CLOs and other CDOs are privately offered and sold, and thus are not registered
under the securities laws. As a result, investments in CDOs may be characterized by the Fund as illiquid securities; however, an active dealer market may exist for CDOs allowing a CDO to qualify under Rule&nbsp;144A under the Securities Act. In
addition to the normal risks associated with debt instruments discussed elsewhere in this prospectus and in the Statement of Additional Information (<I>e.g.</I>, interest rate risk and default risk), CDOs carry additional risks including, but not
limited to: (i)&nbsp;the possibility that distributions from collateral securities will not be adequate to make interest or other payments; (ii)&nbsp;the quality of the collateral may decline in value or default; (iii)&nbsp;the Fund may invest in
CDOs that are subordinate to other classes; and (iv)&nbsp;the complex structure of the security may not be fully understood at the time of investment and may produce disputes with the issuer or unexpected investment results. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><I>Asset-Backed Securities.</I></B>&nbsp;&nbsp;&nbsp;&nbsp;Asset-backed securities (&#147;ABS&#148;) are bonds backed by pools of loans or other
receivables. ABS are created from many types of assets, including auto loans, credit card receivables, home equity loans and student loans. ABS are typically issued through special purpose vehicles that are bankruptcy remote from the issuer of the
collateral. The credit quality of an ABS transaction depends on the performance of the underlying assets. To protect ABS investors from the possibility that some borrowers could miss payments or even default on their loans, ABS include various forms
of credit enhancement. Some ABS, particularly home equity loan ABS, are subject to interest rate risk and prepayment risk. A change in interest can affect the pace of payments on the underlying loans, which in turn affects total return on the
securities. ABS also carry credit or default risk. If many borrowers on the underlying loans default, losses could exceed the credit enhancement level and result in losses to investors in an ABS. In addition, ABS have structural risk due to a unique
characteristic known as early amortization, or early payout, risk. Built into the structure of most ABS are triggers for early payout, designed to protect investors from losses. These triggers are unique to each transaction and can include a big
rise in defaults on the underlying loans, a sharp drop in the credit enhancement level or even the bankruptcy of the originator. Once early amortization begins, all incoming loan payments (after expenses are paid) are used to pay investors as
quickly as possible based upon a predetermined priority of payment. The Fund may invest in any tranche, including the equity tranche, of an ABS. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund
may invest in other types of asset-backed securities that are offered in the marketplace, including Enhanced Equipment Trust Certificates (&#147;EETCs&#148;). EETCs are typically issued by specially-created trusts established by airlines, railroads,
or other transportation corporations. The proceeds of EETCs are used to purchase equipment, such as airplanes, railroad cars, or other equipment, which in turn serve as collateral for the related issue of the EETCs. The equipment generally is leased
by the airline, railroad or other corporation, which makes rental payments to provide the projected cash flow for payments to EETC holders. Holders of EETCs must look to the collateral securing the certificates, typically together with a guarantee
provided by the lessee corporation or its parent company for the payment of lease obligations, in the case of default in the payment of principal and interest on the EETCs. [However, because principal and interest payments on EETCs are funded in the
ordinary course by the lessee corporation, the Fund treats EETCs as corporate bonds/obligations for purposes of compliance testing and related classifications.] </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Please see &#147;Investment Objectives and Policies&#151;Mortgage-Related and Other Asset-Backed Securities&#148; in the Statement of Additional Information
and &#147;Principal Risks of the Fund&#151;Mortgage-Related and Asset-Backed Securities Risk&#148; in this prospectus for a more detailed description of the types of mortgage-related and other asset-backed securities in which the Fund may invest and
their related risks. </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Municipal Bonds </B></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Municipal bonds share the attributes of debt/fixed income securities in general, but are generally issued by states, municipalities and other political
subdivisions, agencies, authorities and instrumentalities of states and multi-state agencies or authorities, and may be either taxable or <FONT STYLE="white-space:nowrap">tax-exempt</FONT> instruments. The municipal bonds that the Fund may purchase
include without limit general obligation bonds and limited obligation bonds (or revenue bonds), including industrial development bonds issued pursuant to former federal tax law. General obligation bonds are obligations involving the credit of an
issuer possessing taxing power and are payable from such issuer&#146;s general revenues and not from any particular source. Limited obligation bonds are payable only from the revenues derived from a particular facility or class of facilities or, in
some cases, from the proceeds of a special excise or other specific revenue source. Tax exempt private activity bonds and industrial development bonds generally are also limited obligation bonds and thus are not payable from the issuer&#146;s
general revenues. The credit and quality of private activity bonds and industrial development bonds are usually related to the credit of the corporate user of the facilities. Payment of interest on and repayment of principal of such bonds is the
responsibility of the corporate user (and/or any guarantor). </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may invest in Build America Bonds, which are tax credit bonds created by the
American Recovery and Reinvestment Act of 2009, which authorizes state and local governments to issue Build America Bonds as taxable bonds in 2009 and 2010, without volume limitations, to finance any capital expenditures for which such issuers could
otherwise issue traditional <FONT STYLE="white-space:nowrap">tax-exempt</FONT> bonds. State and local governments may receive a direct federal subsidy payment for a portion of their borrowing costs on Build America Bonds equal to 35% of the total
coupon interest paid to investors. The state or local government issuer can elect to either take the federal subsidy or pass the 35% tax credit along to bondholders. The Fund&#146;s investments in Build America Bonds will result in taxable income
and the Fund may elect to pass through to shareholders the corresponding tax credits. The tax credits can generally be used to offset federal income taxes and the alternative minimum tax, but such credits are generally not refundable. Build America
Bonds involve similar risks as municipal bonds, including credit and market risk. They are intended to assist state and local governments in financing capital projects at lower borrowing costs and are likely to attract a broader group of investors
than <FONT STYLE="white-space:nowrap">tax-exempt</FONT> municipal bonds. For example, taxable funds, such as the Fund, may choose to invest in Build America Bonds. Although Build America Bonds were only authorized for issuance during 2009 and 2010,
the program may have resulted in reduced issuance of <FONT STYLE="white-space:nowrap">tax-exempt</FONT> municipal bonds during the same period. The Build America Bond program expired on December&nbsp;31, 2010, at which point no further issuance of
new Build America Bonds was permitted. As of the date of this prospectus, there is no indication that Congress will renew the program to permit issuance of new Build America Bonds. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may invest in <FONT STYLE="white-space:nowrap">pre-refunded</FONT> municipal bonds. <FONT STYLE="white-space:nowrap">Pre-refunded</FONT> municipal
bonds are <FONT STYLE="white-space:nowrap">tax-exempt</FONT> bonds that have been refunded to a call date prior to the final maturity of principal, or, in the case of <FONT STYLE="white-space:nowrap">pre-refunded</FONT> municipal bonds commonly
referred to as <FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">&#147;escrowed-to-maturity</FONT></FONT> bonds,&#148; to the final maturity of principal, and remain outstanding in the municipal market. The payment of principal and
interest of the <FONT STYLE="white-space:nowrap">pre-refunded</FONT> municipal bonds held by the Fund 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 (&#147;Agency Securities&#148;)). While still <FONT STYLE="white-space:nowrap">tax-exempt,</FONT> <FONT STYLE="white-space:nowrap">pre-refunded</FONT> municipal bonds usually will bear an AAA/Aaa rating (if a <FONT
STYLE="white-space:nowrap">re-rating</FONT> has been requested and paid for) because they are backed by U.S. Treasury securities or Agency Securities. Because the payment of principal and interest is generated from securities held in an escrow
account established by the municipality and an independent escrow agent, 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 <FONT STYLE="white-space:nowrap">pre-refunded</FONT> 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 <FONT STYLE="white-space:nowrap">pre-refund</FONT> the older, higher cost debt. Investment in
<FONT STYLE="white-space:nowrap">pre-refunded</FONT> municipal bonds held by the Fund may subject the Fund to interest rate risk and market risk. In addition, while a secondary market exists for <FONT STYLE="white-space:nowrap">pre-refunded</FONT>
municipal bonds, if the Fund sells <FONT STYLE="white-space:nowrap">pre-refunded</FONT> 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. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may invest in municipal lease obligations. A lease is not a full faith and credit obligation of the issuer and is usually backed only by the
borrowing government&#146;s unsecured pledge to make annual appropriations for lease payments. There have been challenges to the legality of lease financing in numerous states, and, from time to time, certain municipalities have considered not
appropriating money for lease payments. In deciding whether to purchase </P>
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a lease obligation for the Fund, PIMCO will assess the financial condition of the borrower, the merits of the project, the level of public support for the project and the legislative history of
lease financing in the state. These securities may be less readily marketable than other municipal securities. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Some longer-term municipal bonds give the
investor the right to &#147;put&#148; or sell the security at par (face value) within a specified number of days following the investor&#146;s request&#151;usually one to seven days. This demand feature enhances a security&#146;s liquidity by
shortening its effective maturity and enables it to trade at a price equal to or very close to par. If a demand feature terminates prior to being exercised, the Fund would hold the longer-term security, which could experience substantially more
volatility. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may invest in municipal warrants, which are essentially call options on municipal bonds. In exchange for a premium, municipal
warrants give the purchaser the right, but not the obligation, to purchase a municipal bond in the future. The Fund may purchase a warrant to lock in forward supply in an environment in which the current issuance of bonds is sharply reduced. Like
options, warrants may expire worthless and may have reduced liquidity. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may invest in municipal bonds with credit enhancements such as letters of
credit, municipal bond insurance and standby bond purchase agreements (&#147;SBPAs&#148;). Letters of credit are issued by a third party, usually a bank, to enhance liquidity and to ensure repayment of principal and any accrued interest if the
underlying municipal bond should default. Municipal bond insurance, which is usually purchased by the bond issuer from a private, nongovernmental insurance company, provides an unconditional and irrevocable guarantee that the insured bond&#146;s
principal and interest will be paid when due. Insurance does not guarantee the price of the bond. The credit rating of an insured bond reflects the credit rating of the insurer, based on its claims-paying ability. The obligation of a municipal bond
insurance company to pay a claim extends over the life of each insured bond. Although defaults on insured municipal bonds have been low to date and municipal bond insurers have met their claims, there is no assurance that this will continue. A
higher-than expected default rate could strain the insurer&#146;s loss reserves and adversely affect its ability to pay claims to bondholders. Because a significant portion of insured municipal bonds that have been issued and are outstanding is
insured by a small number of insurance companies, not all of which have the highest credit rating, an event involving one or more of these insurance companies, such as a credit rating downgrade, could have a significant adverse effect on the value
of the municipal bonds insured by such insurance company or companies and on the municipal bond markets as a whole. An SBPA is a liquidity facility provided to pay the purchase price of bonds that cannot be
<FONT STYLE="white-space:nowrap">re-marketed.</FONT> The obligation of the liquidity provider (usually a bank) is only to advance funds to purchase tendered bonds that cannot be <FONT STYLE="white-space:nowrap">re-marketed</FONT> and does not cover
principal or interest under any other circumstances. The liquidity provider&#146;s obligations under the SBPA are usually subject to numerous conditions, including the continued creditworthiness of the underlying borrower. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Indebtedness, Loan Participations and Assignments </B></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The
Fund may purchase indebtedness and participations in commercial loans, as well as interests and/or servicing or similar rights in such loans. Such investments may be secured or unsecured and may be newly-originated (and may be specifically designed
for the Fund). Indebtedness is different from traditional debt securities in that debt securities are part of a large issue of securities to the public and indebtedness may not be a security, but may represent a specific commercial loan to a
borrower. Loan participations typically represent direct participation, together with other parties, in a loan to a corporate borrower, and generally are offered by banks or other financial institutions or lending syndicates. The Fund may
participate in such syndications, or can buy part of a loan, becoming a part lender. When purchasing indebtedness and loan participations, the Fund assumes the credit risk associated with the corporate borrower and may assume the credit risk
associated with an interposed bank or other financial intermediary. The indebtedness and loan participations in which the Fund intends to invest may not be rated by any nationally recognized rating service. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">A loan is often administered by an agent bank acting as agent for all holders. The agent bank administers the terms of the loan, as specified in the loan
agreement. In addition, the agent bank is normally responsible for the collection of principal and interest payments from the corporate borrower and the apportionment of these payments to the credit of all institutions which are parties to the loan
agreement. Unless, under the terms of the loan or other indebtedness, the Fund has direct recourse against the corporate borrower, the Fund may have to rely on the agent bank or other financial intermediary to apply appropriate credit remedies
against a corporate borrower. </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">A financial institution&#146;s employment as agent bank might be terminated in the event that it fails to observe
a requisite standard of care or becomes insolvent. A successor agent bank would generally be appointed to replace the terminated agent bank, and assets held by the agent bank under the loan agreement would likely remain available to holders of such
indebtedness. However, if assets held by the agent bank for the benefit of the Fund were determined to be subject to the claims of the agent bank&#146;s general creditors, the Fund might incur certain costs and delays in realizing payment on a loan
or loan participation and could suffer a loss of principal and/or interest. In situations involving other interposed financial institutions (<I>e.g.</I>, an insurance company or governmental agency) similar risks may arise. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Purchasers of loans and other forms of direct indebtedness depend primarily upon the creditworthiness of the corporate borrower for payment of principal and
interest. If the Fund does not receive scheduled interest or principal payments on such indebtedness, the NAV, market share price and/or yield of the Common Shares could be adversely affected. Loans that are fully secured offer the Fund more
protection than an unsecured loan in the event of <FONT STYLE="white-space:nowrap">non-payment</FONT> of scheduled interest or principal. However, there is no assurance that the liquidation of collateral from a secured loan would satisfy the
corporate borrower&#146;s obligation, or that the collateral can be liquidated. In the event of the bankruptcy of a borrower, the Fund could experience delays or limitations in its ability to realize the benefits of any collateral securing a loan.
</P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may invest in loan participations with credit quality comparable to that of issuers of its securities investments. Indebtedness of companies
whose creditworthiness is poor involves substantially greater risks, and may be highly speculative. Some companies may never pay off their indebtedness, or may pay only a small fraction of the amount owed. Consequently, when investing in
indebtedness of companies with poor credit, the Fund bears a substantial risk of losing the entire amount invested. The Fund may make investments in indebtedness and loan participations to achieve capital appreciation, rather than to seek income.
</P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund will limit the amount of its total assets that it will invest in any one issuer and the Fund will limit the amount of its total assets that it
will invest in issuers within the same industry (except with respect to the Fund&#146;s policy to concentrate in privately-issued (commonly known as <FONT STYLE="white-space:nowrap">&#147;non-agency&#148;)</FONT> mortgage-related securities). For
purposes of this limit, the Fund generally will treat the corporate borrower as the &#147;issuer&#148; of indebtedness held by the Fund. In the case of loan participations where a bank or other lending institution serves as a financial intermediary
between the Fund and the corporate borrower, if the participation does not shift to the Fund the direct debtor-creditor relationship with the corporate borrower, SEC interpretations require the Fund to treat both the lending bank or other lending
institution and the corporate borrower as &#147;issuers.&#148; Treating a financial intermediary as an issuer of indebtedness may restrict the Fund&#146;s ability to invest in indebtedness related to a single financial intermediary, or a group of
intermediaries engaged in the same industry, even if the underlying borrowers represent many different companies and industries. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Loans and other types of
direct indebtedness (which a Fund may originate, invest in or otherwise gain exposure to) may not be readily marketable and may be subject to restrictions on resale. In some cases, negotiations involved in disposing of indebtedness may require weeks
to complete. Consequently, some indebtedness may be difficult or impossible to dispose of readily at what PIMCO believes to be a fair price. In addition, valuation of illiquid indebtedness involves a greater degree of judgment in determining a
Fund&#146;s net asset value than if that value were based on available market quotations, and could result in significant variations in the Fund&#146;s daily share price. At the same time, some loan interests are traded among certain financial
institutions and accordingly may be deemed liquid. As the market for different types of indebtedness develops, the liquidity of these instruments is expected to improve. In addition, the Fund currently intends to treat indebtedness for which there
is no readily available market as illiquid for purposes of the Fund&#146;s limitation on illiquid investments. Investments in loan participations are considered to be debt obligations for purposes of the Trust&#146;s investment restriction relating
to the lending of funds or assets by the Fund. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Investments in loans through a direct assignment of the financial institution&#146;s interests with
respect to the loan may involve additional risks to the Fund. The purchaser of an assignment typically succeeds to all the rights and obligations under the loan agreement with the same rights and obligations as the assigning lender. Assignments may,
however, be arranged through private negotiations between potential assignees and potential assignors, and the rights and obligations acquired by the purchaser of an assignment may differ from, and be more limited than, those held by the assigning
lender. If a loan is foreclosed, the Fund could become part owner of any collateral, and would </P>
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bear the costs and liabilities associated with owning and disposing of the collateral. In addition, it is conceivable that under emerging legal theories of lender liability, the Fund could be
held liable as <FONT STYLE="white-space:nowrap">co-lender.</FONT> It is unclear whether loans and other forms of direct indebtedness offer securities law protections against fraud and misrepresentation. In the absence of definitive regulatory
guidance, the Fund relies on PIMCO&#146;s research in an attempt to avoid situations where fraud or misrepresentation could adversely affect the Fund. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may invest in <FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">debtor-in-possession</FONT></FONT> financings (commonly known as
&#147;DIP financings&#148;). DIP financings are arranged when an entity seeks the protections of the bankruptcy court under Chapter 11 of the U.S. Bankruptcy Code. These financings allow the entity to continue its business operations while
reorganizing under Chapter 11. Such financings constitute senior liens on unencumbered security (<I>i.e.</I>, security not subject to other creditors&#146; claims). There is a risk that the entity will not emerge from Chapter 11 and be forced to
liquidate its assets under Chapter 7 of the U.S. Bankruptcy Code. In the event of liquidation, the Fund&#146;s only recourse will be against the property securing the DIP financing. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may act as the originator for direct loans to a borrower. Direct loans between the Fund and a borrower may not be administered by an underwriter or
agent bank. The Fund may provide financing to commercial borrowers directly or through companies acquired (or created) and owned by or otherwise affiliated with the Fund. The terms of the direct loans are negotiated with borrowers in private
transactions. Furthermore, a direct loan may be secured or unsecured. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">In determining whether to make a direct loan, the Fund will rely primarily upon the
creditworthiness of the borrower and/or any collateral for payment of interest and repayment of principal. In making a direct loan, the Fund is exposed to the risk that the borrower may default or become insolvent and, consequently, that the Fund
will lose money on the loan. Furthermore, direct loans may subject the Fund to liquidity and interest rate risk and certain direct loans may be deemed illiquid. Direct loans are not publicly traded and may not have a secondary market. The lack of a
secondary market for direct loans may have an adverse impact on the ability of the Fund to dispose of a direct loan and/or to value the direct loan. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">When
engaging in direct lending, the Fund&#146;s performance may depend, in part, on the ability of the Fund to originate loans on advantageous terms. In originating and purchasing loans, the Fund will compete with a broad spectrum of lenders. Increased
competition for, or a diminishment in the available supply of, qualifying loans could result in lower yields on such loans, which could reduce Fund performance. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">As part of its lending activities, the Fund may originate loans to companies that are experiencing significant financial or business difficulties, including
companies involved in bankruptcy or other reorganization and liquidation proceedings. Although the terms of such financing may result in significant financial returns to the Fund, they involve a substantial degree of risk. The level of analytical
sophistication, both financial and legal, necessary for successful financing to companies experiencing significant business and financial difficulties is unusually high. Different types of assets may be used as collateral for the Fund&#146;s loans
and, accordingly, the valuation of and risks associated with such collateral will vary by loan. There is no assurance that the Fund will correctly evaluate the value of the assets collateralizing the Fund&#146;s loans or the prospects for a
successful reorganization or similar action. In any reorganization or liquidation proceeding relating to a company that the Fund funds, the Fund may lose all or part of the amounts advanced to the borrower or may be required to accept collateral
with a value less than the amount of the loan advanced by the Fund or its affiliates to the borrower. Furthermore, in the event of a default by a borrower, the Fund may have difficulty disposing of the assets used as collateral for a loan. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Various state licensing requirements could apply to the Fund with respect to investments in, or the origination and servicing of, loans and similar assets.
The licensing requirements could apply depending on the location of the borrower, the location of the collateral securing the loan, or the location where the Fund or PIMCO operates or has offices. In states in which it is licensed, the Fund or PIMCO
will be required to comply with applicable laws and regulations, including consumer protection and anti-fraud laws, which could impose restrictions on the Fund&#146;s or PIMCO&#146;s ability to take certain actions to protect the value of its
investments in such assets and impose compliance costs. Failure to comply with such laws and regulations could lead to, among other penalties, a loss of the Fund&#146;s or PIMCO&#146;s license, which in turn could require the Fund to divest assets
located in or secured by real property located in that state. These risks will also apply to issuers and entities in which the Fund invests that hold similar assets, as well as any origination company or servicer in which the Fund owns an interest.
</P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">50 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Loan origination and servicing companies are routinely involved in legal proceedings concerning matters that
arise in the ordinary course of their business. These legal proceedings range from actions involving a single plaintiff to class action lawsuits with potentially tens of thousands of class members. In addition, a number of participants in the loan
origination and servicing industry (including control persons of industry participants) have been the subject of regulatory actions by state regulators, including state Attorneys General, and by the federal government. Governmental investigations,
examinations or regulatory actions, or private lawsuits, including purported class action lawsuits, may adversely affect such companies&#146; financial results. To the extent the Fund seeks to engage in origination and/or servicing directly, or has
a financial interest in, or is otherwise affiliated with, an origination or servicing company, the Fund will be subject to enhanced risks of litigation, regulatory actions and other proceedings. As a result, the Fund may be required to pay legal
fees, settlement costs, damages, penalties or other charges, any or all of which could materially adversely affect the Fund and its investments. See </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Delayed Funding Loans and Revolving Credit Facilities </B></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may enter into, or acquire participations in, delayed funding loans and revolving credit facilities, in which a bank or other 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 Fund to increase its investment in a company at a time when it might not be desirable to do so (including at a
time when the company&#146;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. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Bonds </B></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may invest in a wide variety of bonds of
varying maturities issued by <FONT STYLE="white-space:nowrap">non-U.S.</FONT> (foreign) and U.S. corporations and other business entities, governments and quasi-governmental entities and municipalities and other issuers. Bonds may include, among
other things, fixed or variable/floating-rate debt obligations, including bills, notes, debentures, money market instruments and similar instruments and securities. Bonds generally are used by corporations as well as governments and other issuers to
borrow money from investors. The issuer pays the investor a fixed or variable rate of interest and normally must repay the amount borrowed on or before maturity. Certain bonds are &#147;perpetual&#148; in that they have no maturity date. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Preferred Securities </B></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Preferred securities represent an
equity interest in a company that generally entitles the holder to receive, in preference to the holders of other stocks such as common stocks, dividends and a fixed share of the proceeds resulting from liquidation of the company. Unlike common
stocks, preferred stocks usually do not have voting rights. Preferred stocks in some instances are convertible into common stock. Some preferred stocks also entitle their holders to receive additional liquidation proceeds on the same basis as
holders of a company&#146;s common stock, and thus also represent an ownership interest in the company. Some preferred stocks offer a fixed rate of return with no maturity date. Because they never mature, these preferred stocks may act like
long-term bonds, can be more volatile than other types of preferred stocks and may have heightened sensitivity to changes in interest rates. Other preferred stocks have a variable dividend, generally determined on a quarterly or other periodic
basis, either according to a formula based upon a specified premium or discount to the yield on particular U.S. Treasury securities or based on an auction process, involving bids submitted by holders and prospective purchasers of such stocks.
Although they are equity securities, preferred securities have certain characteristics of both debt securities and common stock. They are like debt securities in that their stated income is generally contractually fixed. They are like common stocks
in that they do not have rights to precipitate bankruptcy proceedings or collection activities in the event of missed payments. Furthermore, preferred securities have many of the key characteristics of equity due to their subordinated position in an
issuer&#146;s capital structure and because their quality and value are heavily dependent on the profitability of the issuer rather than on any legal claims to specific assets or cash flows. Because preferred securities represent an equity ownership
interest in a company, their value usually will react more strongly than bonds and other debt instruments to actual or perceived changes in a company&#146;s financial condition or prospects, or to fluctuations in the equity markets. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">In order to be payable, dividends on preferred securities must be declared by the issuer&#146;s board of directors. In addition, distributions on preferred
securities may be subject to deferral and thus may not be automatically payable. Income payments on some preferred securities are cumulative, causing dividends and distributions to accrue even if </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">51 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
they are not declared by the board of directors of the issuer or otherwise made payable. Other preferred securities are <FONT STYLE="white-space:nowrap">non-cumulative,</FONT> meaning that
skipped dividends and distributions do not continue to accrue. There is no assurance that dividends on preferred securities in which the Fund invests will be declared or otherwise made payable. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Preferred securities have a liquidation value that generally equals their original purchase price at the date of issuance. The market values of preferred
securities may be affected by favorable and unfavorable changes affecting the issuers&#146; industries or sectors. They also may be affected by actual and anticipated changes or ambiguities in the tax status of the security and by actual and
anticipated changes or ambiguities in tax laws, such as changes in corporate and individual income tax rates or the characterization of dividends as <FONT STYLE="white-space:nowrap">tax-advantaged.</FONT> The dividends paid on the preferred
securities in which the Fund may invest might not be eligible for <FONT STYLE="white-space:nowrap">tax-advantaged</FONT> &#147;qualified dividend&#148; treatment. See &#147;Tax Matters.&#148; Because the claim on an issuer&#146;s earnings
represented by preferred securities may become disproportionately large when interest rates fall below the rate payable on the securities or for other reasons, the issuer may redeem preferred securities, generally after an initial period of call
protection in which the security is not redeemable. Thus, in declining interest rate environments in particular, the Fund&#146;s holdings of higher dividend-paying preferred securities may be reduced and the Fund may be unable to acquire securities
paying comparable rates with the redemption proceeds. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Convertible Securities and Synthetic Convertible Securities </B></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Convertible securities (<I>i.e.</I>, debt securities that may be converted at either a stated price or stated rate into underlying shares of common stock) have
general characteristics similar to both debt securities and equity securities. Although to a lesser extent than with debt obligations, the market value of convertible securities tends to decline as interest rates increase and, conversely, tends to
increase as interest rates decline. In addition, because of the conversion feature, the market value of convertible securities tends to vary with fluctuations in the market value of the underlying common stocks and, therefore, also will react to
variations in the general market for equity securities. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Convertible securities are investments that provide for a stable stream of income with generally
higher yields than common stocks. There can be no assurance of current income because the issuers of the convertible securities may default on their obligations. Convertible securities, however, generally offer lower interest or dividend yields than
<FONT STYLE="white-space:nowrap">non-convertible</FONT> debt securities of similar credit quality because of the potential for equity-related capital appreciation. A convertible security, in addition to providing current income, offers the potential
for capital appreciation through the conversion feature, which enables the holder to benefit from increases in the market price of the underlying common stock. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may invest in synthetic convertible securities, which are created through a combination of separate securities that possess the two principal
characteristics of a traditional convertible security, that is, an income-producing component and the right to acquire a convertible component. The income-producing component is achieved by investing in
<FONT STYLE="white-space:nowrap">non-convertible,</FONT> income-producing securities such as bonds, preferred stocks and money market instruments. The convertible component is achieved by purchasing warrants or options to buy common stock at a
certain exercise price, or options on a stock index. The Fund 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. The values of synthetic convertible securities will respond differently to market fluctuations than a traditional convertible security because a
synthetic convertible is composed of two or more separate securities or instruments, each with its own market value. Synthetic convertible securities are also subject to the risks associated with derivatives. See &#147;Principal Risks of the
Fund&#151;Derivatives Risk.&#148; In addition, if the value of the underlying common stock or the level of the index involved in the convertible element falls below the strike price of the warrant or option, the warrant or option may lose all value.
</P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Reverse Repurchase Agreements and Dollar Rolls </B></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">As
described under &#147;Use of Leverage,&#148; the Fund initially intends to use, among other things, reverse repurchase agreements and/or dollar rolls to add leverage to its portfolio. Under a reverse repurchase agreement, the Fund sells securities
to a bank or broker dealer and agrees to repurchase the securities at a mutually agreed future date and price. A dollar roll is similar to a reverse repurchase agreement except that the counterparty with which the Fund enters into a dollar roll
transaction is not obligated to return the same securities as those originally sold by the Fund, but only securities that are &#147;substantially identical.&#148; Generally, the effect of a reverse repurchase agreement or dollar
</P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
roll transaction is that the Fund can recover and reinvest all or most of the cash invested in the portfolio securities involved during the term of the agreement and still be entitled to the
returns associated with those portfolio securities, thereby resulting in a transaction similar to a borrowing and giving rise to leverage for the Fund. The Fund will incur interest expense as a cost of utilizing reverse repurchase agreements and
dollar rolls. In the event the buyer of securities under a reverse repurchase agreement or dollar roll files for bankruptcy or becomes insolvent, the Fund&#146;s use of the proceeds of the agreement may be restricted pending a determination by the
other party, or its trustee or receiver, whether to enforce the Fund&#146;s obligation to repurchase the securities. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Commercial Paper </B></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Commercial paper represents short-term unsecured promissory notes issued in bearer form by corporations such as banks or bank holding companies and finance
companies. The rate of return on commercial paper may be linked or indexed to the level of exchange rates between the U.S. dollar and a foreign currency or currencies. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>U.S. Government Securities </B></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">U.S. Government securities
are obligations of and, in certain cases, guaranteed by, the U.S. Government, its agencies or instrumentalities. The U.S. Government does not guarantee the NAV of the Fund&#146;s shares. Some U.S. Government securities, such as Treasury bills, notes
and bonds, and securities guaranteed by GNMA, are supported by the full faith and credit of the United States; others, such as those of the FHLBs, are supported by the right of the issuer to borrow from the U.S.&nbsp;Department of the Treasury (the
&#147;U.S. Treasury&#148;); others, such as those of FNMA, are supported by the discretionary authority of the U.S. Government to purchase the agency&#146;s obligations; and still others, such as those of the Student Loan Marketing Association, are
supported only by the credit of the instrumentality. U.S. Government securities may include zero coupon securities, which do not distribute interest on a current basis and tend to be subject to greater risk than interest-paying securities of similar
maturities. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Bank Capital Securities and Bank Obligations </B></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may invest in bank capital securities of both <FONT STYLE="white-space:nowrap">non-U.S.</FONT> (foreign) and U.S. issuers. Bank capital securities are
issued by banks to help fulfill their regulatory capital requirements. There are three common types of bank capital: Lower Tier II, Upper Tier II and Tier I. Upper Tier II securities are commonly thought of as hybrids of debt and preferred stock.
Upper Tier II securities are often perpetual (with no maturity date), callable and have a cumulative interest deferral feature. This means that under certain conditions, the issuer bank can withhold payment of interest until a later date. However,
such deferred interest payments generally earn interest. Tier I securities often take the form of trust preferred securities. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may also invest in
other bank obligations including without limit certificates of deposit, bankers&#146; acceptances and fixed time deposits. Certificates of deposit are negotiable certificates that are issued against funds deposited in a commercial bank for a
definite period of time and that earn a specified return. Bankers&#146; acceptances are negotiable drafts or bills of exchange, normally drawn by an importer or exporter to pay for specific merchandise, which are &#147;accepted&#148; by a bank,
meaning, in effect, that the bank unconditionally agrees to pay the face value of the instrument on maturity. Fixed time deposits are bank obligations payable at a stated maturity date and bearing interest at a fixed rate. Fixed time deposits may be
withdrawn on demand by the investor, but may be subject to early withdrawal penalties which vary depending upon market conditions and the remaining maturity of the obligation. There are generally no contractual restrictions on the right to transfer
a beneficial interest in a fixed time deposit to a third party, although there is generally no market for such deposits. The Fund may also hold funds on deposit with its custodian bank in an interest-bearing account for temporary purposes. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Zero-coupon Bonds, <FONT STYLE="white-space:nowrap">Step-ups</FONT> and
<FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">Payment-in-kind</FONT></FONT> Securities </B></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Zero-coupon bonds pay interest only at
maturity rather than at intervals during the life of the security. Like <FONT STYLE="white-space:nowrap">zero-coupon</FONT> bonds, &#147;step up&#148; bonds pay no interest initially but eventually begin to pay a coupon rate prior to maturity, which
rate may increase at stated intervals during the life of the security. <FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">Payment-in-kind</FONT></FONT> securities (&#147;PIKs&#148;) are debt obligations that pay &#147;interest&#148;
in the form of other debt obligations, instead of in cash. Each of these instruments is normally issued and traded at a deep discount from face value. Zero-coupon bonds, <FONT STYLE="white-space:nowrap">step-ups</FONT> and PIKs allow an issuer to
avoid or delay the need to generate cash to meet current interest payments and, as a result, may involve greater credit risk than bonds that pay interest currently or in cash. The Fund would be required to distribute the income on these instruments
as it accrues, even though the Fund will not receive the income on a current basis or in cash. Thus, the Fund may have to sell other investments, including when it may not be advisable to do so, to make income distributions to its shareholders. </P>

 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">53 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Inflation-indexed Bonds </B></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Inflation-indexed bonds (other than municipal inflation-indexed bonds and certain corporate inflation-indexed bonds) are fixed income securities the principal
value of which 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 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. 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. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">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. 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. See &#147;Tax Matters.&#148; </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Event-linked Instruments </B></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may obtain
event-linked exposure by investing in &#147;event-linked bonds&#148; or &#147;event-linked swaps&#148; or by implementing &#147;event-linked strategies.&#148; Event-linked exposure results in gains or losses that typically are contingent upon, or
formulaically related to, defined trigger events. Examples of trigger events include hurricanes, earthquakes, weather-related phenomena or statistics relating to such events. Some event-linked bonds are commonly referred to as &#147;catastrophe
bonds.&#148; If a trigger event occurs, the Fund may lose a portion or its entire principal invested in the bond or notional amount on a swap. Event-linked exposure often provides for an extension of maturity to process and audit loss claims when a
trigger event has, or possibly has, occurred. An extension of maturity may increase volatility. Event-linked exposure may also expose the Fund to certain other 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. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Variable- and Floating-rate Securities
</B></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Variable- and floating-rate instruments are instruments 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 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. Due to their variable- or floating-rate features, these instruments will generally pay
higher levels of income in a rising interest rate environment and lower levels of income as interest rates decline. For the same reason, the market value of a variable- or floating-rate instrument is generally expected to have less sensitivity to
fluctuations in market interest rates than a fixed-rate instrument, although the value of a variable- or floating-rate instrument may nonetheless decline as interest rates rise and due to other factors, such as changes in credit quality. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund also may 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. </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Inverse Floaters </B></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">An inverse floater is a type of debt instrument that bears a floating or variable interest rate that moves in the opposite direction to interest rates
generally or the interest rate on another security or index. Changes in interest rates generally, or the interest rate of the other security or index, inversely affect the interest rate paid on the inverse floater, with the result that the inverse
floater&#146;s price will be considerably more volatile than that of a fixed-rate bond. [The Fund may invest without limit in inverse floaters, which brokers typically create by depositing an income-producing instrument, which may be a
mortgage-related security, in a trust. The trust in turn issues a variable rate security and inverse floaters. The interest rate for the variable rate security is typically determined by an index or an auction process, while the inverse floater
holder receives the balance of the income from the underlying income-producing instrument less an auction fee. The market prices of inverse floaters may be highly sensitive to changes in interest rates and prepayment rates on the underlying
securities, and may decrease significantly when interest rates increase or prepayment rates change. In a transaction in which the Fund purchases an inverse floater from a trust, and the underlying bond was held by the Fund prior to being deposited
into the trust, the Fund typically treats the transaction as a secured borrowing for financial reporting purposes. As a result, for financial reporting purposes, the Fund will generally incur a <FONT STYLE="white-space:nowrap">non-cash</FONT>
interest expense with respect to interest paid by the trust on the variable rate securities, and will recognize additional interest income in an amount directly corresponding to the <FONT STYLE="white-space:nowrap">non-cash</FONT> interest expense.
Therefore, the Fund&#146;s NAV per Common Share and performance are not affected by the <FONT STYLE="white-space:nowrap">non-cash</FONT> interest expense. This accounting treatment does not apply to inverse floaters acquired by the Fund when the
Fund did not previously own the underlying bond. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Derivatives </B></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may, but is not required to, use a variety of derivative instruments (both long and short positions) for both investment and risk management purposes.
The Fund may use various derivatives transactions to add leverage to its portfolio. See &#147;Use of Leverage.&#148; 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 individual debt instruments, interest rates, currencies or currency exchange rates, commodities and related indexes. Examples of derivative instruments that the Fund may use include, without limit, futures
and forward contracts (including foreign currency exchange contracts), call and put options (including options on futures contracts), credit default swaps, total return swaps, basis swaps and other swap agreements. The Fund&#146;s use of derivative
instruments involves risks different from, or possibly greater than, the risks associated with investment directly in securities and other more traditional investments. See &#147;Principal Risks of the Fund&#151;Derivatives Risk.&#148; Certain types
of derivative instruments that the Fund may utilize with some frequency are described elsewhere in this section, including those described under &#147;Certain Interest Rate Transactions,&#148; &#147;Structured Notes and Related Instruments&#148; and
&#147;Credit Default Swaps.&#148; Please see &#147;Investment Objectives and Policies&#151;Derivative Instruments&#148; in the Statement of Additional Information for additional information about these and other derivative instruments that the Fund
may use and the risks associated with such instruments. There is no assurance that these derivative strategies will be available at any time or that PIMCO will determine to use them for the Fund or, if used, that the strategies will be successful.
In addition, the Fund may be subject to certain restrictions on its use of derivative strategies imposed by guidelines of one or more rating agencies that may issue ratings for any preferred shares issued by the&nbsp;Fund. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Certain Interest Rate Transactions </B></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">In order to reduce
the interest rate risk inherent in the Fund&#146;s underlying investments and capital structure, the Fund may (but is not required to) enter into interest rate swap transactions. Interest rate swaps involve the exchange by the Fund with a
counterparty of their respective commitments to pay or receive interest, such as an exchange of fixed rate payments for floating rate payments. These transactions generally involve an agreement with the swap counterparty to pay a fixed or variable
rate payment in exchange for the counterparty paying the Fund the other type of payment stream (<I>i.e.</I>, variable or fixed). The payment obligation would be based on the notional amount of the swap. Other forms of interest rate swap agreements
in which the Fund may invest include without limitation interest rate caps, under which, in return for a premium, one party agrees to make payments to the other to the extent that interest rates exceed a specified rate, or &#147;cap;&#148; interest
rate floors, under which, in return for a premium, one party agrees to make payments to the other to the extent that interest rates fall below a specified rate, or &#147;floor;&#148; and interest rate &#147;collars,&#148; under which a party sells a
cap and purchases a floor or vice versa in an attempt to protect itself against interest rate movements exceeding given minimum or maximum levels. The Fund may (but is not required to) use interest rate swap transactions with the intent to reduce or
eliminate the risk that an increase in short-term interest rates could pose for the performance of the Fund&#146;s Common Shares as a result of leverage, and also may use these instruments for other hedging or investment purposes. Any termination of
an interest rate swap transaction could result in a termination payment by or to the Fund. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">55 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Credit Default Swaps </B></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may enter into credit default swaps for both investment and risk management purposes, as well as to add leverage to the Fund&#146;s portfolio. A
credit default swap may have as reference obligations one or more securities that are not currently held by the Fund. The protection &#147;buyer&#148; in a credit default swap is generally obligated to pay the protection &#147;seller&#148; an
upfront or a periodic stream of payments over the term of the contract provided that no credit event, such as a default, on a reference obligation has occurred. If a credit event occurs, the seller generally must pay the buyer the &#147;par
value&#148; (full notional value) of the swap in exchange for an equal face amount of deliverable obligations of the reference entity described in the swap, or the seller may be required to deliver the related net cash amount, if the swap is cash
settled. The Fund may be either the buyer or seller in the transaction. If the Fund is a buyer and no credit event occurs, the Fund may recover nothing if the swap is held through its termination date. However, if a credit event occurs, the buyer
generally may elect to receive the full notional value of the swap from the seller, who, in turn, generally will recover an amount significantly lower than the equivalent face amount of the obligations of the reference entity, whose value may have
significantly decreased, through (i)&nbsp;physical delivery of such obligations by the buyer, (ii)&nbsp;cash settlement or (iii)&nbsp;an auction process. As a seller, the Fund generally receives an upfront payment or a fixed rate of income
throughout the term of the swap provided that there is no credit event. As the seller, the Fund would effectively add leverage to its portfolio because, in addition to its total net assets, the Fund would be subject to investment exposure on the
notional amount of the swap. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The spread of a credit default swap is the annual amount the protection buyer must pay the protection seller over the length
of the contract, expressed as a percentage of the notional amount. When spreads rise, market perceived credit risk rises and when spreads fall, market perceived credit risk falls. Wider credit spreads and decreasing market values, when compared to
the notional amount of the swap, represent a deterioration of the referenced entity&#146;s credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the agreement. For credit default
swaps on asset-backed securities and credit indices, the quoted market prices and resulting values, as well as the annual payment rate, serve as an indication of the current status of the payment/performance risk. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Credit default swaps involve greater risks than if the Fund had invested in the reference obligation directly since, in addition to general market risks,
credit default swaps are subject to illiquidity risk, counterparty risk and credit risk, among other risks associated with derivative instruments. A buyer generally also will lose its investment and recover nothing should no credit event occur and
the swap is held to its termination date. If a credit event were to occur, the value of any deliverable obligation received by the seller, coupled with the upfront or periodic payments previously received, may be less than the full notional value it
pays to the buyer, resulting in a loss of value to the seller. The Fund&#146;s obligations under a credit default swap will be accrued daily (offset against any amounts owing to the Fund). In connection with credit default swaps in which the Fund is
the buyer, the Fund may segregate or &#147;earmark&#148; cash or liquid assets, or enter into certain offsetting positions, with a value at least equal to the Fund&#146;s exposure (any accrued but unpaid net amounts owed by the Fund to any
counterparty), on a <FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">marked-to-market</FONT></FONT> basis. In connection with credit default swaps in which the Fund is the seller, if the Fund covers its position through asset
segregation, the Fund will segregate or &#147;earmark&#148; cash or liquid assets with a value at least equal to the full notional amount of the swap (minus any amounts owed to the Fund). Such segregation or &#147;earmarking&#148; will not limit the
Fund&#146;s exposure to loss. See &#147;Principal Risks of the Fund&#151;Segregation and Coverage Risk&#148; and &#147;Principal Risks of the Fund&#151;Regulatory Risk&#151;Commodity Pool Operator.&#148; </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Hybrid Instruments </B></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">A hybrid instrument is a type of
potentially high-risk derivative that combines a traditional bond, stock or commodity with an option or forward contract. Generally, the principal amount, amount payable upon maturity or redemption, or interest rate of a hybrid is tied (positively
or negatively) to the price of some commodity, currency or securities index or another interest rate or some other economic factor (each a &#147;benchmark&#148;). The interest rate or (unlike most fixed income securities) the principal amount
payable at maturity of a hybrid security may be increased or decreased, depending on changes in the value of the benchmark. An example of a hybrid could be a bond issued by an oil company that pays a small base level of interest with additional
interest that accrues in correlation to the extent to which oil prices exceed a certain predetermined level. Such a hybrid instrument would be a combination of a bond and a call option on oil. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">56 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Hybrids can be used as an efficient means of pursuing a variety of investment goals, including currency hedging,
duration management and increased total return. Hybrids may not bear interest or pay dividends. The value of a hybrid or its interest rate may be a multiple of a benchmark and, as a result, may be leveraged and move (up or down) more steeply and
rapidly than the benchmark. These benchmarks may be sensitive to economic and political events, such as commodity shortages and currency devaluations, which cannot be readily foreseen by the purchaser of a hybrid. Under certain conditions, the
redemption value of a hybrid could be zero. Thus, an investment in a hybrid may entail significant market risks that are not associated with a similar investment in a traditional, U.S. dollar-denominated bond that has a fixed principal amount and
pays a fixed rate or floating rate of interest. The purchase of hybrids also exposes the Fund to the credit risk of the issuer of the hybrids. These risks may cause significant fluctuations in the NAV of the Common Shares if the Fund invests in
hybrid instruments. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Certain hybrid instruments may provide exposure to the commodities markets. These are derivative securities with one or more
commodity-linked components that have payment features similar to commodity futures contracts, commodity options or similar instruments. Commodity-linked hybrid instruments may be either equity or debt securities, leveraged or unleveraged, and are
considered hybrid instruments because they have both security and commodity-like characteristics. A portion of the value of these instruments may be derived from the value of a commodity, futures contract, index or other economic variable. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Certain issuers of structured products such as hybrid instruments may be deemed to be investment companies as defined in the 1940 Act. As a result, the
Fund&#146;s investments in these products may be subject to limits applicable to investments in investment companies and may be subject to restrictions contained in the 1940 Act. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund&#146;s use of commodity-linked instruments can be limited by the Fund&#146;s intention to qualify as a RIC and can limit the Fund&#146;s ability to
so qualify. In order to qualify for the special tax treatment accorded RICs and their shareholders, the Fund must, among other things, derive at least 90% of its income from certain specified sources (qualifying income). Income from certain
commodity-linked instruments does not constitute qualifying income to the Fund. The tax treatment of certain other commodity-linked instruments in which the Fund might invest is not certain, in particular with respect to whether income and gains
from such instruments constitute qualifying income. If the Fund were to treat income from a particular instrument as qualifying income and the income were later&nbsp;determined not to constitute qualifying income and, together with any other
nonqualifying income, caused the Fund&#146;s nonqualifying income&nbsp;to exceed 10% of its&nbsp;gross income in any taxable year, the Fund would fail to qualify as a RIC unless it is eligible to and does pay a tax at the Fund level.&nbsp;See
&#147;Tax Matters.&#148; </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Structured Notes and Related Instruments </B></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may invest in &#147;structured&#148; notes and other related instruments, which are privately negotiated debt obligations in which the principal
and/or interest is determined by reference to the performance of a benchmark asset, market or interest rate (an &#147;embedded index&#148;), such as selected securities, an index of securities or specified interest rates, or the differential
performance of two assets or markets, such as indexes reflecting bonds. Structured instruments may be issued by corporations, including banks, as well as by governmental agencies. Structured instruments frequently are assembled in the form of
medium-term notes, but a variety of forms are available and may be used in particular circumstances. The terms of such structured instruments normally provide that their principal and/or interest payments are to be adjusted upwards or downwards (but
ordinarily not below zero) to reflect changes in the embedded index while the structured instruments are outstanding. As a result, the interest and/or principal payments that may be made on a structured product may vary widely, depending on a
variety of factors, including the volatility of the embedded index and the effect of changes in the embedded index on principal and/or interest payments. The rate of return on structured notes may be determined by applying a multiplier to the
performance or differential performance of the referenced index(es) or other asset(s). Application of a multiplier involves leverage that will serve to magnify the potential for gain and the risk of loss. </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may use structured instruments for investment purposes and also for risk management purposes, such as to reduce the duration and interest rate
sensitivity of the Fund&#146;s portfolio, and for leveraging purposes. While structured instruments may offer the potential for a favorable rate of return from time to time, they also entail certain risks. Structured instruments may be less liquid
than other debt securities, and the price of structured instruments may be more volatile. In some cases, depending on the terms of the embedded index, a structured instrument may provide that the principal and/or interest payments may be adjusted
below zero. Structured instruments also may involve significant credit risk and risk of default by the counterparty. [Although structured instruments are not necessarily illiquid, the Investment Manager believes that currently most structured
instruments are illiquid.] Like other sophisticated strategies, the Fund&#146;s use of structured instruments may not work as intended. If the value of the embedded index changes in a manner other than that expected by PIMCO, principal and/or
interest payments </P>
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received on the structured instrument may be substantially less than expected. Also, if PIMCO chooses to use structured instruments to reduce the duration of the Fund&#146;s portfolio, this may
limit the Fund&#146;s return when having a longer duration would be beneficial (for instance, when interest rates decline). </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Credit-linked Trust
Certificates </B></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may invest in credit-linked trust certificates, which are investments in a limited purpose trust or other vehicle which, in
turn, invests in a basket of derivative instruments, such as credit default swaps, total return swaps, interest rate swaps or other securities, in order to provide exposure to the high yield or another debt securities market. Like an investment in a
bond, investments in credit-linked trust certificates represent the right to receive periodic income payments (in the form of distributions) and payment of principal at the end of the term of the certificate. However, these payments are conditioned
on the trust&#146;s receipt of payments from, and the trust&#146;s potential obligations to, the counterparties to the derivative instruments and other securities in which the trust invests. For instance, the trust may sell one or more credit
default swaps, under which the trust would receive a stream of payments over the term of the swap agreements provided that no event of default has occurred with respect to the referenced debt obligation upon which the swap is based. If a default
occurs, the stream of payments may stop and the trust would be obligated to pay to the counterparty the par (or other agreed upon value) of the referenced debt obligation. This, in turn, would reduce the amount of income and principal that the Fund
would receive as an investor in the trust. The Fund&#146;s investments in these instruments are indirectly subject to the risks associated with derivative instruments, including, among others, credit risk, default or similar event risk, counterparty
risk, interest rate risk, leverage risk, valuation risk and management risk. It is expected that the trusts that issue credit-linked trust certificates will constitute &#147;private&#148; investment companies, exempt from registration under the 1940
Act. Therefore, the certificates will not be subject to applicable investment limitations and other regulation imposed by the 1940 Act (although the Fund will remain subject to such limitations and regulation, including with respect to its
investments in the certificates). Although the trusts are typically private investment companies, they generally are not actively managed such as a &#147;hedge fund&#148; might be. It also is expected that the certificates will be exempt from
registration under the Securities Act. Accordingly, there may be no established trading market for the certificates and they may constitute illiquid investments. See &#147;Principal Risks of the Fund&#151;Liquidity Risk.&#148; If market quotations
are not readily available for the certificates, they will be valued by the Fund at fair value as determined by the Board or persons acting at its direction. See &#147;Net Asset Value.&#148; The Fund may lose its entire investment in a credit-linked
trust certificate. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Other Investment Companies </B></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The
Fund may invest in securities of other open- or <FONT STYLE="white-space:nowrap">closed-end</FONT> investment companies, including without limitation ETFs, to the extent that such investments are consistent with the Fund&#146;s investment
objectives, strategies and policies and permissible under the 1940 Act. The Fund may invest in other investment companies to gain broad market or sector exposure, including during periods when it has large amounts of uninvested cash (such as the
period shortly after the Fund receives the proceeds of the offering of its Common Shares) or when PIMCO believes share prices of other investment companies offer attractive values. The Fund treats its investments in other investment companies that
invest primarily in types of securities in which the Fund may invest directly as investments in such types of securities for purposes of the Fund&#146;s investment policies (<I>e.g.</I>, the Fund&#146;s investment in an investment company that
invests primarily in debt securities will be treated by the Fund as an investment in a debt security). As a shareholder in an investment company, the Fund would bear its ratable share of that investment company&#146;s expenses and would remain
subject to payment of the Fund&#146;s management fees and other expenses with respect to assets so invested. Common Shareholders would therefore be subject to duplicative expenses to the extent the Fund invests in other investment companies. The
securities of other investment companies may be leveraged, in which case the NAV and/or market value of the investment company&#146;s shares will be more volatile than unleveraged investments. See &#147;Principal Risks of the Fund&#151;Leverage
Risk.&#148; </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Common Stocks and Other Equity Securities </B></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund will not normally invest directly in common stocks of operating companies. However, the Fund may own and hold common stocks in its portfolio from time
to time in connection with a corporate action, or the restructuring of a debt instrument or through the conversion of a convertible security held by the Fund. For instance, in connection with the restructuring of a debt instrument, either outside of
bankruptcy court or in the context of bankruptcy court proceedings, the Fund may determine or be required to accept common stocks or other equity </P>
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securities in exchange for all or a portion of the debt instrument. Depending upon, among other things, PIMCO&#146;s evaluation of the potential value of such securities in relation to the price
that could be obtained by the Fund at any given time upon sale thereof, the Fund may determine to hold these equity securities in its portfolio. The Fund may invest in common shares of pooled vehicles, such as those of other investment companies,
and in common shares of REITs. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Although common stocks and other equity securities have historically generated higher average returns than debt securities
over the long term, they also have experienced significantly more volatility in those returns and in certain years have significantly underperformed relative to debt securities. An adverse event, such as an unfavorable earnings report, may depress
the value of a particular equity security held by the Fund. Also, prices of common stocks and other equity securities are sensitive to general movements in the equity markets and a decline in those markets may depress the prices of the equity
securities held by the Fund. The prices of equity securities fluctuate for many different reasons, including changes in investors&#146; perceptions of the financial condition of an issuer or the general condition of the relevant stock market or when
political or economic events affecting the issuer occur. In addition, prices of equity securities may be particularly sensitive to rising interest rates, as the cost of capital rises and borrowing costs increase. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Repurchase Agreements </B></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may enter into repurchase
agreements, in which the Fund purchases a security from a bank or broker-dealer and the bank or broker-dealer agrees to repurchase the security at the Fund&#146;s cost plus interest within a specified time. If the party agreeing to repurchase should
default, the Fund will seek to sell the securities it holds. This could involve transaction costs or delays in addition to a loss on the securities if their value should fall below their repurchase price. Repurchase agreements maturing in more than
seven days are considered to be illiquid securities. See &#147;Principal Risks of the Fund&#151;Repurchase Agreements Risk.&#148; </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>When Issued, Delayed
Delivery and Forward Commitment Transactions </B></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may purchase securities that it is eligible to purchase on a when-issued basis, may purchase and
sell such securities for delayed delivery and may make contracts to purchase 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. The risk is in addition to the risk that the Fund&#146;s other assets will decline in value. Therefore, these transactions may result in a form
of leverage and increase the Fund&#146;s overall investment exposure. Typically, no income accrues on securities the Fund has committed to purchase prior to the time delivery of the securities is made, although the Fund may earn income on securities
it has segregated to cover these positions. When the Fund has sold a security on a when-issued, delayed delivery or forward commitment basis, the Fund 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, the Fund could suffer a loss. Additionally, when selling a security on a when-issued, delayed delivery or forward commitment basis without owning the security, the Fund will incur a loss if the
security&#146;s price appreciates in value such that the security&#146;s price is above the agreed-upon price on the settlement date. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Short Sales
</B></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">A short sale is a transaction in which the Fund sells a security or other instrument that it does not own in anticipation that the market price will
decline. The Fund may use short sales for investment purposes or for hedging and risk management purposes. The Fund may also take short positions with respect to the performance of securities, indexes, interest rates, currencies and other assets or
markets through the use of derivative or forward instruments. When the Fund engages in a short sale of a security, it must borrow the security sold short and deliver it to the counterparty. The Fund may have to pay a fee to borrow particular
securities and would often be obligated to pay over any payments received on such borrowed securities. The Fund&#146;s obligation to replace the borrowed security will be secured by collateral deposited with the Fund&#146;s custodian in the name of
the lender. The Fund may not receive any payments (including interest) on its collateral. Short sales expose the Fund to the risk that it will be required to cover its short position at a time when the securities have appreciated in value, thus
resulting in a loss to the Fund. The Fund may engage in <FONT STYLE="white-space:nowrap">so-called</FONT> &#147;naked&#148; short sales when it does not own or have the immediate right to acquire the security sold short at no additional cost, in
which case the Fund&#146;s losses theoretically could be unlimited. If the price of the security sold short increases between the time of the short sale and the time that the </P>
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Fund replaces the borrowed security, the Fund will incur a loss; conversely, if the price declines, the Fund will realize a gain. Any gain will be decreased, and any loss increased, by the
transaction costs described above. The successful use of short selling may be adversely affected by imperfect correlation between movements in the price of the security sold short and securities being hedged if the short sale is being used for
hedging purposes. See &#147;&#151;&nbsp;Derivatives&#148; and &#147;Principal Risks of the Fund&#151;Short Sales Risk.&#148; See also &#147;Principal Risks of the Fund&#151;Leverage Risk&#148; and &#147;Principal Risks of the Fund&#151;Segregation
and Coverage Risk.&#148; The Fund may engage in short selling to the extent permitted by the 1940 Act and other federal securities laws. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Lending of
Portfolio Securities </B></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">For the purpose of achieving income, the Fund may lend its portfolio securities to brokers, dealers or other financial
institutions provided a number of conditions are satisfied, including that the loan is fully collateralized. See &#147;Investment Objectives and Policies&#151;Securities Loans&#148; in the Statement of Additional Information for details. When the
Fund lends portfolio securities, its investment performance will continue to reflect changes in the value of the securities loaned. The Fund 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, or the risk of loss due to the investment performance of the collateral. The Fund may pay lending fees to the
party arranging the loan. See &#147;Principal Risks of the Fund&#151;Securities Lending Risk.&#148; </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Portfolio Turnover </B></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The length of time the Fund has held a particular security is not generally a consideration in investment decisions. A change in the securities held by the
Fund is known as &#147;portfolio turnover.&#148; The Fund may engage in frequent and active trading of portfolio securities to achieve its investment objectives, particularly during periods of volatile market movements. High portfolio turnover
(<I>e.g., </I>over 100%) generally involves correspondingly greater expenses to the Fund, including brokerage commissions or dealer <FONT STYLE="white-space:nowrap">mark-ups</FONT> and other transaction costs on the sale of securities and
reinvestments in other securities. Sales of portfolio securities may also result in realization of taxable capital gains, including short-term capital gains (which are generally treated as ordinary income upon distribution in the form of dividends).
The trading costs and tax effects associated with portfolio turnover may adversely affect the Fund&#146;s performance. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><I>Please see &#147;Investment
Objectives and Policies&#148; in the Statement of Additional Information for additional information regarding the investments of the Fund and their related risks. </I></P>
<P STYLE="margin-top:14pt; margin-bottom:0pt; font-size:18pt; font-family:Times New Roman"><A NAME="pro302337_8"></A>Use of Leverage </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund currently
utilizes leverage through the use of reverse repurchase agreements and credit default swaps. As of [ ], 2016, the Fund&#146;s total effective leverage represented approximately [ ]% of the Fund&#146;s total assets (including assets attributable to
such leverage). </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may also obtain leverage through dollar rolls or borrowings, such as through bank loans or commercial paper or other credit
facilities. The Fund may also enter into transactions other than those noted above that may give rise to a form of leverage including, among others, futures and forward contracts (including foreign currency exchange contracts), total return swaps
and other derivative transactions, loans of portfolio securities, short sales and when-issued, delayed delivery and forward commitment transactions. Although it has no current intention to do so, the Fund may also determine to issue preferred shares
or other types of senior securities to add leverage to its portfolio. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Under normal market conditions, the Fund will limit its use of leverage from any
combination of (i)&nbsp;reverse repurchase agreements or dollar roll transactions (whether or not these instruments are covered as discussed below), (ii), borrowings (i.e., loans or lines of credit from banks or other credit facilities), (iii) any
future issuance of preferred shares, and (iv)&nbsp;to the extent described below, credit default swaps, other swap agreements and futures contracts (whether or not these instruments are covered with segregated assets as discussed below) such that
the assets attributable to the use of such leverage will not exceed 50% of the Fund&#146;s total assets (including, for purposes of the 50% limit, the amounts of leverage obtained through the use of such instruments) (the &#147;50% policy&#148;).
For these purposes, assets attributable to the use of leverage from credit default swaps, other swap agreements and </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">60 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
futures contracts will be determined based on the current market value of the instrument if it is cash settled or based on the notional value of the instrument if it is not cash settled. In
addition, assets attributable to credit default swaps, other swap agreements or futures contracts will not be counted towards the 50% policy to the extent that the Fund owns offsetting positions or enters into offsetting transactions. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Depending upon market conditions and other factors, the Fund may or may not determine to add leverage following an offering to maintain or increase the total
amount of leverage (as a percentage of the Fund&#146;s total assets) that the Fund currently maintains, taking into account the additional assets raised through the issuance of Common Shares in such offering. The Fund utilizes certain kinds of
leverage, such as reverse repurchase agreements and credit default swaps, opportunistically and may choose to increase or decrease, or eliminate entirely, its use of such leverage over time and from time to time based on PIMCO&#146;s assessment of
the yield curve environment, interest rate trends, market conditions and other factors. If the Fund determines to add leverage following an offering, it is not possible to predict with accuracy the precise amount of leverage that would be added, in
part because it is not possible to predict the number of Common Shares that ultimately will be sold in an offering or series of offerings. To the extent that the Fund does not add additional leverage following an offering, the Fund&#146;s total
amount of leverage as a percentage of its total assets will decrease, which could result in a reduction of investment income available for distribution to holders of the Fund&#146;s Common Shares (&#147;Common Shareholders&#148;). </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The net proceeds the Fund obtains from reverse repurchase agreements, credit default swaps or other forms of leverage utilized, if any, will be invested in
accordance with the Fund&#146;s investment objectives and policies as described in this prospectus and any prospectus supplement. So long as the rate of return, net of applicable Fund expenses, on the debt obligations and other investments purchased
by the Fund exceeds the costs to the Fund of the leverage it utilizes, the investment of the Fund&#146;s net assets attributable to leverage will generate more income than will be needed to pay the costs of the leverage. If so, and all other things
being equal, the excess may be used to pay higher dividends to Common Shareholders than if the Fund were not so leveraged. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The 1940 Act, generally
prohibits the Fund from engaging in most forms of leverage representing indebtedness other than preferred shares (including the use of reverse repurchase agreements, dollar rolls, bank loans, commercial paper or other credit facilities, credit
default swaps, total return swaps and other derivative transactions, loans of portfolio securities, short sales and when-issued, delayed delivery and forward commitment transactions, to the extent that these instruments are not covered as described
below) unless immediately after the issuance of the leverage the Fund has satisfied the asset coverage test with respect to senior securities representing indebtedness prescribed by the 1940 Act; that is, the value of the Fund&#146;s total assets
less all liabilities and indebtedness not represented by senior securities (for these purposes, &#147;total net assets&#148;) is at least 300% of the senior securities representing indebtedness (effectively limiting the use of leverage through
senior securities representing indebtedness to 33<SUP STYLE="font-size:85%; vertical-align:top"></SUP><SUP STYLE="font-size:85%; vertical-align:top">&nbsp;1</SUP>/3% of the Fund&#146;s total net assets, including assets attributable to such
leverage). In addition, the Fund is not permitted to declare any cash dividend or other distribution on its Common Shares unless, at the time of such declaration, this asset coverage test is satisfied. The Fund may (but is not required to) cover its
commitments under reverse repurchase agreements, dollar rolls, derivatives and certain other instruments by the segregation of liquid assets, or by entering into offsetting transactions or owning positions covering its obligations. To the extent
that certain of these instruments are so covered, they will not be considered &#147;senior securities&#148; under the 1940 Act and therefore will not be subject to the 1940 Act 300% asset coverage requirement otherwise applicable to forms of
leverage used by the Fund. However, reverse repurchase agreements and other such instruments, even if covered, represent a form of economic leverage and create special risks. The use of these forms of leverage increases the volatility of the
Fund&#146;s investment portfolio and could result in larger losses to Common Shareholders than if these strategies were not used. See &#147;Principal Risks of the Fund&#151;Leverage Risk.&#148; To the extent that the Fund engages in borrowings, it
may prepay a portion of the principal amount of the borrowing to the extent necessary in order to maintain the required asset coverage. Failure to maintain certain asset coverage requirements could result in an event of default. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Leveraging is a speculative technique and there are special risks and costs involved. There is no assurance that the Fund will utilize reverse repurchase
agreements, credit default swaps, dollar rolls or borrowings, issue preferred shares or utilize any other forms of leverage (such as the use of derivatives strategies). If used, there can be no assurance that the Fund&#146;s leveraging strategies
will result in a higher yield on your Common Shares. When leverage is used, the NAV and market price of the Common Shares and the yield to Common Shareholders will be more volatile. See &#147;Principal Risks of the Fund&#151;Leverage Risk.&#148; In
addition, dividend interest and other expenses borne </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">61 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
by the Fund with respect to its use of reverse repurchase agreements, credit default swaps, dollar rolls, borrowings or any other forms of leverage are borne by the Common Shareholders and result
in a reduction of the NAV of the Common Shares. In addition, because the fees received by the Investment Manager are based on the Fund&#146;s average daily &#147;total managed assets&#148; (including any assets attributable to any reverse repurchase
agreements, dollar rolls, borrowings and preferred shares that may be outstanding) minus accrued liabilities (other than liabilities representing reverse repurchase agreements, dollar rolls and borrowings), the Investment Manager has a financial
incentive for the Fund to use certain forms of leverage (<I>e.g.</I>, reverse repurchase agreements, dollar rolls, borrowings and preferred shares), which may create a conflict of interest between the Investment Manager, on the one hand, and the
Common Shareholders, on the other hand. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund also may borrow money in order to repurchase its shares or as a temporary measure for extraordinary or
emergency purposes, including for the payment of dividends or the settlement of securities transactions which otherwise might require untimely dispositions of portfolio securities held by the Fund. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>EFFECTS OF LEVERAGE </B></P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Assuming reverse repurchase
agreements and credit default swaps represent approximately [ ]% of the Fund&#146;s total assets (including the amount of leverage obtained through the use of such instruments), at an annual effective interest expense rate of [ ]% payable by the
Fund on such instruments (based on market interest rates as of the date of this prospectus), the annual return that the Fund&#146;s portfolio must experience (net of expenses) in order to cover such costs of the reverse repurchase agreements and
credit default swaps is [ ]%. Of course, these figures are merely estimates based on current market conditions, used for illustration purposes only. Actual borrowing expenses associated with reverse repurchase agreements and credit default swaps,
(or dollar rolls or borrowings, if any) used by the Fund may vary frequently and may be significantly higher or lower that the rate used for the example below. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The following table is furnished in response to requirements of the SEC. It is designed to illustrate the effects of leverage on Common Share total return,
assuming investment portfolio total returns (consisting of income and changes in the value of investments held in the Fund&#146;s portfolio) of <FONT STYLE="white-space:nowrap">-10%,</FONT> <FONT STYLE="white-space:nowrap">-5%,</FONT> 0%, 5% and
10%. These assumed investment portfolio returns are hypothetical figures and are not necessarily indicative of the investment portfolio returns experienced or expected to be experienced by the Fund. The table further assumes that the Fund utilizes
reverse repurchase agreements and credit default swaps representing approximately [ ]% of the Fund&#146;s total assets (including the amounts of leverage obtained through the use of such instruments) and a projected annual rate of interest expense
on such instruments of [ ]%. Your actual returns may be greater or less than those appearing&nbsp;below. </P> <P STYLE="font-size:18pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Assumed Portfolio Total Return</P>
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<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Common Share Total Return</P></TD>
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</TABLE> <P STYLE="margin-top:24pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Common Share total return is composed of two elements&#151;the Common Share dividends paid by the Fund (the amount of which is
largely determined by the net investment income of the Fund after paying dividend payments on any preferred shares issued by the Fund and expenses on any forms of leverage outstanding) and gains or losses on the value of the securities and other
instruments the Fund owns. As required by SEC rules, the table assumes that the Fund is more likely to suffer capital losses than to enjoy capital appreciation. For example, to assume a total return of 0%, the Fund must assume that the income it
receives on its investments is entirely offset by losses in the value of those investments. This table reflects hypothetical performance of the Fund&#146;s portfolio and not the actual performance of the Fund&#146;s Common Shares, the value of which
is determined by market forces and other factors. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Should the Fund elect to add additional leverage to its portfolio following an offering, any benefits
of such additional leverage cannot be fully achieved until the proceeds resulting from the use of such leverage have been received by the Fund and invested in accordance with the Fund&#146;s investment objectives and policies. As noted above, the
Fund&#146;s willingness to use additional leverage, and the extent to which leverage is used at any time, will depend on many factors, including, among other things, PIMCO&#146;s assessment of the yield curve environment, interest rate trends,
market conditions and other factors. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">62 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:18pt; font-family:Times New Roman"><A NAME="pro302337_9"></A>Principal Risks of the Fund </P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Market Discount Risk </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">As with any stock, the price of the
Fund&#146;s Common Shares will fluctuate with market conditions and other factors. If you sell your Common Shares, the price received may be more or less than your original investment. Net asset value of the Fund&#146;s Common Shares will be reduced
immediately following an offering by any sales load and/or commissions and offering expenses paid or reimbursed by the Fund in connection with such offering. The completion of an offering may result in an immediate dilution of the NAV per Common
Share for all existing Common Shareholders. The Common Shares are designed for long-term investors and should not be treated as trading vehicles. Shares of <FONT STYLE="white-space:nowrap">closed-end</FONT> management investment companies frequently
trade at a discount from their NAV. The Common Shares may trade at a price that is less than the offering price for Common Shares issued pursuant to an offering. This risk may be greater for investors who sell their Common Shares relatively shortly
after completion of an offering. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Market Risk </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The
market price of securities owned by the Fund may go up or down, sometimes rapidly or unpredictably. Securities may decline in value due to factors affecting securities markets generally or particular industries 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. Equity securities generally have greater price volatility than fixed
income securities. Credit ratings downgrades may also negatively affect securities held by the Fund. Even when markets perform well, there is no assurance that the investments held by the Fund will increase in value along with the broader market. In
addition, market risk includes the risk that geopolitical events will disrupt the economy on a national or global level. For instance, terrorism, market manipulation, government defaults, government shutdowns, political changes or diplomatic
developments, and natural/environmental disasters can all negatively impact the securities markets, which could cause the Fund to lose value. Any market disruptions could also prevent the Fund from executing advantageous investment decisions in a
timely manner. To the extent the Fund focuses its investments in a region enduring geopolitical market disruption, it will face higher risks of loss. Thus, investors should closely monitor current market conditions to determine whether a specific
Fund meets their individual financial needs and tolerance for risk. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Current market conditions may pose heightened risks with respect to funds that invest
in fixed income securities. As discussed more under &#147;Principal Risks of the Fund--Interest Rate Risk,&#148; interest rates in the U.S. are near historically low levels. However, continued economic recovery, the end of the Federal Reserve
Board&#146;s quantitative easing program, and an increased likelihood of a rising interest rate environment increase the risk that interest rates will continue to rise in the near future. Any further interest rate increases in the future could cause
the value of the Fund to decrease. As such, fixed income securities markets may experience heightened levels of interest rate, volatility and liquidity risk. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Exchanges and securities markets may close early, close late or issue trading halts on specific securities, which may result in, among other things, the Fund
being unable to buy or sell certain securities or financial instruments at an advantageous time or accurately price its portfolio investments. In addition, the Fund may rely on various third-party sources to calculate its NAV. As a result, the Fund
is subject to certain operational risks associated with reliance on service providers and service providers&#146; data sources. In particular, errors or systems failures and other technological issues may adversely impact the Fund&#146;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. The Fund may be unable to recover any losses associated with
such failures. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">63 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Asset Allocation Risk </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund&#146;s investment performance depends upon how its assets are allocated and reallocated. A principal risk of investing in the Fund is that PIMCO may
make less than optimal or poor asset allocation decisions. PIMCO employs an active approach to allocation among multiple fixed-income sectors, but there is no guarantee that such allocation techniques will produce the desired results. It is possible
that PIMCO will focus on an investment that performs poorly or underperforms other investments under various market conditions. You could lose money on your investment in the Fund as a result of these allocation decisions. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Management Risk </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund 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 Fund, but there can be no guarantee that these decisions
will produce the desired results. Certain securities or other instruments in which the Fund seeks to invest may not be available in the quantities desired. 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 Fund. To the extent the Fund 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 Fund.
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 Fund and may also adversely affect the
ability of the Fund to achieve its 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 the services of one or more key employees of
PIMCO could have an adverse impact on the Fund&#146;s ability to realize its investment objective. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Issuer Risk </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The value of a security may decline for a number of reasons that directly relate to the issuer, such as management performance, financial leverage and reduced
demand for the issuer&#146;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 securities markets as a whole. These
risks can apply to the Common Shares issued by the Fund and to the issuers of securities and other instruments in which the Fund invests. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Interest
Rate Risk </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Interest rate risk is the risk that fixed income securities and other instruments in the Fund&#146;s portfolio will decline in value
because of a change in interest rates. As nominal interest rates rise, the value of certain fixed income securities held by the Fund 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 the Fund may lose money as a result of movements in interest rates. The Fund 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. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">A wide variety of factors can cause interest rates to rise (e.g., central bank monetary
policies, inflation rates, general economic conditions). <B>This risk may be particularly acute in the current market environment because market interest rates are currently at historically low levels.</B> This, combined with recent economic
recovery, the Federal Reserve Board&#146;s conclusion of its quantitative easing program, and recent increases in the interest rates for the first time since 2006, could potentially increase the probability of an upward interest rate environment in
the near future. To the extent the Federal Reserve Board continues to raise interest rates, there is a risk that rates across the financial system may rise. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">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. Duration is a measure used to determine the sensitivity of a security&#146;s price to changes in interest rates that incorporates a security&#146;s yield, coupon, final maturity and call features, among other characteristics.
Duration is useful primarily as a measure of the sensitivity of a fixed income security&#146;s market price to interest rate (i.e. yield) movements. All other things remaining equal, for each one percentage point increase in interest rates, the
value of a portfolio of fixed income investments would generally be expected to decline by one percent for every year of the portfolio&#146;s average duration above zero. For example, the value of a portfolio of fixed income securities with an
average duration of eight years would generally be expected to decline by approximately 8% if interest rates rose by one percentage point. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">64 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">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 than a fixed rate obligation with similar credit quality. When the Fund 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 Fund&#146;s shares. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">During periods of very low or negative interest rates, the Fund may be unable to maintain positive returns. Interest rates in the United States and many parts
of the world, including certain European countries, are at or near historically low levels. Certain European countries have recently 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 Fund performance to the extent the Fund is exposed
to such interest rates. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Measures such as average duration may not accurately reflect the true interest rate sensitivity of the Fund. This is especially
the case if the Fund consists of securities with widely varying durations. Therefore, if the Fund has an average duration that suggests a certain level of interest rate risk, the Fund may in fact be subject to greater interest rate risk than the
average would suggest. This risk is greater to the extent the Fund uses leverage or derivatives in connection with the management of the Fund. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Convexity
is an additional measure used to understand a security&#146;s or Fund&#146;s interest rate sensitivity. Convexity measures the rate of change of duration in response to changes in interest rates. With respect to a security&#146;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 the Fund holds such securities, the Fund may be subject to a greater risk of losses in periods of rising interest rates. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Rising interest rates may result in a decline in value of the Fund&#146;s fixed-income investments and in periods of volatility. Further, while U.S. bond
markets have steadily grown over the past three decades, dealer &#147;market making&#148; 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 &#147;make markets,&#148; 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 the Fund to lose value. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Credit Risk </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund 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, 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 downgrade of the credit of a security held by the Fund 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 the Fund. This is especially the case if the Fund consists of securities with widely varying credit ratings. Therefore, if the Fund has an
average credit rating that suggests a certain credit quality, the Fund may in fact be subject to greater credit risk than the average would suggest. This risk is greater to the extent the Fund uses leverage or derivatives in connection with the
management of the Fund. 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&#146;s
ability to make payments of principal and/or interest. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">65 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Mortgage-Related and Other Asset-Backed Securities Risk </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may invest in a variety of mortgage-related and other asset-backed securities issued by government agencies or other governmental entities or by
private originators or issuers. </P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">As a matter of fundamental policy, the Fund will normally invest at least 25% of its total assets in privately-issued
(commonly known as <FONT STYLE="white-space:nowrap">&#147;non-agency&#148;)</FONT> mortgage-related securities. </P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The mortgage-related securities in which
the Fund may invest include, without limitation, mortgage pass-through securities, collateralized mortgage obligations (&#147;CMOs&#148;), commercial or residential mortgage-backed securities, mortgage dollar rolls, CMO residuals, stripped
mortgage-backed securities (&#147;SMBSs&#148;) and other securities that directly or indirectly represent a participation in, or are secured by and payable from, mortgage loans on real property. The Fund may also invest in other types of
asset-backed securities, including collateralized debt obligations (&#147;CDOs&#148;), which include collateralized bond obligations (&#147;CBOs&#148;), collateralized loan obligations (&#147;CLOs&#148;) and other similarly structured securities.
See &#147;Portfolio Contents&#150;&#150;Mortgage-Related and Other Asset-Backed Securities&#148; in this prospectus and &#147;Investment Objectives and Policies&#150;&#150;Mortgage-Related and Other Asset-Backed Securities&#148; in the Statement of
Additional Information for a description of the various mortgage-related and other asset-backed securities in which the Fund may invest and their related risks. </P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Mortgage-related and other asset-backed securities represent interests in &#147;pools&#148; 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. As a result, in a period of rising interest rates, the Fund 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 the Fund 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 the Fund to lose value. Mortgage-backed securities, and in particular those not backed by a government guarantee, are subject to credit risk. When interest rates decline, borrowers may pay off their mortgages sooner than
expected. This can reduce the returns of the Fund because the Fund may have to reinvest that money at the lower prevailing interest rates. The Fund&#146;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. 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. See &#147;Principal Risks of the Fund&#151;Mortgage Market/Subprime Risk.&#148; See also
&#147;Principal Risks of the Fund&#151;Recent Economic Conditions Risk.&#148; </P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Privately Issued Mortgage-Related Securities Risk </B></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">There are no direct or indirect government or agency guarantees of payments in pools created by <FONT STYLE="white-space:nowrap">non-governmental</FONT>
issuers. Privately issued mortgage-related securities are also 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. </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">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 the Fund&#146;s portfolio may be particularly difficult to value because of the
complexities involved in assessing the value of the underlying mortgage loans. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Mortgage Market/Subprime Risk </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The mortgage markets in the United States and in various foreign countries have experienced extreme difficulties in the past that may adversely affect the
performance and market value of certain of the Fund&#146;s mortgage-related investments. Delinquencies and losses on residential and commercial mortgage loans (especially subprime and second-lien mortgage loans) generally increased during that
period and may continue to increase, and a decline in or flattening of housing and other real property values (as has been experienced during that period and may continue to be experienced in many real estate markets) may exacerbate such
delinquencies and losses. Borrowers with adjustable rate mortgage loans are more sensitive to changes in interest rates, which affect their monthly mortgage payments, and may be unable to secure replacement mortgages at comparably low interest
rates. Also, a number of mortgage loan originators have experienced serious financial difficulties or bankruptcy in recent periods. Owing </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">66 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
largely to the foregoing, reduced investor demand for mortgage loans and mortgage-related securities and increased investor yield requirements have caused limited liquidity in the secondary
market for mortgage-related securities, which can adversely affect the market value of mortgage-related securities. It is possible that such limited liquidity in such secondary markets could continue or worsen. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>High Yield Risk </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">In general, lower rated debt securities
carry a greater degree of risk that the issuer will lose its ability to make interest and principal payments, which could have a negative effect on the NAV of the Fund&#146;s Common Shares or Common Share dividends. Securities of below investment
grade quality are regarded as having predominantly speculative characteristics with respect to capacity to pay interest and repay principal, and are commonly referred to as &#147;high yield&#148; securities or &#147;junk bonds.&#148; High yield
securities involve a greater risk of default and their prices are generally more volatile and sensitive to actual or perceived negative developments, such as a decline in the issuer&#146;s revenues or revenues of underlying borrowers or a general
economic downturn, than are the prices of higher grade securities. Debt securities in the lowest investment grade category also may be considered to possess some speculative characteristics by certain rating agencies. The Fund may purchase
distressed securities that are in default or the issuers of which are in bankruptcy, which involve heightened risks. See &#147;Principal Risks of the Fund&#151;Distressed and Defaulted Securities Risk.&#148; An economic downturn could severely
affect the ability of issuers (particularly those that are highly leveraged) to service their debt obligations or to repay their obligations upon maturity. Lower-rated securities are generally less liquid than higher-rated securities, which may have
an adverse effect on the Fund&#146;s ability to dispose of a particular security. For example, under adverse market or economic conditions, the secondary market for below investment grade securities could contract further, independent of any
specific adverse changes in the condition of a particular issuer, and certain securities in the Fund&#146;s portfolio may become illiquid or less liquid. As a result, the Fund could find it more difficult to sell these securities or may be able to
sell these securities only at prices lower than if such securities were widely traded. See &#147;Principal Risks of the Fund&#151;Liquidity Risk.&#148; To the extent the Fund focuses on below investment grade debt obligations, PIMCO&#146;s
capabilities in analyzing credit quality and associated risks will be particularly important, and there can be no assurance that PIMCO will be successful in this regard. See &#147;Portfolio Contents&#151;High Yield Securities (&#145;Junk
Bonds&#146;)&#148; for additional information. Due to the risks involved in investing in high yield securities, an investment in the Fund should be considered speculative. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund&#146;s credit quality policies apply only at the time a security is purchased, and the Fund is not required to dispose of a security in the event
that a rating agency or PIMCO downgrades its assessment of the credit characteristics of a particular issue. In determining whether to retain or sell such a security, PIMCO may consider factors including, but not limited to, PIMCO&#146;s assessment
of the credit quality of the issuer of such security, the price at which such security could be sold and the rating, if any, assigned to such security by other rating agencies. Analysis of creditworthiness may be more complex for issuers of high
yield securities than for issuers of higher quality debt securities. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Distressed and Defaulted Securities Risk </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">As noted above, the Fund may invest in the debt securities of financially distressed issuers, including those that are in default or the issuers of which are
in bankruptcy. Investments in the securities of financially distressed issuers involve substantial risks. These securities may present a substantial risk of default or may be in default at the time of investment. The Fund may incur additional
expenses to the extent it is required to seek recovery upon a default in the payment of principal or interest on its portfolio holdings. In any reorganization or liquidation proceeding relating to an investment, the Fund may lose its entire
investment or may be required to accept cash or securities with a value substantially less than its original investment. Among the risks inherent in investments in a troubled issuer is that it frequently may be difficult to obtain information as to
the true financial condition of such issuer. PIMCO&#146;s judgments about the credit quality of a financially distressed issuer and the relative value of its securities may prove to be wrong. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Municipal Bond Risk </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Investing in the municipal bond
market involves the risks of investing in debt securities generally and certain other risks. The amount of public information available about the municipal bonds in which the Fund may invest is generally less than that for corporate equities or
bonds, and the investment performance of the Fund&#146;s investment in </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">67 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
municipal bonds may therefore be more dependent on the analytical abilities of PIMCO than its investments in taxable bonds. The secondary market for municipal bonds also tends to be less well
developed or liquid than many other securities markets, which may adversely affect the Fund&#146;s ability to sell municipal bonds at attractive prices. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The ability of municipal issuers to make timely payments of interest and principal may be diminished during general economic downturns, by litigation,
legislation or political events, or by the bankruptcy of the issuer. Laws, referenda, ordinances or regulations enacted in the future by Congress or state legislatures or the applicable governmental entity 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 also might seek protection under the bankruptcy laws. In the event of
bankruptcy of such an issuer, the Fund could experience delays in collecting principal and interest and the Fund 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, the Fund may take possession of and manage the assets securing the issuer&#146;s obligations on such securities, which may increase the Fund&#146;s operating expenses. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may invest in revenue bonds, which are typically issued to fund a wide variety of capital projects including electric, gas, water and sewer systems;
highways, bridges and tunnels; port and airport facilities; colleges and universities; and hospitals. Because the principal security for a revenue bond is generally the net revenues derived from a particular facility or group of facilities or, in
some cases, from the proceeds of a special excise or other specific revenue source, there is no guarantee that the particular project will generate enough revenue to pay its obligations, in which case the Fund&#146;s performance may be adversely
affected. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may invest in taxable municipal bonds, such as Build America Bonds. Build America Bonds are tax credit bonds created by the American
Recovery and Reinvestment Act of 2009, which authorized state and local governments to issue Build America Bonds as taxable bonds in 2009 and 2010, without volume limitations, to finance any capital expenditures for which such issuers could
otherwise issue traditional <FONT STYLE="white-space:nowrap">tax-exempt</FONT> bonds. The Fund&#146;s investments in Build America Bonds or similar taxable municipal bonds will result in taxable income and the Fund may elect to pass through to
Common Shareholders the corresponding tax credits. The tax credits can generally be used to offset federal income taxes and the alternative minimum tax, but such credits are generally not refundable. Taxable municipal bonds involve similar risks as <FONT
STYLE="white-space:nowrap">tax-exempt</FONT> municipal bonds, including credit and market risk. See &#147;Principal Risks of the Fund&#151;Credit Risk&#148; and &#147;Principal Risks of the Fund&#151;Market Risk.&#148; </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Inflation-Indexed Security Risk </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Inflation-indexed debt
securities are subject to the effects of changes in market interest rates caused by factors other than inflation (real interest rates). In general, the value of an inflation-indexed security, including TIPS, tends to decrease when real interest
rates increase and can increase when real interest rates decrease. Thus generally, during periods of rising inflation, the value of inflation-indexed securities will tend to increase and during periods of deflation, their value will tend to
decrease. Interest payments on inflation-indexed securities are unpredictable and will fluctuate as the principal and interest are adjusted for inflation. There can be no assurance that the inflation index used (i.e., the CPI) will accurately
measure the real rate of inflation in the prices of goods and services. Increases in the principal value of TIPS due to inflation are considered taxable ordinary income for the amount of the increase in the calendar year. Any increase in the
principal amount of an inflation-indexed debt security will be considered taxable ordinary income, even though the Fund will not receive the principal until maturity. Additionally, a CPI swap can potentially lose value if the realized rate of
inflation over the life of the swap is less than the fixed market implied inflation rate (fixed breakeven rate) that the investor agrees to pay at the initiation of the swap. With municipal inflation-indexed securities, the inflation adjustment is
integrated into the coupon payment, which is federally tax exempt (and may be state tax exempt). For municipal inflation-indexed securities, there is no adjustment to the principal value. Because municipal inflation-indexed securities are a small
component of the municipal bond market, they may be less liquid than conventional municipal bonds.. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Senior Debt Risk </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Because it may invest in below-investment grade senior debt, the Fund may be subject to greater levels of credit risk than funds that do not invest in such
debt. The Fund may also be subject to greater levels of liquidity risk than funds that do not invest in senior debt. Restrictions on transfers in loan agreements, a lack of publicly available information and other factors may, in certain instances,
make senior debt more difficult to sell at an advantageous time or price than other types of securities or instruments. Additionally, if the issuer of senior debt prepays, the Fund will have to consider reinvesting the proceeds in other senior debt
or similar instruments that may pay lower interest rates. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">68 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Loan Participations and Assignments Risk </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund&#146;s investments in fixed and floating rate loans arranged through private negotiations between an issuer and one or more financial institutions
may be in the form of participations in loans or assignments of all or a portion of loans from third parties. In connection with purchasing loan participations, the Fund generally will have no right to enforce compliance by the borrower with the
terms of the loan agreement relating to the loan, nor any rights of <FONT STYLE="white-space:nowrap">set-off</FONT> against the borrower, and the Fund may not directly benefit from any collateral supporting the loan in which it has purchased the
loan participation. As a result, the Fund may be subject to the credit risk of both the borrower and the lender that is selling the participation. In the event of the insolvency of the lender selling a participation, the Fund may be treated as a
general creditor of the lender and may not benefit from any <FONT STYLE="white-space:nowrap">set-off</FONT> between the lender and the borrower. Certain loan participations may be structured in a manner designed to prevent purchasers of
participations from being subject to the credit risk of the lender with respect to the participation, but even under such a structure, in the event of the lender&#146;s insolvency, the lender&#146;s servicing of the participation may be delayed and
the assignability of the participation impaired. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may have difficulty disposing of loans and loan participations because to do so it will have to
assign or sell such securities to a third party. Because there is no liquid market for many such securities, the Fund anticipates that such securities could be sold only to a limited number of institutional investors. The lack of a liquid secondary
market may have an adverse impact on the value of such securities and the Fund&#146;s ability to dispose of particular loans and loan participations when that would be desirable, including in response to a specific economic event such as a
deterioration in the creditworthiness of the borrower. The lack of a liquid secondary market for loans and loan participations also may make it more difficult for the Fund to assign a value to these securities for purposes of valuing the Fund&#146;s
portfolio. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Reinvestment Risk </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Income from the
Fund&#146;s portfolio will decline if and when the Fund invests the proceeds from matured, traded or called debt obligations at market interest rates that are below the portfolio&#146;s current earnings rate. For instance, during periods of
declining interest rates, an issuer of debt obligations may exercise an option to redeem securities prior to maturity, forcing the Fund to invest in lower-yielding securities. The Fund also may choose to sell higher yielding portfolio securities and
to purchase lower yielding securities to achieve greater portfolio diversification, because the portfolio managers believe the current holdings are overvalued or for other investment-related reasons. A decline in income received by the Fund from its
investments is likely to have a negative effect on dividend levels and the market price, NAV and/or overall return of the Common Shares. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Call Risk
</B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Call risk refers to the possibility that an issuer may exercise its right to redeem a fixed income security earlier than expected (a call). Issuers
may call outstanding securities prior to their maturity for a number of reasons (e.g., declining interest rates, changes in credit spreads and improvements in the issuer&#146;s credit quality). If an issuer calls a security in which the Fund has
invested, the Fund may not recoup the full amount of its initial investment and may be forced to reinvest in lower-yielding securities, securities with greater credit risks or securities with other, less favorable features. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Foreign <FONT STYLE="white-space:nowrap">(Non-U.S.)</FONT> Investment Risk </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may invest in foreign <FONT STYLE="white-space:nowrap">(non-U.S.)</FONT> securities and may experience more rapid and extreme changes in value than
the Fund that invests exclusively in securities of U.S. companies. The securities markets of many foreign countries are relatively small, with a limited number of companies representing a small number of industries. Additionally, issuers of foreign <FONT
STYLE="white-space:nowrap">(non-U.S.)</FONT> securities are usually not subject to the same degree of regulation as U.S. issuers. Reporting, accounting, auditing and custody 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 </P>
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a different country, region or financial market. Also, nationalization, expropriation or confiscatory taxation, currency blockage, political changes or diplomatic developments could adversely
affect the Fund&#146;s investments in a foreign country. In the event of nationalization, expropriation or other confiscation, the Fund could lose its entire investment in foreign <FONT STYLE="white-space:nowrap">(non-U.S.)</FONT> securities.
Adverse conditions in a certain region can adversely affect securities of other countries whose economies appear to be unrelated. To the extent that the Fund invests a significant portion of its assets in a specific geographic region, the Fund will
generally have more exposure to regional economic risks associated with foreign <FONT STYLE="white-space:nowrap">(non-U.S.)</FONT> investments. Foreign <FONT STYLE="white-space:nowrap">(non-U.S.)</FONT> securities may also be less liquid and more
difficult to value than securities of U.S. issuers. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The global economic crisis brought several small economies in Europe to the brink of bankruptcy and
many other economies into recession and weakened the banking and financial sectors of many European countries. For example, the governments of Greece, Spain, Portugal, and the Republic of Ireland have all experienced large public budget deficits,
the effects of which are still yet unknown and may slow the overall recovery of the European economies from the global economic crisis. In addition, due to large public deficits, some European countries may be dependent on assistance from other
European governments and institutions or other central banks or supranational agencies such as the International Monetary Fund. Assistance may be dependent on a country&#146;s implementation of reforms or reaching a certain level of performance.
Failure to reach those objectives or an insufficient level of assistance could result in a deep economic downturn which could significantly affect the value of the Fund&#146;s European investments. It is possible that one or more Economic and
Monetary Union member countries could abandon the euro and return to a national currency and/or that the euro will cease to exist as a single currency in its current form. The exit of any country out of the euro may have an extremely destabilizing
effect on other eurozone countries and their economies and a negative effect on the global economy as a whole. Such an exit by one country may also increase the possibility that additional countries may exit the euro should they face similar
financial difficulties. In June 2016, the United Kingdom approved a referendum to leave the European Union. Significant uncertainty remains in the market regarding the ramifications of that development, and the range and potential implications of
possible political, regulatory, economic and market outcomes are difficult to predict. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may invest in securities and instruments that are
economically tied to Russia. Investments in Russia are subject to various risks such as political, economic, legal, market and currency risks. The risks include uncertain political and economic policies, short term market volatility, poor accounting
standards, corruption and crime, an inadequate regulatory system, and unpredictable taxation. Investments in Russia are particularly subject to the risk that economic sanctions may be imposed by the United States and/or other countries. Such
sanctions &#151; which may impact companies in many sectors, including energy, financial services and defense, among others &#151; may negatively impact the Fund&#146;s performance and/or ability to achieve its investment objectives. The Russian
securities market is characterized by limited volume of trading, resulting in difficulty in obtaining accurate prices. The Russian securities market, as compared to U.S. markets, has significant price volatility, less liquidity, a smaller market
capitalization and a smaller number of traded securities. There may be little publicly available information about issuers. Settlement, clearing and registration of securities transactions are subject to risks because of registration systems that
may not be subject to effective government supervision. This may result in significant delays or problems in registering the transfer of securities. Russian securities laws may not recognize foreign nominee accounts held with a custodian bank, and
therefore the custodian may be considered the ultimate owner of securities they hold for their clients. Ownership of securities issued by Russian companies is recorded by companies themselves and by registrars instead of through a central
registration system. It is possible that the ownership rights of the Fund could be lost through fraud or negligence. While applicable Russian regulations impose liability on registrars for losses resulting from their errors, it may be difficult for
the Fund to enforce any rights it may have against the registrar or issuer of the securities in the event of loss of share registration. Adverse currency exchange rates are a risk and there may be a lack of available currency hedging instruments.
Investments in Russia may be subject to the risk of nationalization or expropriation of assets. Oil, natural gas, metals, and timber account for a significant portion of Russia&#146;s exports, leaving the country vulnerable to swings in world
prices. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Emerging Markets Risk </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Foreign investment
risk may be particularly high to the extent that the Fund invests in securities of issuers based in or doing business in emerging market countries or invests in securities denominated in the currencies of emerging market countries. Investing in
securities of issuers based in or doing business in emerging markets entails all of the risks of investing in foreign securities noted above, but to a heightened degree. </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Investments in emerging market countries pose a greater degree of systemic risk (<I>i.e.</I>, the risk of a
cascading collapse of multiple institutions within a country, and even multiple national economies). The inter-relatedness of economic and financial institutions within and among emerging market economies has deepened over the years, with the effect
that institutional failures and/or economic difficulties that are of initially limited scope may spread throughout a country, a region or even among all or most emerging market countries. This may undermine any attempt by the Fund to reduce risk
through geographic diversification of its portfolio investments among emerging market countries. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">There is a heightened possibility of imposition of
withholding taxes on interest or dividend income generated from emerging market securities. Governments of emerging market countries may engage in confiscatory taxation or expropriation of income and/or assets to raise revenues or to pursue a
domestic political agenda. In the past, emerging market countries have nationalized assets, companies and even entire sectors, including the assets of foreign investors, with inadequate or no compensation to the prior owners. There can be no
assurance that the Fund will not suffer a loss of any or all of its investments or, interest or dividends thereon, due to adverse fiscal or other policy changes in emerging market countries. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">There is also a greater risk that an emerging market government may take action that impedes or prevents the Fund from taking income and/or capital gains
earned in the local currency and converting into U.S. dollars (<I>i.e.</I>, &#147;repatriating&#148; local currency investments or profits). Certain emerging market countries have sought to maintain foreign exchange reserves and/or address the
economic volatility and dislocations caused by the large international capital flows by controlling or restricting the conversion of the local currency into other currencies. This risk tends to become more acute when economic conditions otherwise
worsen. There can be no assurance that if the Fund earns income or capital gains in an emerging market currency or PIMCO otherwise seeks to withdraw the Fund&#146;s investments from a given emerging market country, capital controls imposed by such
country will not prevent, or cause significant expense in, doing so. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Bankruptcy law and creditor reorganization processes may differ substantially from
those in the United States, resulting in greater uncertainty as to the rights of creditors, the enforceability of such rights, reorganization timing and the classification, seniority and treatment of claims. In certain emerging market countries,
although bankruptcy laws have been enacted, the process for reorganization remains highly uncertain. In addition, it may be impossible to seek legal redress against an issuer that is a sovereign state. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Other heightened risks associated with emerging markets investments include without limit: (i)&nbsp;risks due to less social, political and economic
stability; (ii)&nbsp;the smaller size of the market for such securities and a lower volume of trading, resulting in a lack of liquidity and in price volatility; (iii)&nbsp;certain national policies which may restrict the Fund&#146;s investment
opportunities, including restrictions on investing in issuers or industries deemed sensitive to relevant national interests and requirements that government approval be obtained prior to investment by foreign persons; (iv)&nbsp;certain national
policies that may restrict the Fund&#146;s repatriation of investment income, capital or the proceeds of sales of securities, including temporary restrictions on foreign capital remittances; (v)&nbsp;the lack of uniform accounting and auditing
standards and/or standards that may be significantly different from the standards required in the United States; (vi)&nbsp;less publicly available financial and other information regarding issuers; (vii)&nbsp;potential difficulties in enforcing
contractual obligations; and (viii)&nbsp;higher rates of inflation, higher interest rates and other economic concerns. The Fund may invest to a substantial extent in emerging market securities that are denominated in local currencies, subjecting the
Fund to a greater degree of foreign currency risk. See &#147;&#151;&nbsp;Currency Risk.&#148; Also, investing in emerging market countries may entail purchases of securities of issuers that are insolvent, bankrupt or otherwise of questionable
ability to satisfy their payment obligations as they become due, subjecting the Fund to a greater amount of credit risk and/or high yield risk. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Currency Risk </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may engage in practices and
strategies that will result in exposure to fluctuations in foreign exchange rates, in which case the Fund will be subject to foreign currency risk. The Fund&#146;s Common Shares are priced in U.S. dollars and the distributions paid by the Fund to
Common Shareholders are paid in U.S. dollars. However, a substantial portion of the Fund&#146;s assets may be denominated directly in foreign <FONT STYLE="white-space:nowrap">(non-U.S.)</FONT> currencies or in securities that trade in, and receive
revenues in, foreign <FONT STYLE="white-space:nowrap">(non-U.S.)</FONT> currencies, or in derivatives that provide exposure to foreign <FONT STYLE="white-space:nowrap">(non-U.S.)</FONT> 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. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">71 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Currency rates in foreign <FONT STYLE="white-space:nowrap">(non-U.S.)</FONT> 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 <FONT
STYLE="white-space:nowrap">(non-U.S.)</FONT> 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.
These fluctuations may have a significant adverse impact on the value of the Fund&#146;s portfolio and/or the level of Fund distributions made to Common Shareholders. As noted above, the Fund may (but is not required to) seek exposure to foreign
currencies, or attempt to hedge exposure to reduce the risk of loss due to fluctuations in currency exchange rates relative to the U.S. dollar. There is no assurance, however, that these strategies will be available or will be used by the Fund or,
if used, that they will be successful. As a result, the Fund&#146;s investments in foreign currency-denominated securities may reduce the returns of the Fund. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Currency risk may be particularly high to the extent that the Fund invests in foreign <FONT STYLE="white-space:nowrap">(non-U.S.)</FONT> 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 <FONT STYLE="white-space:nowrap">(non-U.S.)</FONT> currencies or engaging in foreign currency transactions that are economically tied to developed foreign countries. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Redenomination Risk </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Continuing uncertainty as to the
status of the euro and the European Monetary Union (the &#147;EMU&#148;) has 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 the Fund&#146;s portfolio investments. If one or more EMU countries were to stop using the euro as its primary currency, the Fund&#146;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 foreign currency risk, liquidity
risk and valuation risk to a greater extent than similar investments currently denominated in euros. See &#147;Principal Risks of the Fund&#151;Currency Risk,&#148; &#147;Principal Risks of the Fund&#151;Liquidity Risk&#148; and &#147;Principal
Risks of the Fund&#151;Valuation Risk.&#148; To the extent a currency used for redenomination purposes is not specified in respect of certain <FONT STYLE="white-space:nowrap">EMU-related</FONT> 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. The Fund may incur additional expenses to the extent it is required to seek judicial or other
clarification of the denomination or value of such securities. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Real Estate Risk </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">To the extent that the Fund invests in real estate related investments, including REITs or real-estate linked derivative instruments, it will be subject to
the risks associated with owning real estate and with the real estate industry generally. These include difficulties in valuing and disposing of real estate, the possibility of declines in the value of real estate, risks related to general and local
economic conditions, the possibility of adverse changes in the climate for real estate, environmental liability risks, the risk of increases in property taxes and operating expenses, possible adverse changes in zoning laws, the risk of casualty or
condemnation losses, limitations on rents, the possibility of adverse changes in interest rates and in the credit markets and the possibility of borrowers paying off mortgages sooner than expected, which may lead to reinvestment of assets at lower
prevailing interest rates. To the extent that the Fund invests in REITs, it will also be subject to the risk that a REIT may default on its obligations or go bankrupt. By investing in REITs indirectly through the Fund, a shareholder will bear not
only his or her proportionate share of the expenses of the Fund, but also, indirectly, similar expenses of the REITs. The Fund&#146;s investments in REITs could cause the Fund to recognize income in excess of cash received from those securities and,
as a result, the Fund may be required to sell portfolio securities, including when it is not advantageous to do so, in order to make distributions. An investment in a REIT or a real estate-linked derivative instrument that is linked to the value of
a REIT is subject to additional risks, such as poor performance by the manager of the REIT, adverse changes to the tax laws or failure by the REIT to qualify for <FONT STYLE="white-space:nowrap">tax-free</FONT> pass-through of income under the
Internal Revenue Code of 1986 as amended (the &#147;Code&#148;). In addition, some REITs have limited diversification because they invest in a limited number of properties, a narrow geographic area, or a single type of property. Also, the
</P>
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organizational documents of a REIT may contain provisions that make changes in control of the REIT difficult and time-consuming. Finally, private REITs are not traded on a national securities
exchange. As such, these products are generally illiquid. This reduces the ability of the Fund to redeem its investment early. Private REITs are also generally harder to value and may bear higher fees than public REITs. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>U.S. Government Securities Risk </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may invest in
debt securities issued or guaranteed by agencies, instrumentalities and sponsored enterprises of the U.S. Government. Some U.S. Government securities, such as U.S. Treasury bills, notes and bonds, and mortgage-related securities guaranteed by the
Government National Mortgage Association (&#147;GNMA&#148;), are supported by the full faith and credit of the United States; others, such as those of the Federal Home Loan Banks or the Federal Home Loan Mortgage Corporation (&#147;FHLMC&#148;), are
supported by the right of the issuer to borrow from the U.S. Treasury; others, such as those of the Federal National Mortgage Association (&#147;FNMA&#148;), are supported by the discretionary authority of the U.S. Government to purchase the
agency&#146;s obligations; and still others, such as those of the Student Loan Marketing Association, are supported only by the credit of the issuing agency, instrumentality or enterprise. Although U.S. Government-sponsored enterprises, such as the
Federal Home Loan Banks, FHLMC, FNMA and the Student Loan Marketing Association, may be chartered or sponsored by Congress, they are not funded by Congressional appropriations, and their securities are not issued by the U.S. Treasury or supported by
the full faith and credit of the U.S. Government and involve increased credit risks. Although legislation has been enacted to support certain government sponsored entities, including the Federal Home Loan Banks, FHLMC and FNMA, there is no assurance
that the obligations of such entities will be satisfied in full, or that such obligations will not decrease in value or default. It is difficult, if not impossible, to predict the future political, regulatory or economic changes that could impact
the government sponsored entities and the values of their related securities or obligations. In addition, certain governmental entities, including FNMA and FHLMC, have been subject to regulatory scrutiny regarding their accounting policies and
practices and other concerns that may result in legislation, changes in regulatory oversight and/or other consequences that could adversely affect the credit quality, availability or investment character of securities issued by these entities. See
&#147;Investment Objectives and Policies&#151;Mortgage-Related and Other Asset-Backed Securities&#148; in the Statement of Additional Information. U.S. Government debt securities generally involve lower levels of credit risk than other types of debt
securities of similar maturities, although, as a result, the yields available from U.S. Government debt securities are generally lower than the yields available from such other securities. Like other debt securities, the values of U.S. Government
securities change as interest rates fluctuate. Fluctuations in the value of portfolio securities will not affect interest income on existing portfolio securities but will be reflected in the Fund&#146;s NAV. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Foreign <FONT STYLE="white-space:nowrap">(Non-U.S.)</FONT> Government Securities Risk </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund&#146;s investments in debt obligations of foreign <FONT STYLE="white-space:nowrap">(non-U.S.)</FONT> governments or their <FONT
STYLE="white-space:nowrap">sub-divisions,</FONT> agencies and government sponsored enterprises and obligations of international agencies and supranational entities (together &#147;Foreign Government Securities&#148;) can involve a high degree of
risk. The foreign governmental entity that controls the repayment of debt may not be able or willing to repay the principal and/or interest when due in accordance with the terms of such debt. A governmental entity&#146;s willingness or ability to
repay principal and interest due in a timely manner may be affected by, among other factors, its cash flow situation, the extent of its foreign reserves, the availability of sufficient foreign exchange on the date a payment is due, the relative size
of the debt service burden to the economy as a whole, the governmental entity&#146;s policy towards the International Monetary Fund and the political constraints to which a governmental entity may be subject. Foreign governmental entities also may
be dependent on expected disbursements from other governments, multilateral agencies and others abroad to reduce principal and interest arrearages on their debt. The commitment on the part of these governments, agencies and others to make such
disbursements may be conditioned on the implementation of economic reforms and/or economic performance and the timely service of such debtor&#146;s obligations. Failure to implement such reforms, achieve such levels of economic performance or repay
principal or interest when due may result in the cancellation of such third parties&#146; commitments to lend funds to the foreign governmental entity, which may further impair such debtor&#146;s ability or willingness to timely service its debts.
Consequently, foreign governmental entities may default on their debt. Holders of Foreign Government Securities may be requested to participate in the rescheduling of such debt and to extend further loans to governmental entities. In the event of a
default by a governmental entity, there may be few or no effective legal remedies for collecting on such debt. These risks are particularly severe with respect to the Fund&#146;s investments in Foreign Government Securities of emerging market
countries. See &#147;Principal </P>
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Risks of the Fund&#151;Emerging Markets Risk.&#148; Among other risks, if the Fund&#146;s investments in Foreign Government Securities issued by an emerging market country need to be liquidated
quickly, the Fund could sustain significant transaction costs. Also, governments in many emerging market countries participate to a significant degree in their economies and securities markets, which may impair investment and economic growth, and
which may in turn diminish the value of the Fund&#146;s holdings in emerging market Foreign Government Securities and the currencies in which they are denominated and/or pay revenues. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Convertible Securities Risk </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Convertible securities are
fixed income securities, preferred stocks or other securities that are convertible into or exercisable for common stock of the issuer (or cash or securities of equivalent value) at either a stated price or a stated rate. The market values of
convertible securities may decline as interest rates increase and, conversely, may increase as interest rates decline. A convertible security&#146;s market value, however, tends to reflect the market price of the common stock of the issuing company
when that stock price approaches or is greater than the convertible security&#146;s &#147;conversion price.&#148; The conversion price is defined as the predetermined price at which the convertible security could be exchanged for the associated
stock. As the market price of the underlying common stock declines, the price of the convertible security tends to be influenced more by the yield of the convertible security. Thus, it may not decline in price to the same extent as the underlying
common stock. In the event of a liquidation of the issuing company, holders of convertible securities may be paid before the company&#146;s common stockholders but after holders of any senior debt obligations of the company. Consequently, the
issuer&#146;s convertible securities generally entail less risk than its common stock but more risk than its debt obligations. Convertible securities are often rated below investment grade or not rated because they fall below debt obligations and
just above common equity in order of preference or priority on the issuer&#146;s balance sheet. See &#147;Principal Risks of the Fund&#151;High Yield Risk.&#148; </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Synthetic Convertible Securities Risk </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may
invest in synthetic convertible securities, which are created through a combination of separate securities that possess the two principal characteristics of a traditional convertible security, i.e., an income-producing security
(&#147;income-producing component&#148;) and the right to acquire an equity security (&#147;convertible component&#148;). The income-producing component is achieved by investing in <FONT STYLE="white-space:nowrap">non-convertible,</FONT>
income-producing securities such as bonds, preferred stocks and money market instruments. The convertible component is achieved by purchasing warrants or options to buy common stock at a certain exercise price, or options on a stock index. The
values of synthetic convertible securities will respond differently to market fluctuations than a traditional convertible security because a synthetic convertible is composed of two or more separate securities or instruments, each with its own
market value. Synthetic convertible securities are also subject to the risks associated with derivatives. See &#147;Principal Risks of the Fund&#151;Derivatives Risk.&#148; In addition, if the value of the underlying common stock or the level of the
index involved in the convertible element falls below the strike price of the warrant or option, the warrant or option may lose all value. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Valuation
Risk </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">When market quotations are not readily available or are deemed to be unreliable, the Fund values its investments at fair value as determined in
good faith pursuant to policies and procedures approved by the Board of Trustees. See &#147;Net Asset Value.&#148; Fair value pricing may require subjective determinations about the value of a security or other asset. As a result, there can be no
assurance that fair value pricing will result in adjustments to the prices of securities or other assets, or that fair value pricing will reflect actual market value, and it is possible that the fair value determined for a security or other asset
will be materially different from quoted or published prices, from the prices used by others for the same security or other asset and/or from the value that actually could be or is realized upon the sale of that security or other asset. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Leverage Risk </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund&#146;s use of leverage (as
described under &#147;Use of Leverage&#148; in the body of this prospectus) creates the opportunity for increased Common Share net income, but also creates special risks for Common Shareholders. To the extent used, there is no assurance that the
Fund&#146;s leveraging strategies will be successful. Leverage is a speculative technique that may expose the Fund to greater risk and increased costs. The net proceeds that the Fund obtains from its use of reverse repurchase agreements, credit
default swaps, dollar rolls and/or borrowings (as well </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
as from any future issuance of preferred shares) will be invested in accordance with the Fund&#146;s investment objectives and policies as described in this prospectus and any prospectus
supplement. Interest or other expenses payable by the Fund with respect to its reverse repurchase agreements, credit default swaps, dollar rolls and borrowings for dividends payable with respect to any outstanding preferred shares will generally be
based on shorter-term interest rates that would be periodically reset. So long as the Fund&#146;s portfolio investments provide a higher rate of return (net of applicable Fund expenses) than the interest rates and other costs to the Fund of such
leverage, the investment of the proceeds thereof will generate more income than will be needed to pay the costs of the leverage. If so, and all other things being equal, the excess may be used to pay higher dividends to Common Shareholders than if
the Fund were not so leveraged. If, however, shorter-term interest rates rise relative to the rate of return on the Fund&#146;s portfolio, the interest and other costs to the Fund of leverage (including interest expenses on reverse repurchase
agreements, dollar rolls and borrowings and the dividend rate on any outstanding preferred shares) could exceed the rate of return on the debt obligations and other investments held by the Fund, thereby reducing return to Common Shareholders. In
addition, fees and expenses of any form of leverage used by the Fund will be borne entirely by the Common Shareholders (and not by preferred shareholders, if any) and will reduce the investment return of the Common Shares. Therefore, there can be no
assurance that the Fund&#146;s use of leverage will result in a higher yield on the Common Shares, and it may result in losses. In addition, any preferred shares issued by the Fund are expected to pay cumulative dividends, which may tend to increase
leverage risk. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Leverage creates several major types of risks for Common Shareholders, including: </P>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">the likelihood of greater volatility of NAV and market price of the Common Shares, and of the investment return to Common Shareholders, than a comparable portfolio without leverage; </TD></TR></TABLE>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">the possibility either that the Common Share dividends will fall if the interest and other costs of leverage rise, or that dividends paid on Common Shares will fluctuate because such costs vary over time; and
</TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">the effects of leverage in a declining market or a rising interest rate environment, as leverage is likely to cause a greater decline in the NAV of the Common Shares than if the Fund were not leveraged and may result in
a greater decline the market value of the Common Shares. </TD></TR></TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">In addition, the counterparties to the Fund&#146;s leveraging transactions and any
preferred shareholders of the Fund will have priority of payment over the Fund&#146;s Common Shareholders. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The use by the Fund of reverse repurchase
agreements and dollar rolls to obtain leverage also involves special risks. For instance, the market value of the securities that the Fund is obligated to repurchase under a reverse repurchase agreement or dollar roll may decline below the
repurchase price. See &#147;The Fund&#146;s Investment Objectives and Policies&#151;Portfolio Contents and Other Information&#150;&#150;Reverse Repurchase Agreements and Dollar Rolls.&#148; </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">In addition to reverse repurchase agreements, dollar rolls and/or borrowings (or a future issuance of preferred shares), the Fund may engage in other
transactions that may give rise to a form of leverage including, among others, futures and forward contracts (including foreign currency exchange contracts), credit default swaps, total return swaps, basis swaps and other derivative transactions,
loans of portfolio securities, short sales and when-issued, delayed delivery and forward commitment transactions). The Fund&#146;s use of such transactions gives rise to associated leverage risks described above, and may adversely affect the
Fund&#146;s income, distributions and total returns to Common Shareholders. The Fund manages some of its derivative positions by segregating an amount of cash or liquid securities equal to the notional value or the market value, as applicable, of
those positions. See &#147;Principal Risks of the Fund&#151;Segregation and Coverage Risk.&#148; The Fund may also offset derivatives positions against one another or against other assets to manage effective market exposure resulting from
derivatives in its portfolio. To the extent that any offsetting positions do not behave in relation to one another as expected, the Fund may perform as if it is leveraged through use of these derivative strategies. See &#147;Use of Leverage.&#148;
</P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Because the fees received by the Investment Manager are based on the average daily &#147;total managed assets&#148; of the Fund (including assets
attributable to any reverse repurchase agreements, dollar rolls, borrowings and preferred shares that may be outstanding) minus accrued liabilities (other than liabilities representing reverse repurchase agreements, dollar rolls and borrowings), the
Investment Manager have a financial incentive for the Fund to use reverse repurchase agreements, dollar rolls and borrowings or to issue preferred shares, which may create a conflict of interest between the Investment Manager, on the one hand, and
the Common Shareholders, on the other hand. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">75 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Segregation and Coverage Risk </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Certain portfolio management techniques, such as, among other things, using reverse repurchase agreements or dollar rolls, purchasing securities on a
when-issued or delayed delivery basis, entering into swap agreements, futures contracts or other derivative transactions, or engaging in short sales, may be considered senior securities unless steps are taken to segregate the Fund&#146;s assets or
otherwise cover its obligations. To avoid having these instruments considered senior securities, the Fund may segregate liquid assets with a value equal (on a daily
<FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">mark-to-market</FONT></FONT> basis) to its obligations under these types of leveraged transactions, enter into offsetting transactions or otherwise cover such transactions. See
&#147;Use of Leverage&#148; in this prospectus. The Fund may be unable to use such segregated assets for certain other purposes, which could result in the Fund earning a lower return on its portfolio than it might otherwise earn if it did not have
to segregate those assets in respect of, or otherwise cover such portfolio positions. To the extent the Fund&#146;s assets are segregated or committed as cover, it could limit the Fund&#146;s investment flexibility. Segregating assets and covering
positions will not limit or offset losses on related positions. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Focused Investment Risk </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">To the extent that the Fund focuses its investments in a particular industry, the NAV of the common shares will be more susceptible to events or factors
affecting companies in that industry. These may 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 regulation and other economic, market, political or other
developments specific to that industry. Also, the Fund 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 events and factors described above, which will subject the Fund to greater risk. The Fund also will be subject to focused investment risk to the extent that it invests a substantial portion of its
assets in a particular country or geographic region. See &#147;Principal Risks of the Fund&#151;Foreign <FONT STYLE="white-space:nowrap">(Non-U.S.)</FONT> Investment Risk,&#148; &#147;Principal Risks of the Fund&#151;Emerging Markets Risk&#148; and
&#147;Principal Risks of the Fund&#151;Currency Risk.&#148; </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">As a matter of fundamental policy, the Fund will normally invest at least 25% of its total
assets in privately-issued (commonly known as <FONT STYLE="white-space:nowrap">&#147;non-agency&#148;)</FONT> mortgage-related securities, and therefore will be particularly susceptible to the risks associated with these securities. See
&#147;Principal Risks of the Fund&#151;Privately Issued Mortgage-Related Securities Risk.&#148; </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Derivatives Risk </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may utilize a variety of derivative instruments (both long and short positions) for investment or risk management purposes, as well as to leverage
its portfolio. The Fund may use derivatives to gain exposure to securities markets in which it may invest (e.g., pending investment of the proceeds of this offering in individual securities, as well as on an ongoing basis). The Fund may also use
derivatives to add leverage to its portfolio. See &#147;Principal Risks of the Fund&#151;Leverage Risk.&#148; Derivatives transactions that the Fund may utilize include, but are not limited to, purchases or sales of futures and forward contracts
(including foreign currency exchange contracts), call and put options, credit default swaps, total return swaps, basis swaps and other swap agreements. The Fund may also have exposure to derivatives, such as interest rate or credit-default swaps,
through investment in credit-linked trust certificates and other securities issued by special purpose or structured vehicles. The Fund&#146;s use of derivative instruments involves risks different from, and 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 prospectus, such as liquidity risk, interest rate risk, issuer risk, credit risk, leveraging
risk, counterparty risk, management risk and, if applicable, smaller company risk. See &#147;Principal Risks of the Fund&#151;Segregation and Coverage Risk.&#148; They also involve the risk of mispricing or improper valuation, the risk of
unfavorable or ambiguous documentation and the risk that changes in the value of the derivative may not correlate perfectly with the underlying asset, rate or index. If the Fund invests in a derivative instrument, it could lose more than the
principal amount invested. Also, suitable derivative transactions may not be available in all circumstances and there can be no assurance that the Fund will engage in these transactions to reduce exposure to other risks when that would be
beneficial. The Fund&#146;s use of derivatives also may increase the amount and affect the character and/or timing of taxes payable by Common Shareholders. See &#147;Tax Matters.&#148; </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">76 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">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 of the Fund&#146;s derivative transactions and cause the Fund to lose value. For instance, in December 2015, the SEC proposed new regulations applicable to a registered investment company&#146;s use of
derivatives and related instruments. If adopted as proposed, these regulations could significantly limit or impact the Fund&#146;s ability to invest in derivatives and other instruments, limit the Fund&#146;s ability to employ certain strategies
that use derivatives and/or adversely affect the Fund&#146;s performance, efficiency in implementing their strategy, liquidity and/or ability to pursue their investment objectives. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Credit Default Swaps Risk </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Credit default swap
agreements may involve greater risks than if the Fund had invested in the reference obligation directly since, in addition to general market risks, credit default swaps are subject to illiquidity risk, counterparty risk and credit risk. A buyer
generally also will lose its investment and recover nothing should no credit event occur and the swap is held to its termination date. If a credit event were to occur, the value of any deliverable obligation received by the seller (if any), coupled
with the upfront or periodic payments previously received, may be less than the full notional value it pays to the buyer, resulting in a loss of value to the seller. When the Fund acts as a seller of a credit default swap, it is exposed to many of
the same risks of leverage described herein since if an event of default occurs, the seller must pay the buyer the full notional value of the reference obligation. See &#147;Principal Risks of the Fund&#151;Leverage Risk.&#148; </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Although the Fund may seek to realize gains by selling credit default swaps that increase in value, to realize gains on selling credit default swaps, an
active secondary market for such instruments must exist or the Fund must otherwise be able to close out these transactions at advantageous times. In addition to the risk of losses described above, if no such secondary market exists or the Fund is
otherwise unable to close out these transactions at advantageous times, selling credit default swaps may not be profitable for the Fund. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The market for
credit default swaps has become more volatile in recent years as the creditworthiness of certain counterparties has been questioned and/or downgraded. The Fund will be subject to credit risk with respect to the counterparties to the derivative
contract (whether a clearing corporation in the case of a cleared credit default swap or another third party in the case of an uncleared credit default swap). If a counterparty&#146;s credit becomes significantly impaired, multiple requests for
collateral posting in a short period of time could increase the risk that the Fund may not receive adequate collateral. The Fund may exit its obligations under a credit default swap only by terminating the contract and paying applicable breakage
fees, or by entering into an offsetting credit default swap position, which may cause the Fund to incur more losses. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Counterparty Risk </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund will be subject to credit risk with respect to the counterparties to the derivative contracts and other instruments entered into by the Fund or held
by special purpose or structured vehicles in which the Fund invests. In the event that the Fund enters into a derivative transaction with a counterparty that subsequently becomes insolvent or becomes the subject of a bankruptcy case, the derivative
transaction may be terminated in accordance with its terms and the Fund&#146;s ability to realize its rights under the derivative instrument and its ability to distribute the proceeds could be adversely affected. If a counterparty becomes bankrupt
or otherwise fails to perform its obligations under a derivative contract due to financial difficulties, the Fund may experience significant delays in obtaining any recovery (including recovery of any collateral it has provided to the counterparty)
in a dissolution, assignment for the benefit of creditors, liquidation, <FONT STYLE="white-space:nowrap">winding-up,</FONT> bankruptcy, or other analogous proceeding. In addition, in the event of the insolvency of a counterparty to a derivative
transaction, the derivative transaction would typically be terminated at its fair market value. If the Fund is owed this fair market value in the termination of the derivative transaction and its claim is unsecured, the Fund will be treated as a
general creditor of such counterparty, and will not have any claim with respect to any underlying security or asset. The Fund may obtain only a limited recovery or may obtain no recovery in such circumstances. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">77 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Failure of Futures Commission Merchants and Clearing Organizations </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may deposit funds required to margin open positions in the derivative instruments subject to the CEA with a clearing broker registered as a
&#147;futures commission merchant&#148; (&#147;FCM&#148;). The CEA requires an FCM to segregate all funds received from customers with respect to any orders for the purchase or sale of U.S. domestic futures contracts and cleared swaps from the
FCM&#146;s proprietary assets. Similarly, the CEA requires each FCM to hold in a separate secure account all funds received from customers with respect to any orders for the purchase or sale of foreign futures contracts and segregate any such funds
from the funds received with respect to domestic futures contracts. However, all funds and other property received by a clearing broker from its customers are held by the clearing broker on a commingled basis in an omnibus account and may be freely
accessed by the clearing broker, which may also invest any such funds in certain instruments permitted under the applicable regulation. There is a risk that assets deposited by the Fund with any swaps or futures clearing broker as margin for futures
contracts or cleared swaps may, in certain circumstances, be used to satisfy losses of other clients of the Fund&#146;s clearing broker. In addition, the assets of the Fund may not be fully protected in the event of the clearing broker&#146;s
bankruptcy, as the Fund would be limited to recovering only a pro rata share of all available funds segregated on behalf of the clearing broker&#146;s combined domestic customer accounts. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Similarly, the CEA requires a clearing organization approved by the U.S. Commodity Futures Trading Commission (&#147;CFTC&#148;) as a derivatives clearing
organization to segregate all funds and other property received from a clearing member&#146;s clients in connection with domestic futures, swaps and options contracts from any funds held at the clearing organization to support the clearing
member&#146;s proprietary trading. Nevertheless, with respect to futures and options contracts, a clearing organization may use assets of a <FONT STYLE="white-space:nowrap">non-defaulting</FONT> customer held in an omnibus account at the clearing
organization to satisfy payment obligations of a defaulting customer of the clearing member to the clearing organization. As a result, in the event of a default or the clearing broker&#146;s other clients or the clearing broker&#146;s failure to
extend own funds in connection with any such default, the Fund would not be able to recover the full amount of assets deposited by the clearing broker on its behalf with the clearing organization. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Equity Securities and Related Market Risk </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Subject to
the Fund&#146;s investment policies, the Fund may hold common stocks and other equity securities from time to time, including without limit those it has received through the conversion of a convertible security held by the Fund or in connection with
the restructuring of a debt security. The market price of common stocks and other equity securities may go up or down, sometimes rapidly or unpredictably. Equity securities may decline in value due to factors affecting equity securities markets
generally, particular industries represented in those markets, or the issuer itself. See &#147;Principal Risks of the Fund &#150;&#150;Issuer Risk.&#148; The values of equity securities 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 or adverse investor sentiment generally. They 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. Equity securities generally have greater price volatility than bonds and
other debt securities. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Preferred Securities Risk </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">In addition to equity securities risk (see &#147;Principal Risks of the Fund&#151;Equity Securities and Related Market Risk&#148;), credit risk (see
&#147;Principal Risks of the Fund&#151;Credit Risk&#148;) and possibly high yield risk (see &#147;Principal Risks of the Fund&#151;High Yield Risk&#148;), investment in preferred securities involves certain other risks. Certain preferred securities
contain provisions that allow an issuer under certain conditions to skip or defer distributions. If the Fund owns a preferred security that is deferring its distribution, the Fund may be required to include the amount of the deferred distribution in
its taxable income for tax purposes despite the fact that it does not currently receive such amount. In order to receive the special treatment accorded to RICs and their shareholders under the Code and to avoid U.S. federal income and/or excise
taxes at the Fund level, the Fund may be required to distribute this income to shareholders in the tax year in which the income is recognized (without a corresponding receipt of cash). Therefore, the Fund may be required to pay out as an income
distribution in any such tax year an amount greater than the total amount of cash income the Fund actually received, and to sell portfolio securities, including at potentially disadvantageous times or prices, to obtain cash needed for these income
distributions. Preferred securities often are subject to legal provisions that allow for redemption in the event of certain tax or legal changes or at the issuer&#146;s call. In the event of redemption, the Fund may not be able to reinvest the
proceeds at comparable rates of return. Preferred securities are subordinated to bonds and other debt securities in an issuer&#146;s capital structure in terms of priority for corporate income and liquidation payments, and therefore will be subject
to greater credit risk than those </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">78 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
debt securities. Preferred securities may trade less frequently and in a more limited volume and may be subject to more abrupt or erratic price movements than many other securities, such as
common stocks, corporate debt securities and U.S. Government securities. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Smaller Company Risk </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The general risks associated with debt instruments or equity securities are particularly pronounced for securities issued by companies with small market
capitalizations. Small capitalization companies involve certain special risks. They are more likely than larger companies to have limited product lines, markets or financial resources, or to depend on a small, inexperienced management group.
Securities of smaller companies may trade less frequently and in lesser volume than more widely held securities and their values may fluctuate more sharply than other securities. They may also have limited liquidity. These securities may therefore
be more vulnerable to adverse developments than securities of larger companies, and the Fund may have difficulty purchasing or selling securities positions in smaller companies at prevailing market prices. Also, there may be less publicly available
information about smaller companies or less market interest in their securities as compared to larger companies. Companies with <FONT STYLE="white-space:nowrap">medium-sized</FONT> market capitalizations may have risks similar to those of smaller
companies. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Confidential Information Access Risk </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">In
managing the Fund, PIMCO may from time to time have the opportunity to receive material, <FONT STYLE="white-space:nowrap">non-public</FONT> information (&#147;Confidential Information&#148;) about the issuers of certain investments, including,
without limit, senior floating rate loans, other bank loans and related investments being considered for acquisition by the Fund or held in the Fund&#146;s portfolio. For example, a bank issuer of privately placed senior floating rate loans
considered by the Fund may offer to provide PIMCO with financial information and related documentation regarding the bank issuer that is not publicly available. Pursuant to applicable policies and procedures, PIMCO may (but is not required to) seek
to avoid receipt of Confidential Information from the issuer so as to avoid possible restrictions on its ability to purchase and sell investments on behalf of the Fund and other clients to which such Confidential Information relates (e.g., other
securities issued by the bank used in the example above). In such circumstances, the Fund (and other PIMCO clients) may be disadvantaged in comparison to other investors, including with respect to the price the Fund pays or receives when it buys or
sells an investment. Further, PIMCO&#146;s and the Fund&#146;s abilities to assess the desirability of proposed consents, waivers or amendments with respect to certain investments may be compromised if they are not privy to available Confidential
Information. PIMCO may also determine to receive such Confidential Information in certain circumstances under its applicable policies and procedures. If PIMCO intentionally or unintentionally comes into possession of Confidential Information, it may
be unable, potentially for a substantial period of time, to purchase or sell investments to which such Confidential Information relates. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Short Sale
Risk </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund&#146;s short sales, if any, are subject to special risks. A short sale involves the sale by the Fund of a security that it does not own
with the hope of purchasing the same security at a later date at a lower price. The Fund may also enter into a short position through a forward commitment or a short derivative position through a futures contract or swap agreement. If the price of
the security or derivative has increased during this time, then the Fund will incur a loss equal to the increase in price from the time that the short sale was entered into plus any premiums and interest paid to the third party. Therefore, short
sales involve the risk that losses may be exaggerated, potentially losing more money than the actual cost of the investment. By contrast, a loss on a long position arises from decreases in the value of the security and is limited by the fact that a
security&#146;s value cannot decrease below zero. By investing the proceeds received from selling securities short, the Fund could be deemed to be employing a form of leverage, which creates special risks. The use of leverage may increase the
Fund&#146;s exposure to long securities positions and make any change in the Fund&#146;s NAV greater than it would be without the use of leverage. This could result in increased volatility of returns. There is no guarantee that any leveraging
strategy the Fund employs will be successful during any period in which it is employed. In times of unusual or adverse market, economic, regulatory or political conditions, the Fund may not be able, fully or partially, to implement its short selling
strategy. Periods of unusual or adverse market, economic, regulatory or political conditions generally may exist for as long as six months and, in some cases, much longer. Also, there is the risk that the third party to the short sale may fail to
honor its contract terms, causing a loss to the Fund. See &#147;Principal Risks of the Fund&#151;Leverage Risk.&#148; Also, there is the risk that the counterparty to a short sale may fail to honor its contractual terms, causing a loss to the Fund.
See &#147;Principal Risks of the Fund&#151;Counterparty Risk.&#148; To the extent the Fund seeks to obtain some or all of its short exposure by using derivative instruments instead of engaging directly in short sales on individual securities, it
will be subject to many of the foregoing risks, as well as to those described under &#147;Principal Risks of the Fund&#151;Derivatives Risk.&#148; See also &#147;Principal Risks of the Fund&#151;Segregation and Coverage Risk.&#148; </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Other Investment Companies Risk </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may invest in securities of other open- or <FONT STYLE="white-space:nowrap">closed-end</FONT> investment companies, including without limit ETFs and
money market funds, to the extent that such investments are consistent with the Fund&#146;s investment objectives and policies and permissible under the 1940 Act. As a shareholder in an investment company, the Fund will bear its ratable share of
that investment company&#146;s expenses, and would remain subject to payment of the Fund&#146;s investment management fees with respect to the assets so invested. Common Shareholders would therefore be subject to duplicative expenses to the extent
the Fund invests in other investment companies. In addition, these other investment companies may utilize leverage, in which case an investment would subject the Fund to additional risks associated with leverage. Money market mutual funds in which
the Fund may invest are subject to Rule <FONT STYLE="white-space:nowrap">2a-7</FONT> of the 1940 Act, and invest in a variety of short-term, high quality, dollar-denominated money market instruments. Money market funds are not designed to offer
capital appreciation. Effective October&nbsp;14, 2016, amendments to money market fund regulations could affect a money market fund&#146;s operations and possibly negatively affect its return. In addition, certain money market funds may impose a fee
upon the sale of shares or may temporarily suspend the ability of investors to redeem shares if such fund&#146;s liquidity falls below required minimums, which may adversely affect the Fund&#146;s returns or liquidity. Due to its own financial
interest or other business considerations, the Investment Manager may choose to invest a portion of the Fund&#146;s assets in investment companies sponsored or managed by the Investment Manager or its related parties in lieu of investments by the
Fund directly in portfolio securities, or may choose to invest in such investment companies over investment companies sponsored or managed by others. Applicable law may limit the Fund&#146;s ability to invest in other investment companies. See
&#147;Principal Risks of the Fund &#151;Leverage Risk.&#148; </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Private Placements Risk </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">A private placement involves the sale of securities that have not been registered under the Securities Act, or relevant provisions of applicable <FONT
STYLE="white-space:nowrap">non-U.S.</FONT> law, to certain institutional and qualified individual purchasers, such as the Fund. In addition to the general risks to which all securities are subject, securities received in a private placement
generally are subject to strict restrictions on resale, and there may be no liquid secondary market or ready purchaser for such securities. See &#147;Principal Risks of the Fund&#151;Liquidity Risk.&#148; Therefore, the Fund may be unable to dispose
of such securities when it desires to do so, or at the most favorable time or price. Private placements may also raise valuation risks. See &#147;Principal Risks of the Fund&#151;Valuation Risk.&#148; </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Inflation/Deflation Risk </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Inflation risk is the risk
that the value of assets or income from the Fund&#146;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 the Fund&#146;s portfolio could 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 the
Fund&#146;s portfolio and Common Shares. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Legal and Regulatory Risk </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Legal, tax and regulatory changes could occur and may adversely affect the Fund and its ability to pursue its investment strategies and/or increase the costs
of implementing such strategies. New (or revised) laws or regulations may be imposed by CFTC, the SEC, the U.S. Internal Revenue Service (&#147;IRS&#148;), the U.S. Federal Reserve or other banking regulators, other governmental regulatory
authorities or self-regulatory organizations that supervise the financial markets that could adversely affect the Fund. In particular, these agencies are implementing a variety of new rules pursuant to financial reform legislation in the United
States. The EU (and some other countries) are implementing similar requirements. The Fund also may be adversely affected by changes in the enforcement or interpretation of existing statutes and rules by these governmental regulatory authorities or
self-regulatory organizations. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">80 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">In addition, the securities and futures markets are subject to comprehensive statutes, regulations and margin
requirements. The CFTC, the SEC, the Federal Deposit Insurance Corporation, other regulators and self-regulatory organizations and exchanges are authorized under these statutes, regulations and otherwise to take extraordinary actions in the event of
market emergencies. The Fund and the Investment Manager have historically been eligible for exemptions from certain regulations. However, there is no assurance that the Fund and the Investment Manager will continue to be eligible for such
exemptions. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The CFTC and certain futures exchanges have established limits, referred to as &#147;position limits,&#148; on the maximum net long or net
short positions which any person may hold or control in particular options and futures contracts. The CFTC has proposed position limits for certain swaps. All positions owned or controlled by the same person or entity, even if in different accounts,
may be aggregated for purposes of determining whether the applicable position limits have been exceeded. Thus, even if the Fund do not intend to exceed applicable position limits, it is possible that different clients managed by the Investment
Manager and their related parties may be aggregated for this purpose. Therefore it is possible that the trading decisions of Investment Manager may have to be modified and that positions held by the Fund may have to be liquidated in order to avoid
exceeding such limits. The modification of investment decisions or the elimination of open positions, if it occurs, may adversely affect the performance of the Fund. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The SEC has in the past adopted interim rules requiring reporting of all short positions above a certain<I>&nbsp;de minimis</I>&nbsp;threshold and may adopt
rules requiring monthly public disclosure in the future. In addition, other <FONT STYLE="white-space:nowrap">non-U.S.</FONT> jurisdictions where the Fund may trade have adopted reporting requirements. If the Fund&#146;s short positions or its
strategy become generally known, it could have a significant effect on the Investment Manager&#146;s ability to implement its investment strategy. In particular, it would make it more likely that other investors could cause a short squeeze in the
securities held short by the Fund forcing the Fund to cover its positions at a loss. Such reporting requirements may also limit the Investment Manager&#146;s ability to access management and other personnel at certain companies where the Investment
Manager seeks to take a short position. In addition, if other investors engage in copycat behavior by taking positions in the same issuers as the Fund, the cost of borrowing securities to sell short could increase drastically and the availability of
such securities to the Fund could decrease drastically. Such events could make the Fund unable to execute its investment strategy. In addition, if the SEC were to adopt restrictions regarding short sales, they could restrict the Fund&#146;s ability
to engage in short sales in certain circumstances, and the Fund may be unable to execute their investment strategies as a result. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The SEC and regulatory
authorities in other jurisdictions may adopt (and in certain cases, have adopted) bans on short sales of certain securities in response to market events. Bans on short selling may make it impossible for the Fund to execute certain investment
strategies and may have a material adverse effect on the Fund&#146;s ability to generate returns. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Recently adopted rules implementing the credit risk
retention requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the &#147;Dodd-Frank Act&#148;), for asset-backed securities will require the sponsor of certain securitization vehicles (or a majority owned affiliate of such
sponsor) to retain, and to refrain from transferring, selling, conveying to a third party, or hedging 5% of the credit risk in assets transferred, sold, or conveyed through the issuance of the asset-backed securities of such vehicle, subject to
certain exceptions. The rules apply to offerings of residential mortgage-backed securities (RMBS) occurring on and after December&nbsp;24, 2015 and to offerings of other types of asset-backed securities occurring on and after December&nbsp;24, 2016,
subject to certain exceptions. In addition, a refinancing of, or a significant amendment to, a securitization that closed prior to such date may in certain cases result in the application of the rules to a securitization that was previously not
subject to the Dodd-Frank risk retention requirements. The impact of the risk retention rules on the securitization markets is uncertain. These requirements may increase the costs to originators, securitizers, and, in certain cases, collateral
managers of securitization vehicles in which the Fund may invest, which costs could be passed along to such Fund as an investor in such vehicles. In addition, the costs imposed by the risk retention rules on originators, securitizers and/or
collateral managers may result in a reduction of the number of new offerings of asset-backed securities and thus in fewer investment opportunities for the Fund. A reduction in the number of new securitizations could also reduce liquidity in the
markets for certain types of financial assets that are typically held by securitization vehicles, which in turn could negatively affect the returns on the Fund&#146;s investment in asset-backed securities. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">81 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Regulatory Risk&#151;Commodity Pool Operator </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The CFTC has adopted regulations that subject registered investment companies and their investment advisers to regulation by the CFTC if the registered
investment company invests more than a prescribed level of its liquidation value in commodity futures, options on commodities or commodity futures, swaps, or other financial instruments regulated under the Commodity Exchange Act (&#147;commodity
interests&#148;), or if the Fund markets itself as providing investment exposure to such instruments. The Investment Manager is registered with the National Futures Association (&#147;NFA&#148;) as a &#147;commodity pool operator&#148;
(&#147;CPO&#148;) under the CEA with respect to certain registered funds it manages other than the Fund. The Investment Manager has claimed an exclusion from CPO registration pursuant to CFTC Rule 4.5 with respect to the Fund. For the Investment
Manager to remain eligible for this exclusion, the Fund must comply with certain limitations, including limits on its ability to use any commodity interests and limits on the manner in which the Fund holds out its use of such commodity interests.
These limitations may restrict the Fund&#146;s ability to pursue its investment objective and strategies, increase the costs of implementing its strategies, result in higher expenses for the Fund, and/or adversely affect the Fund&#146;s total
return. Further, in the event the Investment Manager becomes unable to rely on the exclusion in CFTC Rule 4.5 with respect to the Fund and is required to register as a CPO with respect to the Fund, the Fund will be subject to additional regulation
and its expenses may increase. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Liquidity Risk </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The
Fund may invest without limit in illiquid securities (i.e., securities that cannot be disposed of within seven days in the ordinary course of business at approximately the value at which the Fund has valued the securities). Liquidity risk exists
when particular investments are difficult to purchase or sell. Many of the Fund&#146;s investments may be illiquid. Illiquid securities may become harder to value, especially in changing markets. The Fund&#146;s investments in illiquid securities
may reduce the returns of the Fund because it may be unable to sell the illiquid securities at an advantageous time or price or possibly require the Fund to dispose of other investments at unfavorable times or prices in order to satisfy its
obligations, which could prevent the Fund 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 &#147;make markets,&#148; 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, the Fund, due to limitations on investments in illiquid securities 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 the Fund&#146;s principal investment strategies involve securities of companies with smaller market capitalizations, foreign <FONT STYLE="white-space:nowrap">(non-U.S.)</FONT> securities,
Rule 144A securities, senior loans, illiquid sectors of fixed income securities, derivatives or securities with substantial market and/or credit risk, the Fund 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. It may also be the case that other market participants may be attempting to
liquidate fixed income holdings at the same time as the Fund, causing increased supply in the market and contributing to liquidity risk and downward pricing pressure. See &#147;Principal Risks of the Fund&#151;Valuation Risk.&#148; </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Tax Risk </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">[The Fund has elected to be treated as a
&#147;regulated investment company&#148; under the Code and each year to qualify and be eligible to be treated as such. If the Fund qualifies as a regulated investment company, it generally will not be subject to U.S. federal income tax on its net
investment income or net short-term or long-term capital gains, distributed (or deemed distributed, as described below) to shareholders, provided that, for each taxable year, the Fund distributes (or is treated as distributing) to its shareholders
an amount equal to or exceeding 90% of its &#147;investment company taxable income&#148; as that term is defined in the Code (which includes, among other things, dividends, taxable interest and the excess of any net short-term capital gains over net
long-term capital losses, as reduced by certain deductible expenses). The Fund generally distributes all or substantially all of its investment company taxable income and net capital gain each year. In order for the Fund to qualify as a regulated
investment company in any taxable year, the Fund must meet certain asset diversification tests and at least 90% of its gross income for such year must be certain types of qualifying income. Foreign currency gains will generally be treated as
qualifying income for purposes of the 90% gross income requirement. However, the U.S. Treasury Department has </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
authority to issue regulations in the future that could treat some or all of the Fund&#146;s foreign currency gains as <FONT STYLE="white-space:nowrap">non-qualifying</FONT> income, thereby
jeopardizing the Fund&#146;s status as a regulated investment company for all years to which the regulations are applicable. Income derived from some commodity-linked derivatives is not qualifying income, and the treatment of income from some other
commodity-linked derivatives is uncertain, for purposes of the 90% gross income test. If for any taxable year the Fund were to fail to meet the income or diversification test described above, the Fund could in some cases cure such failure, including
by paying a fund-level tax and, in the case of a diversification test failure, disposing of certain assets. If the Fund were ineligible to or otherwise did not cure such failure for any year, or were otherwise to fail to qualify as a regulated
investment company accorded special tax treatment in any taxable year, it would be treated as a corporation subject to U.S. federal income tax, thereby subjecting any income earned by the Fund to tax at the corporate level (currently at a 35% U.S.
federal tax rate) and, when such income is distributed, to a further tax at the shareholder level to the extent of the Fund&#146;s current or accumulated earnings and profits.] </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Recent Economic Conditions Risk </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The debt and equity
capital markets in the United States and in foreign countries in the recent past were negatively affected by significant write-offs in the banking and financial services sectors relating to subprime mortgages and the
<FONT STYLE="white-space:nowrap">re-pricing</FONT> of credit risk in the broadly syndicated market, among other things. These events, along with the deterioration of housing markets, the failure of banking and other major financial institutions and
resulting governmental actions led to worsening general economic conditions, which materially and adversely affected the broader financial and credit markets and reduced the availability of debt and equity capital for the market as a whole and
financial firms in particular. These developments may increase the volatility of the value of securities owned by the Fund, and also may make it more difficult for the Fund to accurately value securities or to sell securities on a timely basis.
These developments adversely affected the broader global economy, and may continue to do so, which in turn may adversely affect the ability of issuers of securities owned by the Fund to make payments of principal and interest when due, lead to lower
credit ratings and increase the rate of defaults. Such developments could, in turn, reduce the value of securities owned by the Fund and adversely affect the NAV and/or market value of the Fund&#146;s Common Shares. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The instability in the financial markets discussed above has led the U.S. and certain foreign governments to take a number of unprecedented actions designed
to support certain banking and other financial institutions and segments of the financial markets that have experienced extreme volatility, and in some cases a lack of liquidity. Federal, state and other governments and their regulatory agencies or
self-regulatory organizations may take actions that affect the regulation of the instruments in which the Fund invests, or the issuers of such instruments, in ways that are unforeseeable or not fully understood or anticipated. Governments or their
agencies have and may in the future acquire distressed assets from financial institutions and acquire ownership interests in those institutions. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">U.S.
legislation or regulation may also change the way in which the Fund itself is regulated. Such legislation or regulation could limit or preclude the Fund&#146;s ability to achieve its investment objective. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">According to various reports, certain financial institutions, commencing as early as 2005 and throughout the global financial crisis, routinely made
artificially low submissions in the LIBOR rate setting process. In June 2012, one such financial institution was fined a significant amount by various financial regulators in connection with allegations of manipulation of LIBOR rates, and other
financial institutions in various countries are being investigated for similar actions. These developments may have adversely affected the interest rates on securities whose interest payments were determined by reference to LIBOR. Any future similar
developments could, in turn, adversely affect the value of securities owned by the Fund. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Global economies and financial markets are increasingly
interconnected, which increases the possibility that conditions in one country or region might adversely impact issuers in a different country or region or across the globe. For instance, a significant slowdown in China&#146;s economy is adversely
affecting worldwide commodity prices and the economies of many countries, especially those that depend heavily on commodity production and/or trade with China. The severity or duration of adverse economic conditions may also be affected by policy
changes made by governments or quasi-governmental organizations. The imposition of sanctions by the United States or another government on a country could cause disruptions to the country&#146;s financial system and economy, which could negatively
impact the value of securities. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">83 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Market Disruption and Geopolitical Risk </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The wars with Iraq and Afghanistan and similar conflicts and geopolitical developments, their aftermath and substantial military presence in Afghanistan,
along with instability in Pakistan, Egypt, Libya, Syria, Russia, Ukraine, Yemen and the Middle East, possible terrorist attacks in the United States and around the world, growing social and political discord in the United States, the European debt
crisis, the response of the international community&#151;through economic sanctions and otherwise&#151;to Russia&#146;s recent annexation of the Crimea region of Ukraine and posture
<FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">vis-a-vis</FONT></FONT> Ukraine, further downgrade of U.S. Government securities, the outbreak of infectious diseases such as Ebola and other similar events may have long-term effects
on the U.S. and worldwide financial markets and may cause further economic uncertainties in the United States and worldwide. The potential costs of rebuilding infrastructure cannot be predicted with any certainty. Terrorist attacks on the World
Trade Center and the Pentagon on September&nbsp;11, 2001 closed some of the U.S. securities markets for a <FONT STYLE="white-space:nowrap">four-day</FONT> period and similar future events cannot be ruled out. The war and occupation, terrorism and
related geopolitical risks have led, and may in the future lead, to increased short-term market volatility and may have adverse long-term effects on U.S. and world economies and markets generally. Likewise, natural and environmental disasters, such
as the earthquake and tsunami in Japan in early 2011, and systemic market dislocations of the kind surrounding the insolvency of Lehman Brothers in 2008, if repeated, could be highly disruptive to economies and markets. Those events, as well as
other changes in foreign and domestic economic and political conditions also could have an acute effect on individual issuers or related groups of issuers. These risks also could adversely affect individual issuers and securities markets, interest
rates, secondary trading, ratings, credit risk, inflation, deflation and other factors relating to the Fund&#146;s investments and the market value and NAV of the Fund&#146;s Common Shares. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">At a referendum in June 2016, the United Kingdom (the UK) voted to leave the European Union (EU). In connection with the British exit from the EU (commonly
known as &#147;Brexit&#148;), it is expected that the UK will invoke article 50 of the Treaty of Lisbon to withdraw from the EU in due course, however there is a significant degree of uncertainty about how negotiations relating to the UK&#146;s
withdrawal and new trade agreements will be conducted, as well as the potential consequences and precise timeframe for Brexit. It is expected that the UK&#146;s exit from the EU will take place within two years of the UK notifying the European
Council that it intends to withdraw from the EU. During this period and beyond, the impact of any partial or complete dissolution of the EU on the UK and European economies and the broader global economy could be significant, resulting in negative
impacts on currency and financial markets generally, such as increased volatility and illiquidity, and potentially lower economic growth in markets in the UK, Europe and globally, which may adversely affect the value of the Fund&#146;s portfolio
investments. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The UK has one of the largest economies in Europe, and member countries of the EU are substantial trading partners of the UK. The City of
London&#146;s economy is dominated by financial services, some of which may have to move outside of the UK post-referendum (e.g., currency trading, international settlement). Under the referendum, banks may be forced to move staff and comply with
two separate sets of rules or lose business to banks in Europe. Furthermore, the referendum creates the potential for decreased trade, the possibility of capital outflows, devaluation of the pound sterling, the cost of higher corporate bond spreads
due to uncertainty, and the risk that all the above could damage business and consumer spending as well as foreign direct investment. As a result of the referendum, the British economy and its currency may be negatively impacted by changes to its
economic and political relations with the EU. Any further exits from the EU, or the possibility of such exits, would likely cause additional market disruption globally and introduce new legal and regulatory uncertainties. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The impact of the referendum in the near- and long-term is still unknown and could have additional adverse effects on economies, financial markets, currencies
and asset valuations around the world. Any attempt by the Fund to hedge against or otherwise protect its portfolio or to profit from such circumstances may fail and, accordingly, an investment in the Fund could lose money over short or long periods.
</P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Portfolio Turnover Risk </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Investment Manager
manages the Fund without regard generally to restrictions on portfolio turnover. The use of futures contracts and other derivative instruments with relatively short maturities may tend to exaggerate the portfolio turnover rate for the Fund. Trading
in fixed income securities does not generally involve the payment of brokerage commissions, but does involve indirect transaction costs. The use of futures contracts and other derivative instruments may involve the payment of commissions to futures
commission merchants or other intermediaries. Higher portfolio turnover involves correspondingly greater expenses to the Fund, including brokerage commissions </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
or dealer <FONT STYLE="white-space:nowrap">mark-ups</FONT> and other transaction costs on the sale of securities and reinvestments in other securities. The higher the rate of portfolio turnover
of the Fund, the higher these transaction costs borne by the Fund generally will be. Such sales may result in realization of taxable capital gains (including short-term capital gains, which are generally taxed to shareholders at ordinary income tax
rates when distributed net of short-term capital losses and net long-term capital losses), and may adversely impact the Fund&#146;s <FONT STYLE="white-space:nowrap">after-tax</FONT> returns. See &#147;Tax Matters.&#148; </P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Operational Risk </B></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">An investment in the Fund, like any
fund, can involve operational risks arising from factors such as processing errors, human errors, inadequate or failed internal or external processes, failures 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 material adverse effect on the Fund. While the Fund
seeks to minimize such events through controls and oversight, there may still be failures that could cause losses to the Fund. </P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Cyber Security
Risk</B></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">As the use of technology has become more prevalent in the course of business, the Fund has become potentially more susceptible to operational
risks through breaches in cyber security. A breach in cyber security refers to both intentional and unintentional cyber events that may cause the Fund to lose proprietary information, suffer data corruption, or lose operational capacity. Cyber
security breaches may involve unauthorized access to the Fund&#146;s digital information systems (<I>e.g.,</I>&nbsp;through &#147;hacking&#148; or malicious software coding), but may also result from outside attacks such as <FONT
STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">denial-of-service</FONT></FONT> attacks (<I>i.e.,</I>&nbsp;efforts to make network services unavailable to intended users). In addition, cyber security breaches of the Fund&#146;s third
party service providers (including but not limited to advisers, <FONT STYLE="white-space:nowrap">sub-advisers,</FONT> administrators, transfer agents, custodians, distributors and other third parties) or issuers that the Fund invests in can also
subject the Fund to many of the same risks associated with direct cyber security breaches. Cyber security failures or breaches may result in financial losses to the Fund and its shareholders. These failures or breaches may also result in disruptions
to business operations, potentially resulting in financial losses; interference with the Fund&#146;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; reputational damage; reimbursement or other compensation costs; or additional compliance costs. In addition, substantial costs may be incurred in order to prevent any cyber incidents
in the future. Like with operational risk in general, the Fund has established risk management systems and business continuity plans designed to reduce the risks associated with cyber security. However, there is no guarantee that such efforts will
succeed, especially since the Fund does not directly control the cyber security systems of issuers or third party service providers. The Fund and its Common Shareholders could be negatively impacted as a result. </P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Potential Conflicts of Interest Risk&#151;Allocation of Investment Opportunities </B></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Investment Manager is involved worldwide with a broad spectrum of financial services and asset management activities and may engage in the ordinary course
of business in activities in which their interests or the interests of their clients may conflict with those of the Fund. The Investment Manager may provide investment management services to other funds and discretionary managed accounts that follow
an investment program similar to that of the Fund. Subject to the requirements of the 1940 Act, the Investment Manager intends to engage in such activities and may receive compensation from third parties for their services. The results of the
Fund&#146;s investment activities may differ from those of the Fund&#146;s affiliates, or another account managed by the Fund&#146;s affiliates, and it is possible that the Fund could sustain losses during periods in which one or more of the
Fund&#146;s affiliates or and other accounts achieve profits on their trading for proprietary or other accounts. </P> <P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Repurchase Agreements Risk </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may enter into repurchase agreements, in which the Fund purchases a security from a bank or broker-dealer, which agrees to repurchase the security at
the Fund&#146;s cost plus interest within a specified time. If the party agreeing to repurchase should default, the Fund 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 maturing in more than seven days and which may not be terminated within seven days at approximately the amount at which the Fund has valued the agreements are
considered illiquid securities. These events could also trigger adverse tax consequences for the Fund. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">85 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Structured Investments Risk </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may invest in structured products, including, structured notes, credit-linked notes and other types of structured products. Holders of structured
products bear risks of the underlying investments, index or reference obligation and are subject to counterparty risk. The Fund may have the right to receive payments only from the structured product, and generally does not have direct rights
against the issuer or the entity that sold the assets to be securitized. While certain structured products enable the investor to acquire interests in a pool of securities without the brokerage and other expenses associated with directly holding the
same securities, investors in structured products generally pay their share of the structured product&#146;s administrative and other expenses. Although it is difficult to predict whether the prices of indices and securities underlying structured
products will rise or fall, these prices (and, therefore, the prices of structured products) are generally influenced by the same types of political and economic events that affect issuers of securities and capital markets generally. If the issuer
of a structured product uses shorter term financing to purchase longer term securities, the issuer may be forced to sell its securities at below market prices if it experiences difficulty in obtaining such financing, which may adversely affect the
value of the structured products owned by the Fund. Structured products generally entail risks associated with derivative instruments. See &#147;Derivatives Risk.&#148; </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Collateralized Loan Obligations Risk </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may
invest in CLOs. A CLO is a trust typically collateralized by a pool of loans issued by banks, corporations or any other public or private entity or person, which may include, among others, domestic and foreign senior secured loans, senior unsecured
loans and subordinate or mezzanine loans, including loans that may be rated below investment grade or equivalent unrated loans. CLOs may charge management fees and administrative expenses. The cash flows from the trust are split into two or more
portions, called tranches, varying in risk and yield. The riskiest portion is the equity tranche which generally bears losses in connection with the first defaults, if any, on the bonds or loans in the trust and serves to provide some measure of
protection to the other, more senior tranches from defaults. The Fund will normally not invest in equity tranches of CLOs. A senior tranche from a CLO trust typically has higher ratings and lower yields than the 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 and 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 CLO in which the Fund invests. Normally, CLOs are privately
offered and sold, and thus are not registered under the securities laws. As a result, investments in CLOs may be characterized by the Fund as illiquid securities; however, an active dealer market may exist for CLOs allowing a CLO to qualify under
Rule&nbsp;144A under the Securities Act. In addition to the normal risks associated with debt instruments (e.g., interest rate risk and credit risk), CLOs carry additional risks including, but not limited to: (i)&nbsp;the possibility that
distributions from the collateral will not be adequate to make interest or other payments; (ii)&nbsp;the quality of the collateral may decline in value or default; (iii)&nbsp;that they may be subordinate to other classes; and (iv)&nbsp;the complex
structure of the security may not be fully understood at the time of investment and may produce disputes with the issuer or others and may produce unexpected investment results. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Certain Affiliations </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Certain broker-dealers may be
considered to be affiliated persons of the Fund or the Investment Manager due to their possible affiliations with Allianz SE, the ultimate parent of the Investment Manager. Absent an exemption from the SEC or other regulatory relief, the Fund is
generally precluded from effecting certain principal transactions with affiliated brokers, and its ability to purchase securities being underwritten by an affiliated broker or a syndicate including an affiliated broker, or to utilize affiliated
brokers for agency transactions, is subject to restrictions. This could limit the Fund&#146;s ability to engage in securities transactions and take advantage of market opportunities. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Anti-Takeover Provisions </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund&#146;s Amended and
Restated Agreement and Declaration of Trust (the &#147;Declaration&#148;) includes provisions that could limit the ability of other entities or persons to acquire control of the Fund or to convert the Fund to
<FONT STYLE="white-space:nowrap">open-end</FONT> status. See &#147;Anti-Takeover and Other Provisions in the Declaration of Trust.&#148; These provisions in the Declaration could have the effect of depriving the Common Shareholders of opportunities
to sell their Common Shares at a premium over the then-current market price of the Common Shares or at NAV. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">86 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:18pt; font-family:Times New Roman"><A NAME="pro302337_10"></A>How the Fund Manages Risk </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>INVESTMENT LIMITATIONS </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund has adopted certain
investment limitations designed to limit investment risk and maintain portfolio diversification. These limitations are fundamental and may not be changed without the approval of the holders of a majority of the outstanding Common Shares. The Fund
may not: </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">Purchase any security if as a result 25% or more of the Fund&#146;s total assets (taken at current value at the time of investment) would be invested in a single industry (for purposes of this restriction, investment
companies are not considered to be part of any industry). As a fundamental policy, the Fund, under normal circumstances, will invest at least 25% of its total assets in mortgage-related securities not issued or guaranteed as to principal or interest
by the U.S. Government or its agencies or instrumentalities and other investments that the Fund&#146;s investment adviser or <FONT STYLE="white-space:nowrap">sub-adviser</FONT> determines have the same primary economic characteristics.
</TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">Purchase or sell real estate, although it may purchase securities secured by real estate or interests therein, or securities issued by companies that invest in real estate, or interests therein. </TD></TR></TABLE>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">Purchase or sell commodities or commodities contracts or oil, gas or mineral programs. This restriction shall not prohibit the Fund, subject to restrictions described in this Prospectus and elsewhere in the Statement of
Additional Information, from purchasing, selling or entering into futures contracts, options on futures contracts, forward contracts, or any interest rate, securities-related or other derivative instrument, including swap agreements and other
derivative instruments, subject to compliance with any applicable provisions of the federal securities or commodities laws. </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">Borrow money or issue any senior security, except to the extent permitted under the 1940 Act and as interpreted, modified, or otherwise permitted from time to time by regulatory authority having jurisdiction.
</TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">Make loans, except to the extent permitted under the 1940 Act, and as interpreted, modified, or otherwise permitted by regulatory authority having jurisdiction. </TD></TR></TABLE>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">Act as an underwriter of securities of other issuers, except to the extent that in connection with the disposition of portfolio securities, it may be deemed to be an underwriter under the federal securities laws.
</TD></TR></TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">See &#147;Investment Objectives and Policies&#148; and &#147;Investment Restrictions&#148; in the Statement of Additional Information for a
complete list of the fundamental investment policies of the Fund. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>MANAGEMENT OF INVESTMENT PORTFOLIO AND CAPITAL STRUCTURE TO LIMIT LEVERAGE RISK
</B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may take certain actions if short-term interest rates increase or market conditions otherwise change (or the Fund anticipates such an
increase or change) and the Fund&#146;s leverage begins (or is expected) to adversely affect Common Shareholders. In order to attempt to offset such a negative impact of leverage on Common Shareholders, the Fund may shorten the average maturity or
duration of its investment portfolio (by investing in short-term, high quality securities or implementing certain hedging strategies). The Fund also may attempt to reduce leverage by redeeming or otherwise purchasing any preferred shares that may be
outstanding or by reducing any holdings in other instruments that create leverage. As explained above under &#147;Principal Risks of the Fund&#151;Leverage Risk,&#148; the success of any such attempt to limit leverage risk depends on PIMCO&#146;s
ability to accurately predict interest rate or other market changes. Because of the difficulty of making such predictions, the Fund may not be successful in managing its interest rate exposure in the manner described above. If market conditions
suggest that additional leverage would be beneficial, the Fund may issue preferred shares or utilize other forms of leverage, such as reverse repurchase agreements, credit default swaps and other derivative instruments. See &#147;Investment
Objective and Policies&#151;Portfolio Contents&#148; and &#147;Principal Risks of the Fund&#151;Liquidity Risk.&#148; </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">87 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>HEDGING AND RELATED STRATEGIES </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may (but is not required to) use various investment strategies to seek exposure to foreign currencies, or attempt to hedge exposure to reduce the
risk of loss and preserve capital, due to fluctuations in currency exchange rates relative to the U.S. dollar. See &#147;The Fund&#146;s Investment Objective and Strategies&#151;Portfolio Contents and other Information&#151;Foreign Currencies and
Related Transactions.&#148; The Fund may also purchase credit default swaps for the purpose of hedging the Fund&#146;s credit exposure to certain issuers and, thereby, seek to decrease its exposure to credit risk, and it may invest in structured
notes or interest rate futures contracts or swap, cap, floor or collar transactions for the purpose of reducing the interest rate sensitivity of the Fund&#146;s portfolio and, thereby, seek to decrease the Fund&#146;s exposure to interest rate risk.
See &#147;Portfolio Contents&#151;Credit Default Swaps,&#148; &#147;Portfolio Contents&#151;Structured Notes and Related Instruments&#148; and &#147;Portfolio Contents&#151;Certain Interest Rate Transactions&#148; in this prospectus. Other
derivatives strategies and instruments that the Fund may use include without limitation: financial futures contracts; short sales; other types of swap agreements or options thereon; options on financial futures; and options based on either an index
or individual debt securities whose prices, PIMCO believes, correlate with the prices of the Fund&#146;s investments. Income earned by the Fund from its hedging and related transactions may be subject to one or more special U.S. federal income tax
rules that can affect the amount, timing and/or character of distributions to Common Shareholders. For instance, income earned by the Fund from its foreign currency hedging activities, if any, may give rise to ordinary income that, to the extent not
offset by losses from such activities, may be distributed to Common Shareholders and taxable at ordinary income rates. Therefore, any foreign currency hedging activities by the Fund can increase the amount of distributions taxable to Common
Shareholders as ordinary income. See &#147;Tax Matters.&#148; There is no assurance that these hedging strategies will be available at any time or that PIMCO will determine to use them for the Fund or, if used, that the strategies will be
successful. PIMCO may determine not to engage in hedging strategies or to do so only in unusual circumstances or market conditions. In addition, the Fund may be subject to certain restrictions on its use of hedging strategies imposed by guidelines
of one or more ratings agencies that may issue ratings on any preferred shares issued by the Fund. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:18pt; font-family:Times New Roman"><A NAME="pro302337_11"></A>Management of the Fund </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>TRUSTEES AND OFFICERS </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Board is responsible for the
management of the Fund, including supervision of the duties performed by the Investment Manager. There are currently eight Trustees of the Fund, two of whom are treated by the Fund as an &#147;interested person&#148; (as defined in the 1940 Act).
The names and business addresses of the Trustees and officers of the Fund and their principal occupations and other affiliations during the past five years are set forth under &#147;Management of the Fund&#148; in the Statement of Additional
Information. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>INVESTMENT MANAGER </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">PIMCO serves as
the investment manager of the Fund. Subject to the supervision of the Board. PIMCO is responsible for managing the investment activities of the Fund and the Fund&#146;s business affairs and other administrative matters. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">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 [&nbsp;&nbsp;],
the PIMCO had approximately $[&nbsp;&nbsp;] in assets under management. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The following individuals are jointly and primarily responsible for the <FONT
STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">day-to-day</FONT></FONT> portfolio management of the Fund: </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">88 </P>


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<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:9pt" ALIGN="center">


<TR>
<TD WIDTH="16%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD WIDTH="14%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD WIDTH="14%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD WIDTH="50%"></TD></TR>


<TR BGCOLOR="#cceeff" STYLE="font-family:Times New Roman; font-size:7.5pt">
<TD VALIGN="top"><B>Portfolio Manager</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"><B>Since</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"><B>Title</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"><B>Recent Professional Experience</B></TD></TR>
<TR BGCOLOR="#cceeff" STYLE="font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top">Daniel J. Ivascyn</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">2012 (Inception)</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Group Chief Investment Officer</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Mr.&nbsp;Ivascyn joined PIMCO in 1998, previously having been associated with Bear Stearns in the asset-backed securities group as well as with T. Rowe Price and Fidelity Investments. Mr.&nbsp;Ivascyn has twenty years of investment
experience and holds a degree in economics from Occidental College and an MBA in analytic finance from the University of Chicago Graduate School of Business.</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top">Joshua Anderson</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">2012 (Inception)</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Portfolio Manager, Opportunistic Mortgage and Real Estate</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Prior to joining PIMCO in 2003, Mr.&nbsp;Anderson was an analyst at Merrill Lynch covering both the residential ABS and collateralized debt obligation sectors. He was previously a portfolio manager at Merrill Lynch Investment
Managers. He has 17 years of investment experience and holds an MBA from the State University of New York, Buffalo.</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top">Alfred T. Murata</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">2012 (Inception)</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Portfolio Manager, Mortgage Credit</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Prior to joining PIMCO in 2001, Mr.&nbsp;Murata researched and implemented exotic equity and interest-rate derivatives at Nikko Financial Technologies. He has 13 years of investment experience and holds a Ph.D. in
engineering-economic systems and operations research from Stanford University. He also earned a J.D. from Stanford Law School and is a member of the State Bar of California.</TD></TR>
</TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Statement of Additional Information provides additional information about the portfolio managers&#146; compensation, other
accounts managed by the portfolio managers and the portfolio managers&#146; ownership of securities in the Fund. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Additional Information </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Trustees are responsible generally for overseeing the management of the Fund. The Trustees authorize the Fund to enter into service agreements with the
Investment Manager 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 Fund. Shareholders are not intended to be
third-party beneficiaries of such service agreements. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Neither this prospectus, the Fund&#146;s Statement of Additional Information, any contracts filed
as exhibits to the Fund&#146;s registration statement, nor any other communications or disclosure documents from or on behalf of the Fund creates a contract between a shareholder of the Fund and the Fund, a service provider to the Fund, and/or the
Trustees or officers of the Fund. The Trustees may amend this prospectus, the Statement of Additional Information, and any other contracts to which the Fund is a party, and interpret the investment objective(s), policies, restrictions and
contractual provisions applicable to the Fund without shareholder input or approval, except in circumstances in which shareholder approval is specifically required by law (such changes to fundamental investment policies) or where a shareholder
approval requirement is specifically disclosed in the Fund prospectus or Statement of Additional Information. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>INVESTMENT MANAGEMENT AGREEMENT </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Pursuant to an investment management agreement between the Investment Manager and the Fund (the &#147;Investment Management Agreement&#148;), the Fund has
agreed to pay the Investment Manager an annual fee, payable monthly, in an amount equal to 1.15% of the Fund&#146;s average daily &#147;total managed assets,&#148; for the services rendered, for the facilities it provides and for certain expenses
borne by the Investment Manager pursuant to the Investment Management Agreement. Total managed assets includes total assets of the Fund (including assets attributable to any reverse repurchase agreements, dollar rolls, borrowings and preferred
shares that may be outstanding) minus accrued liabilities (other than liabilities representing reverse repurchase agreements, dollar rolls and borrowings ). </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">89 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Pursuant to the Investment Management Agreement, PIMCO shall provide to the Fund investment guidance and policy
direction in connection with the management of the Fund, including oral and written research, analysis, advice and statistical and economic data and information. In addition, under the terms of the Investment Management Agreement, subject to the
general supervision of the Board of Trustees, PIMCO shall provide or cause to be furnished all supervisory and administrative and other services reasonably necessary for the operation of the Fund under what is essentially an <FONT
STYLE="white-space:nowrap">all-in</FONT> fee structure, including but not limited to the supervision and coordination of matters relating to the operation of the Fund, including any necessary coordination among the custodian, transfer agent,
dividend disbursing agent, and recordkeeping agent (including pricing and valuation of the Fund), accountants, attorneys, auction agents and other parties performing services or operational functions for the Fund; the provision of adequate
personnel, office space, communications facilities, and other facilities necessary for the effective supervision and administration of the Fund, as well as the services of a sufficient number of persons competent to perform such supervisory and
administrative and clerical functions as are necessary for compliance with federal securities laws and other applicable laws; the maintenance of the books and records of the Fund; the preparation of all federal, state, local and foreign tax returns
and reports for the Fund; the provision of administrative services to shareholders for the Fund including the maintenance of a shareholder information telephone number, the provision of certain statistical information and performance of the Fund, an
internet website (if requested), and maintenance of privacy protection systems and procedures; the preparation and filing of such registration statements and other documents with such authorities as may be required to register and maintain the
listing of the shares of the Fund; the taking of other such actions as may be required by applicable law (including establishment and maintenance of a compliance program for the Fund); and the preparation, filing and distribution of proxy materials,
periodic reports to shareholders and other regulatory filings. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">In addition, under the Investment Management Agreement, PIMCO will procure, at its own
expense, the following services, and will bear expenses associated with the following for the Fund: a custodian or custodians for the Fund to provide for the safekeeping of the Fund&#146;s assets; a recordkeeping agent to maintain the portfolio
accounting records for the Fund; a transfer agent for the Fund; a dividend disbursing agent and/or registrar for the Fund; all audits by the Fund&#146;s independent public accountant (except fees to auditors associated with satisfying rating agency
requirements for preferred shares or other securities issued by the Fund and other related requirements in the Fund&#146;s organizational documents); valuation services; maintaining the Fund&#146;s tax records; all costs and/or fees incident to
meetings of the Fund&#146;s shareholders, the preparation, printing and mailing of the Fund&#146;s prospectuses, (although the Fund will bear such expenses in connection with the offerings made pursuant to this prospectus as noted below) notices and
proxy statements, press releases and reports to its Shareholders, the filing of reports with regulatory bodies, the maintenance of the Fund&#146;s existence and qualification to do business, the expense of issuing, redeeming, registering and
qualifying for sale, common shares with the federal and state securities authorities, and the expense of qualifying and listing Shares with any securities exchange or other trading system; legal services (except for extraordinary legal expenses);
costs of printing certificates representing Shares of the Fund; the Fund&#146;s pro rata portion of its fidelity bond and other insurance premiums; and association membership dues. </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund (and not PIMCO) will be responsible for certain fees and expenses that are not covered by the unified fee under the Investment Management Agreement.
These include fees and expenses, including travel expenses, and fees and expenses of legal counsel retained for their benefit, of Trustees who are not officers, employees, partners, shareholders or members of PIMCO or its subsidiaries or affiliates;
the salaries and other compensation or expenses, including travel expenses, of the Fund&#146;s executive officers and employees, if any, who are not officers, directors, shareholders, members, partners or employees of PIMCO or its subsidiaries or
affiliates; taxes and governmental fees, if any, levied against the Fund; brokerage fees and commissions, and other portfolio transaction expenses incurred by or for the Fund; expenses of the Fund&#146;s securities lending (if any), including any
securities lending agent fees, as governed by a separate securities lending agreement; costs, including interest expenses, of borrowing money or engaging in other types of leverage financing; costs, including dividend and/or interest expenses and
other costs associated with the Fund&#146;s issuance, offering, redemption and maintenance of preferred shares, commercial paper or other senior securities for the purpose of incurring leverage; fees and expenses of any underlying funds or other
pooled vehicles in which the Fund invests; dividend and interest expenses on short positions taken by the Fund; organizational and offering expenses of the Fund, including with respect to share offerings following the Fund&#146;s initial offering
(including expenses associated with offerings made pursuant to this prospectus), and expenses associated with tender offers and other share repurchases and redemptions; extraordinary legal costs; and expenses of the Fund which are capitalized in
accordance with generally accepted accounting principles. Because the fees received by the Investment Manager are based on the total managed assets of the Fund (including any assets attributable to any reverse repurchase agreements, dollar rolls,
borrowings and preferred shares that may </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">90 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
be outstanding), the Investment Manager has a financial incentive for the Fund to utilize reverse repurchase agreements, dollar rolls and borrowings, which may create a conflict of interest
between the Investment Manager, on the one hand, and the holders of the Fund&#146;s Common Shares, on the other hand. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">A discussion regarding the basis
for the Board&#146;s continuation of the Investment Management Agreement is available in the Fund&#146;s annual report to shareholders for the fiscal period ended June&nbsp;30, 2016. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:18pt; font-family:Times New Roman"><A NAME="pro302337_12"></A>Net Asset Value </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The NAV of the
Fund&#146;s Common Shares is determined by dividing the total value of the Fund&#146;s portfolio investments and other assets attributable to that Fund, less any liabilities, by the total number of shares outstanding of that Fund. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">On each day that the NYSE is open, Fund shares are ordinarily valued as of the close of regular trading (&#147;NYSE Close&#148;). Information that becomes
known to the Fund or its 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. The Fund reserves the right to
change the time as of which its respective NAV is calculated if the Fund closes earlier, or as permitted by the SEC. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">For purposes of calculating NAV,
portfolio securities and other assets for which market quotes are readily available are valued at market value. Market value is generally determined on the basis of official closing prices or the last reported sales prices, or if no sales are
reported, based on quotes obtained from established market makers or prices (including evaluated prices) supplied by the Fund&#146;s approved pricing services, quotation reporting systems and other third-party sources (together, &#147;Pricing
Services&#148;). The Fund 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 <FONT
STYLE="white-space:nowrap">(non-U.S.)</FONT> 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. A foreign <FONT
STYLE="white-space:nowrap">(non-U.S.)</FONT> 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. Domestic and foreign <FONT
STYLE="white-space:nowrap">(non-U.S.)</FONT> fixed income securities, <FONT STYLE="white-space:nowrap">non-exchange</FONT> traded derivatives, and equity options are normally valued on the basis of quotes obtained from brokers and dealers or Pricing
Services using data reflecting the earlier closing of the principal markets for those securities. Prices obtained from Pricing Services 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 Services or other pricing sources. With respect to any portion of the Fund&#146;s assets that are invested in one or more <FONT STYLE="white-space:nowrap">open-end</FONT> management investment companies (other than ETFs, the
Fund&#146;s NAV will be calculated based upon the NAVs of such investments. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">If a foreign <FONT STYLE="white-space:nowrap">(non-U.S.)</FONT> equity
security&#146;s value has materially changed after the close of the security&#146;s primary exchange or principal market but before the NYSE Close, the security may be valued at fair value based on procedures established and approved by the Board.
Foreign <FONT STYLE="white-space:nowrap">(non-U.S.)</FONT> equity securities that do not trade when the NYSE is open are also valued at fair value. With respect to foreign <FONT STYLE="white-space:nowrap">(non-U.S.)</FONT> equity securities, the
Fund may determine the fair value of investments based on information provided by Pricing Services and other third-party vendors, which may recommend fair value or adjustments with reference to other securities, indices or assets. In considering
whether fair valuation is required and in determining fair values, the Fund may, among other things, consider significant events (which may be considered to include changes in the value of U.S. securities or securities indices) that occur after the
close of the relevant market and before the NYSE Close. The Fund may utilize modeling tools provided by third-party vendors to determine fair values of <FONT STYLE="white-space:nowrap">non-U.S.</FONT> securities. Foreign <FONT
STYLE="white-space:nowrap">(non-U.S.)</FONT> exchanges may permit trading in foreign <FONT STYLE="white-space:nowrap">(non-U.S.)</FONT> equity securities on days when the Fund is not open for business, which may result in the Fund&#146;s portfolio
investments being affected when shareholders are unable to buy or sell shares. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">91 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Senior secured floating rate loans for which an active secondary market exists to a reliable degree will be
valued at the mean of the last available bid/ask prices in the market for such loans, as provided by a Pricing Service. Senior secured floating rate loans for which an active secondary market does not exist to a reliable degree 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)&nbsp;the creditworthiness of the borrower and any
intermediate participants, (b)&nbsp;the terms of the loan, (c)&nbsp;recent prices in the market for similar loans, if any, and (d)&nbsp;recent prices in the market for instruments of similar quality, rate, period until next interest rate reset and
maturity. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Investments valued in currencies other than the U.S. dollar are converted to the U.S. dollar using exchange rates obtained from Pricing
Services. As a result, the value of such investments and, in turn, the NAV of the Fund&#146;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 Fund is not open for business. As a result, to the extent that the Fund holds foreign <FONT STYLE="white-space:nowrap">(non-U.S.)</FONT>
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 Fund&#146;s next calculated NAV. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Investments for which market quotes or market-based valuations are not readily available are valued at fair value as determined in good faith by the Board or
persons acting at their direction. The Board has adopted methods for valuing securities and other assets in circumstances where market quotes are not readily available, and has delegated to PIMCO the responsibility for applying the fair valuation
methods. In the event that market quotes or market-based valuations are not readily available, and the security or asset cannot be valued pursuant to a Board approved valuation method, the value of the security or asset will be determined in good
faith by the Valuation Oversight Committee of the Board (&#147;Valuation Oversight Committee&#148;), generally based on recommendations provided by the Investment Manager. Market quotes are considered not readily available in circumstances where
there is an absence of current or reliable market-based data (e.g., trade information, bid/ask information, indicative market quotations (&#147;Broker Quotes&#148;), Pricing Services&#146; prices), including where events occur after the close of the
relevant market, but prior to the NYSE Close, that materially affect the values of the Fund&#146;s securities or assets. In addition, market quotes are considered not readily available when, due to extraordinary circumstances, the exchanges or
markets on which the securities trade do not open for trading for the entire day and no other market prices are available. The Board has delegated to the Investment Manager the responsibility for monitoring significant events that may materially
affect the values of the Fund&#146;s securities or assets and for determining whether the value of the applicable securities or assets should be reevaluated in light of such significant events. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">When the Fund uses fair valuation to determine the value of a portfolio security or other asset for purposes of calculating its NAV, such investments will not
be priced on the basis of quotes from the primary market in which they are traded, but rather may be priced by another method that the Board or persons acting at their direction believe reflects fair value. Fair valuation may require subjective
determinations about the value of a security. While the Fund&#146;s policy is intended to result in a calculation of the Fund&#146;s NAV that fairly reflects security values as of the time of pricing, the Fund cannot ensure that fair values
determined by the Board or persons acting at their direction would accurately reflect the price that the Fund 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 the Fund may differ from the value that would be realized if the securities were sold. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:18pt; font-family:Times New Roman"><A NAME="pro302337_13"></A>Distributions
</P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund makes regular monthly cash distributions to Common Shareholders at a rate based upon the past and projected net income of the Fund. Subject to
applicable law, the Fund may fund a portion of its distributions with gains from the sale of portfolio securities and other sources. The dividend rate that the Fund pays on its Common Shares may vary as portfolio and market conditions change, and
will depend on a number of factors, including without limit the amount of the Fund&#146;s undistributed net investment income and net short- and long-term capital gains, as well as the costs of any leverage obtained by the Fund (including interest
or other expenses on any reverse repurchase agreements, credit default swaps, dollar rolls and borrowings and dividends payable on any preferred shares issued by the Fund). As portfolio and market conditions change, the rate of distributions on the
Common Shares and the Fund&#146;s dividend policy could change. There can be no assurance that a change in market conditions </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">92 </P>


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or other factors will not result in a change in the Fund distribution rate or that the rate will be sustainable in the future. For a discussion of factors that may cause the Fund&#146;s income
and capital gains (and therefore the dividend) to vary, see &#147;Principal Risks of the Fund.&#148; The Fund generally distributes each year all of its net investment income and net short-term capital gains. In addition, at least annually, the Fund
generally distributes net realized long-term capital gains not previously distributed, if any. The net investment income of the Fund consists of all income (other than net short-term and long-term capital gains) less all expenses of the Fund (after
it pays accrued dividends on any outstanding preferred shares). </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">[To permit the Fund to maintain a more stable monthly distribution, the Fund may
distribute less than the entire amount of net investment income earned in a particular period. The undistributed net investment income would be available to supplement future distributions. As a result, the distributions paid by the Fund for any
particular monthly period may be more or less than the amount of net investment income actually earned by the Fund during the period. Undistributed net investment income will be added to the Fund&#146;s NAV and, correspondingly, distributions from
undistributed net investment income will be deducted from the Fund&#146;s NAV.] </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The tax treatment and characterization of the Fund&#146;s distributions
may vary significantly from time to time because of the varied nature of the Fund&#146;s investments. The Fund may enter into opposite sides of interest rate swap and other derivatives for the principal purpose of generating distributable gains on
the one side (characterized as ordinary income for tax purposes) that are not part of the Fund&#146;s duration or yield curve management strategies (&#147;paired swap transactions&#148;), and with a substantial possibility that the Fund will
experience a corresponding capital loss and decline in NAV with respect to the opposite side transaction (to the extent it does not have corresponding offsetting capital gains). Consequently, common shareholders may receive distributions and owe tax
at a time when their investment in the Fund has declined in value, which tax may be at ordinary income rates, and which may be economically similar to a taxable return of capital. The tax treatment of certain derivatives may be open to different
interpretations. Any recharacterization of payments made or received by the Fund pursuant to derivatives potentially could affect the amount, timing or character of Fund distributions. In addition, the tax treatment of such investment strategies may
be changed by regulation or otherwise. To the extent required by the 1940 Act and other applicable laws, absent an exemption, a notice will accompany each monthly distribution with respect to the estimated source (as between net income and gains) of
the distribution made. To determine the sources of the Fund&#146;s distributions during the reporting period, the Fund references its internal accounting records at the time the distribution is paid and generally bases its projections of the final
tax character of those distributions on the tax characteristics of the distribution reflected in its internal accounting records at the time of such payment. If, based on such records, a particular distribution does not include capital gains or <FONT
STYLE="white-space:nowrap">paid-in</FONT> surplus or other capital sources, a Section&nbsp;19 Notice generally would not be issued. It is important to note that differences exist between the Fund&#146;s daily internal accounting records, the
Fund&#146;s financial statements presented in accordance with U.S. GAAP, and recordkeeping practices under income tax regulations. Examples of such differences may include, among others, the treatment of paydowns on mortgage-backed securities
purchased at a discount and periodic payments under interest rate swap contracts. Notwithstanding the Fund&#146;s estimates and projections, it is possible that the Fund may not issue a Section&nbsp;19 Notice in situations where the Fund&#146;s
financial statements prepared later and in accordance with U.S. GAAP or the final tax character of those distributions might later report that the sources of those distributions included capital gains and/or a return of capital. Additionally, given
differences in tax and U.S. GAAP treatment of certain distributions, the Fund may not issue a Section&nbsp;19 Notice in situations where the Fund&#146;s financial statements prepared later and in accordance with U.S. GAAP might report that the
sources of these distributions included capital gains and/or a return of capital. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The tax characterization of the Fund&#146;s distributions made in a
taxable year cannot finally be determined until at or after the end of the year. As a result, there is a possibility that the Fund may make total distributions during a taxable year in an amount that exceeds the Fund&#146;s net investment income and
net realized capital gains for the relevant year (including as reduced by any capital loss carry-forwards). For example, the Fund may distribute amounts early in the year that are derived from short-term capital gains, but incur net short-term
capital losses later in the year, thereby offsetting short-term capital gains out of which distributions have already been made by the Fund. In such a situation, the amount by which the Fund&#146;s total distributions exceed net investment income
and net realized capital gains would generally be treated as a <FONT STYLE="white-space:nowrap">tax-free</FONT> return of capital up to the amount of a shareholder&#146;s tax basis in his or her Common Shares, with any amounts exceeding such basis
treated as gain from the sale of Common Shares. In general terms, a return of capital would occur where the Fund distribution (or portion thereof) represents a return of a portion of your investment, rather than net income or capital gains generated
from your investment during a particular period. Although return of capital distributions may not be taxable, such distributions would reduce the basis of a shareholder&#146;s Common Shares and therefore may increase a shareholder&#146;s capital
gains, or decrease a shareholder&#146;s capital loss, thereby potentially increasing a shareholder&#146;s tax liability upon a sale of Common Shares. The Fund will send shareholders detailed tax information with respect to the Fund&#146;s
distributions annually. See &#147;Tax Matters.&#148; </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The 1940 Act currently limits the number of times the Fund may distribute long-term capital gains in
any tax year, which may increase the variability of the Fund&#146;s distributions and result in certain distributions being comprised more or less heavily than others of long-term capital gains currently eligible for favorable income tax rates. </P>

 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">93 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Unless a Common Shareholder elects to receive distributions in cash, all distributions of Common Shareholders
whose shares are registered with the plan agent will be automatically reinvested in additional Common Shares of the Fund under the Fund&#146;s Dividend Reinvestment Plan. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:18pt; font-family:Times New Roman">Dividend Reinvestment Plan </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund has adopted a Dividend
Reinvestment Plan (the &#147;Plan&#148;) which allows Common Shareholders to reinvest Fund distributions in additional Common Shares of the Fund.&nbsp;American Stock Transfer&nbsp;&amp; Trust Company, LLC (the &#147;Plan Agent&#148;) serves as agent
for Common Shareholders in administering the Plan.&nbsp;It is important to note that participation in the Plan and automatic reinvestment of Fund distributions does not ensure a profit, nor does it protect against losses in a declining market. </P>
<P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>AUTOMATIC ENROLLMENT/VOLUNTARY PARTICIPATION </B></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Under the
Plan, Common Shareholders whose shares are registered with the Plan Agent (&#147;registered shareholders&#148;) are automatically enrolled as participants in the Plan and will have all Fund distributions of income, capital gains and returns of
capital (together, &#147;distributions&#148;) reinvested by the Plan Agent in additional Common Shares of the Fund, unless the Common Shareholder elects to receive cash.&nbsp;Registered shareholders who elect not to participate in the Plan will
receive all distributions in cash paid by check and mailed directly to the Common Shareholder of record (or if the shares are held in street or other nominee name, to the nominee) by the Plan Agent. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Participation in the Plan is voluntary.&nbsp;Participants may terminate or resume their enrollment in the Plan at any time without penalty by notifying the
Plan Agent online at www.amstock.com, by calling (844) 33PIMCO (844 <FONT STYLE="white-space:nowrap">337-4626),</FONT> by writing to the Plan Agent, American Stock Transfer&nbsp;&amp; Trust Company, LLC, at P.O. Box 922, Wall Street Station, New
York, NY 10269-0560, or, as applicable, by completing and returning the transaction form attached to a Plan statement.&nbsp;A proper notification will be effective immediately and apply to the Fund&#146;s next distribution if received by the Plan
Agent at least three (3)&nbsp;days prior to the record date for the distribution; otherwise, a notification will be effective shortly following the Fund&#146;s next distribution and will apply to the Fund&#146;s next succeeding distribution
thereafter.&nbsp;If you withdraw from the Plan and so request, the Plan Agent will arrange for the sale of your shares and send you the proceeds, minus a transaction fee and brokerage commissions. </P>
<P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>HOW SHARES ARE PURCHASED UNDER THE PLAN </B></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">For each Fund
distribution, the Plan Agent will acquire Common Shares for participants either (i)&nbsp;through receipt of newly issued Common Shares from the Fund (&#147;newly issued shares&#148;) or (ii)&nbsp;by purchasing Common Shares of the Fund on the open
market (&#147;open market purchases&#148;).&nbsp;If, on a distribution payment date, the NAV is equal to or less than the market price per Common Share plus estimated brokerage commissions (often referred to as a &#147;market premium&#148;), the
Plan Agent will invest the distribution amount on behalf of participants in newly issued shares at a price equal to the greater of (i)&nbsp;NAV or (ii)&nbsp;95% of the market price per Common Share on the payment date.&nbsp;If the NAV is greater
than the market price per Common Share plus estimated brokerage commissions (often referred to as a &#147;market discount&#148;) on a distribution payment date, the Plan agent will instead attempt to invest the distribution amount through open
market purchases.&nbsp;If the Plan Agent is unable to invest the full distribution amount in open market purchases, or if the market discount shifts to a market premium during the purchase period, the Plan Agent will invest any <FONT
STYLE="white-space:nowrap">un-invested</FONT> portion of the distribution in newly issued shares at a price equal to the greater of (i)&nbsp;NAV or (ii)&nbsp;95% of the market price per share as of the last business day immediately prior to the
purchase date (which, in either case, may be a price greater or lesser than the NAV per Common Share on the distribution payment date).&nbsp;No interest will be paid on distributions awaiting reinvestment. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Under the Plan, the market price of Common Shares on a particular date is the last sales price on the exchange where the Common Shares are listed on that date
or, if there is no sale on the exchange on that date, the mean between the closing bid and asked quotations for the Common Shares on the exchange on that date.&nbsp;The NAV per Common Share on a particular date is the amount calculated on that date
(normally at the close of regular trading on the NYSE) in accordance with the Fund&#146;s then current policies. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">94 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>FEES AND EXPENSES </B></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">No brokerage charges are imposed on reinvestments in newly issued shares under the Plan.&nbsp;However, all participants will pay a pro rata share of brokerage
commissions incurred by the Plan Agent when it makes open market purchases.&nbsp;There are currently no direct service charges imposed on participants in the Plan, although the Fund reserves the right to amend the Plan to include such
charges.&nbsp;The Plan Agent imposes a transaction fee (in addition to brokerage commissions that are incurred) if it arranges for the sale of your Common Shares held under the Plan. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>SHARES HELD THROUGH NOMINEES </B></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">In the case of a registered
shareholder such as a broker, bank or other nominee (together, a &#147;nominee&#148;) that holds Common Shares for others who are the beneficial owners, the Plan Agent will administer the Plan on the basis of the number of Common Shares certified by
the nominee/record shareholder as representing the total amount registered in such shareholder&#146;s name and held for the account of beneficial owners who are to participate in the Plan. If your Common Shares are held through a nominee and are not
registered with the Plan Agent, neither you nor the nominee will be participants in or have distributions reinvested under the Plan.&nbsp;If you are a beneficial owner of Common Shares and wish to participate in the Plan, and your nominee is unable
or unwilling to become a registered shareholder and a Plan participant on your behalf, you may request that your nominee arrange to have all or a portion of your shares <FONT STYLE="white-space:nowrap">re-registered</FONT> with the Plan Agent in
your name so that you may be enrolled as a participant in the Plan.&nbsp;Please contact your nominee for details or for other possible alternatives.&nbsp;Participants whose shares are registered with the Plan Agent in the name of one nominee firm
may not be able to transfer the shares to another firm and continue to participate in the Plan. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>TAX CONSEQUENCES </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Automatically reinvested dividends and distributions are taxed in the same manner as cash dividends and distributions&#151;<I>i.e.</I>, automatic reinvestment
in additional shares does not relieve Common Shareholders of, or defer the need to pay, any income tax that may be payable (or that is required to be withheld) on Fund dividends and distributions. The Fund and the Plan Agent reserve the right to
amend or terminate the Plan. Additional information about the Plan, as well as a copy of the full Plan itself, may be obtained from the Plan Agent, American Stock Transfer&nbsp;&amp; Trust Company, LLC, at P.O. Box 922, Wall Street Station, New
York, NY 10269-0560; telephone number: (844) <FONT STYLE="white-space:nowrap">33-PIMCO</FONT> <FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">(844-337-4626);</FONT></FONT> website: www.amstock.com. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:18pt; font-family:Times New Roman"><A NAME="pro302337_15"></A>Description of Capital Structure </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The following is a brief description of the capital structure of the Fund. This description does not purport to be complete and is subject to and qualified in
its entirety by reference to the Declaration and the Fund&#146;s Bylaws, as amended and restated through the date hereof (the &#147;Bylaws&#148;). The Declaration and Bylaws are each exhibits to the registration statement of which this prospectus is
a part. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund is an unincorporated voluntary association with transferable shares of beneficial interest (commonly referred to as a
&#147;Massachusetts business trust&#148;) established under the laws of the Commonwealth of Massachusetts by the Declaration. The Declaration provides that the Trustees of the Fund may authorize separate classes of shares of beneficial interest.
However, as of the date of this prospectus, the Fund has not issued any shares other than the Common Shares. The following table shows the amount of Common Shares authorized and outstanding as of [&nbsp;&nbsp; ]. </P>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000"><B>Title of Class</B></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-BOTTOM:1px solid #000000"><B>Amount&nbsp;Authorized</B></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-BOTTOM:1px solid #000000"><B>Amount&nbsp;Outstanding&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B></TD></TR>


<TR BGCOLOR="#cceeff" STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Common Shares</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">[&nbsp;&nbsp;&nbsp;]</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">[&nbsp;&nbsp;&nbsp;]</TD></TR>
</TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Common Shares of the Fund commenced trading on the NYSE on May&nbsp;30, 2012, under the trading or &#147;ticker&#148;
symbol PDI. As of the close of trading on the NYSE on [&nbsp;&nbsp;], the NAV per Common Share was $[&nbsp;&nbsp;], and the closing price per Common Share on the NYSE was $[&nbsp;&nbsp;]. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Common Shareholders are entitled to share equally in dividends declared by the Board to Common Shareholders and in the net assets of the Fund available for
distribution to Common Shareholders after payment of the preferential amounts payable to holders of any outstanding preferred shares of beneficial interest. All Common Shares of the Fund have equal rights to the payment of dividends and the
distribution of assets upon liquidation. Common Shares of the Fund are fully paid and, subject to matters discussed in &#147;Anti-Takeover and Other Provisions in the Declaration of Trust,&#148;
<FONT STYLE="white-space:nowrap">non-assessable,</FONT> and have no <FONT STYLE="white-space:nowrap">pre-emptive</FONT> or conversion rights or rights to cumulative voting, </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">95 </P>


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and have no right to cause the Fund to redeem their shares. Upon liquidation of the Fund, after payment of the preferential amounts payable to holders of any outstanding preferred shares of
beneficial interest, and upon receipt of such releases, indemnities and refunding agreements as they deem necessary for their protection, the Trustees may distribute the remaining assets of the Fund among the Fund&#146;s Common Shareholders. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Shareholders of each class are entitled to one vote for each share held. Common Shareholders will vote with the holders of any outstanding preferred shares as
a single class on each matter submitted to a vote of holders of Common Shares, except as otherwise provided by the Declaration, the Bylaws or applicable law. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund will send unaudited reports at least semiannually and audited financial statements annually to all of its shareholders. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:18pt; font-family:Times New Roman"><A NAME="pro302337_14"></A>Plan of Distribution </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may
sell Common Shares through underwriters or dealers, directly to one or more purchasers (including existing shareholders in a rights offering), through agents, to or through underwriters or dealers, or through a combination of any such methods of
sale.&nbsp;The applicable prospectus supplement will identify any underwriter or agent involved in the offer and sale of the Common Shares, any sales loads, discounts, commissions, fees or other compensation paid to any underwriter, dealer or agent,
the offering price, net proceeds and use of proceeds and the terms of any sale.</P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The distribution of the Common Shares may be effected from time to time in
one or more transactions at a fixed price or prices, which may be changed, at prevailing market prices at the time of sale, at prices related to such prevailing market prices, or at negotiated prices. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund may sell the Common Shares directly to, and solicit offers from, institutional investors or others who may be deemed to be underwriters as defined in
the Securities Act for any resales of the securities.&nbsp;In this case, no underwriters or agents would be involved.&nbsp;The Fund may use electronic media, including the Internet, to sell offered securities directly. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">In connection with the sale of the Common Shares, underwriters or agents may receive compensation from the Fund in the form of discounts, concessions or
commissions.&nbsp;Underwriters may sell Common Shares to or through dealers, and such dealers may receive compensation in the form of discounts, concessions or commissions from the underwriters and/or commissions from the purchasers for whom they
may act as agents.&nbsp;Underwriters, dealers and agents that participate in the distribution of the Common Shares may be deemed to be underwriters under the Securities Act, and any discounts and commissions they receive from the Fund and any profit
realized by them on the resale of the Common Shares may be deemed to be underwriting discounts and commissions under the Securities Act.&nbsp;Any such underwriter or agent will be identified and any such compensation received from the Fund will be
described in the applicable prospectus supplement. The maximum amount of compensation to be received by any Financial Industry Regulatory Authority member or independent broker-dealer will not exceed 8% for the sale of any securities being
registered pursuant to Rule 415 under the Securities Act.&nbsp;The Fund will not pay any compensation to any underwriter or agent in the form of warrants, options, consulting or structuring fees or similar arrangements.</P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">If a prospectus supplement so indicates, the Fund may grant the underwriters an option to purchase additional Common Shares at the public offering price, less
the underwriting discounts and commissions, within 45 days from the date of the prospectus supplement, to cover any over-allotments. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Under agreements
into which the Fund may enter, underwriters, dealers and agents who participate in the distribution of the Common Shares may be entitled to indemnification by the Fund against certain liabilities, including liabilities under the Securities
Act.&nbsp;Underwriters, dealers and agents may engage in transactions with the Fund, or perform services for the Fund, in the ordinary course of business. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">If so indicated in the applicable prospectus supplement, the Fund will, or will authorize underwriters or other persons acting as its agents to, solicit
offers by certain institutions to purchase Common Shares from the Fund pursuant to contracts providing for payment and delivery on a future date.&nbsp;Institutions with which such contracts </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">96 </P>


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may be made include commercial and savings banks, insurance companies, pension funds, investment companies, educational and charitable institutions and others, but in all cases such institutions
must be approved by the Fund.&nbsp;The obligation of any purchaser under any such contract will be subject to the condition that the purchase of the Common Shares shall not at the time of delivery be prohibited under the laws of the jurisdiction to
which such purchaser is subject.&nbsp;The underwriters and such other agents will not have any responsibility in respect of the validity or performance of such contracts.&nbsp;Such contracts will be subject only to those conditions set forth in the
prospectus supplement, and the prospectus supplement will set forth the commission payable for solicitation of such contracts. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">To the extent permitted
under the 1940 Act and the rules&nbsp;and regulations promulgated thereunder, the underwriters may from time to time act as brokers or dealers and receive fees in connection with the execution of the Fund&#146;s portfolio transactions after the
underwriters have ceased to be underwriters and, subject to certain restrictions, each may act as a broker while it is an underwriter. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">A prospectus and
accompanying prospectus supplement in electronic form may be made available on the websites maintained by underwriters.&nbsp;The underwriters may agree to allocate a number of securities for sale to their online brokerage account holders.&nbsp;Such
allocations of securities for Internet distributions will be made on the same basis as other allocations.&nbsp;In addition, securities may be sold by the underwriters to securities dealers who resell securities to online brokerage account holders.
</P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">In order to comply with the securities laws of certain states, if applicable, Common Shares offered hereby will be sold in such jurisdictions only
through registered or licensed brokers or dealers. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:18pt; font-family:Times New Roman"><A NAME="pro302337_17"></A>Market and Net Asset Value Information </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund&#146;s Common Shares are listed on the NYSE under the trading or &#147;ticker&#148; symbol PDI. The Fund&#146;s Common Shares commenced trading on
the NYSE in May 2012. The Fund cannot predict whether its Common Shares will trade in the future at a premium or discount to NAV. The conduct of any offering and the issuance of additional Common Shares pursuant to any offering may have an adverse
effect on prices in the secondary market for the Fund&#146;s Common Shares by increasing the number of shares available, which may put downward pressure on the market price for the Common Shares. The NAV of the Fund&#146;s Common Shares will be
reduced immediately following an offering by the sales load, commissions and offering expenses paid or reimbursed by the Fund in connection with such offering. The completion of an offering may result in an immediate dilution of the NAV per Common
Share for all existing Common Shareholders. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The following table sets forth, for each of the periods indicated, the high and low closing market prices of
the Fund&#146;s Common Shares on the NYSE, the high and low NAV per Common Share and the high and low premium/discount to NAV per Common Share. See &#147;Net Asset Value&#148; for information as to how the Fund&#146;s NAV is determined. </P>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="90%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">


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<TR STYLE="font-family:Times New Roman; font-size:7.5pt">
<TD VALIGN="bottom" STYLE="BORDER:1px solid #000000; padding-left:8pt">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD COLSPAN="2" VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="9" ALIGN="center" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:7.5pt; font-family:Times New Roman" ALIGN="center"><B>Common&nbsp;share</B></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:7.5pt; font-family:Times New Roman" ALIGN="center"><B>market&nbsp;price<SUP STYLE="font-size:85%; vertical-align:top">(1)</SUP></B></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="9" ALIGN="center" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000"><B>Common&nbsp;share<BR>net&nbsp;asset&nbsp;value</B></TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="7" ALIGN="center" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000"><B>Premium&nbsp;(discount)&nbsp;as<BR>a&nbsp;%&nbsp;of&nbsp;net&nbsp;asset&nbsp;value</B></TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-right:8pt">&nbsp;&nbsp;</TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="13" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; padding-left:8pt">&nbsp;</TD>
<TD HEIGHT="13" COLSPAN="4" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000">&nbsp;</TD>
<TD HEIGHT="13" COLSPAN="4" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000">&nbsp;</TD>
<TD HEIGHT="13" COLSPAN="2" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000">&nbsp;</TD>
<TD HEIGHT="13" COLSPAN="4" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000">&nbsp;</TD>
<TD HEIGHT="13" COLSPAN="2" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000">&nbsp;</TD>
<TD HEIGHT="13" COLSPAN="4" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000">&nbsp;</TD>
<TD HEIGHT="13" COLSPAN="2" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000">&nbsp;</TD>
<TD HEIGHT="13" COLSPAN="4" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000">&nbsp;</TD>
<TD HEIGHT="13" COLSPAN="2" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000">&nbsp;</TD>
<TD HEIGHT="13" COLSPAN="2" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000">&nbsp;</TD>
<TD HEIGHT="13" COLSPAN="2" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000">&nbsp;</TD>
<TD HEIGHT="13" COLSPAN="2" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000">&nbsp;</TD>
<TD HEIGHT="13" COLSPAN="2" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000">&nbsp;</TD>
<TD HEIGHT="13" COLSPAN="2" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000">&nbsp;</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:7.5pt">
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-left:8pt"><B>Quarter</B></TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD COLSPAN="2" VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="3" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000"><B>High</B></TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="3" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000"><B>Low</B></TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="3" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000"><B>High</B></TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="3" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000"><B>Low</B></TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000"><B>High</B></TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000"><B>Low</B></TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-right:8pt">&nbsp;&nbsp;</TD></TR>


<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" STYLE="BORDER:1px solid #000000; padding-left:8pt"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Quarter ended September&nbsp;30, 2016</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" NOWRAP STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">$</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">[&nbsp;&nbsp;&nbsp;]&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" NOWRAP STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">$</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">[&nbsp;&nbsp;&nbsp;]&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" NOWRAP STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">$</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">[&nbsp;&nbsp;&nbsp;]&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" NOWRAP STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">$</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">[&nbsp;&nbsp;&nbsp;]&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">[&nbsp;&nbsp;&nbsp;]&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">%&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">[&nbsp;&nbsp;&nbsp;]&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">%</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" STYLE="BORDER:1px solid #000000; padding-left:8pt"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Quarter ended June&nbsp;30, 2016</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" NOWRAP STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">$</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">[&nbsp;&nbsp;&nbsp;]&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" NOWRAP STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">$</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">[&nbsp;&nbsp;&nbsp;]&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" NOWRAP STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">$</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">[&nbsp;&nbsp;&nbsp;]&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" NOWRAP STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">$</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">[&nbsp;&nbsp;&nbsp;]&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">[&nbsp;&nbsp;&nbsp;]&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">%&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">[&nbsp;&nbsp;&nbsp;]&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">%</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" STYLE="BORDER:1px solid #000000; padding-left:8pt"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Quarter ended March&nbsp;31, 2016</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" NOWRAP STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">$</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">[&nbsp;&nbsp;&nbsp;]&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" NOWRAP STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">$</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">[&nbsp;&nbsp;&nbsp;]&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" NOWRAP STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">$</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">[&nbsp;&nbsp;&nbsp;]&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" NOWRAP STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">$</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">[&nbsp;&nbsp;&nbsp;]&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">[&nbsp;&nbsp;&nbsp;]&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">%</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">[&nbsp;&nbsp;&nbsp;]&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">%</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" STYLE="BORDER:1px solid #000000; padding-left:8pt"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Quarter ended December&nbsp;31, 2015</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" NOWRAP STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">$</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">[&nbsp;&nbsp;&nbsp;]&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" NOWRAP STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">$</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">[&nbsp;&nbsp;&nbsp;]&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" NOWRAP STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">$</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">[&nbsp;&nbsp;&nbsp;]&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" NOWRAP STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">$</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">[&nbsp;&nbsp;&nbsp;]&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">[&nbsp;&nbsp;&nbsp;]&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">%</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">[&nbsp;&nbsp;&nbsp;]&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">%</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" STYLE="BORDER:1px solid #000000; padding-left:8pt"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Quarter ended September&nbsp;30, 2015</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" NOWRAP STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">$</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">[&nbsp;&nbsp;&nbsp;]&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" NOWRAP STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">$</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">[&nbsp;&nbsp;&nbsp;]&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" NOWRAP STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">$</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">[&nbsp;&nbsp;&nbsp;]&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" NOWRAP STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">$</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">[&nbsp;&nbsp;&nbsp;]&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">[&nbsp;&nbsp;&nbsp;]&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">%</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">[&nbsp;&nbsp;&nbsp;]&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">%</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" STYLE="BORDER:1px solid #000000; padding-left:8pt"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Quarter ended June&nbsp;30, 2015</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" NOWRAP STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">$</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">[&nbsp;&nbsp;&nbsp;]&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" NOWRAP STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">$</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">[&nbsp;&nbsp;&nbsp;]&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" NOWRAP STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">$</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">[&nbsp;&nbsp;&nbsp;]&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" NOWRAP STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">$</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">[&nbsp;&nbsp;&nbsp;]&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">[&nbsp;&nbsp;&nbsp;]&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">%</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">[&nbsp;&nbsp;&nbsp;]&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">%</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" STYLE="BORDER:1px solid #000000; padding-left:8pt"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Quarter ended March&nbsp;31, 2015</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" NOWRAP STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">$</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">[&nbsp;&nbsp;&nbsp;]&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" NOWRAP STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">$</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">[&nbsp;&nbsp;&nbsp;]&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" NOWRAP STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">$</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">[&nbsp;&nbsp;&nbsp;]&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" NOWRAP STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">$</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">[&nbsp;&nbsp;&nbsp;]&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">[&nbsp;&nbsp;&nbsp;]&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">%</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">[&nbsp;&nbsp;&nbsp;]&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">%</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" STYLE="BORDER:1px solid #000000; padding-left:8pt"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Quarter ended December&nbsp;31, 2014</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" NOWRAP STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">$</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">[&nbsp;&nbsp;&nbsp;]&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
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<TD VALIGN="bottom" NOWRAP STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">$</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">[&nbsp;&nbsp;&nbsp;]&nbsp;&nbsp;</TD>
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<TD VALIGN="bottom" NOWRAP STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">$</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">[&nbsp;&nbsp;&nbsp;]&nbsp;</TD>
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<TD VALIGN="bottom" NOWRAP STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">$</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">[&nbsp;&nbsp;&nbsp;]&nbsp;</TD>
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<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">[&nbsp;&nbsp;&nbsp;]&nbsp;&nbsp;&nbsp;&nbsp;</TD>
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<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">%</TD>
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<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">[&nbsp;&nbsp;&nbsp;]&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
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<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" STYLE="BORDER:1px solid #000000; padding-left:8pt"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Quarter ended September&nbsp;30, 2014</P></TD>
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<TD VALIGN="bottom" NOWRAP STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">$</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">[&nbsp;&nbsp;&nbsp;]&nbsp;&nbsp;&nbsp;&nbsp;</TD>
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<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">[&nbsp;&nbsp;&nbsp;]&nbsp;&nbsp;</TD>
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<TD VALIGN="bottom" NOWRAP STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">$</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">[&nbsp;&nbsp;&nbsp;]&nbsp;</TD>
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<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">[&nbsp;&nbsp;&nbsp;]&nbsp;</TD>
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<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">[&nbsp;&nbsp;&nbsp;]&nbsp;&nbsp;&nbsp;&nbsp;</TD>
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<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">[&nbsp;&nbsp;&nbsp;]&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
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</TABLE> <P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:5%; margin-right:5%; font-size:10pt; font-family:Times New Roman"><SUP STYLE="font-size:85%; vertical-align:top"></SUP><SUP
STYLE="font-size:85%; vertical-align:top">(1)</SUP><SUP STYLE="font-size:85%; vertical-align:top"></SUP> Such prices reflect inter-dealer prices, without retail <FONT STYLE="white-space:nowrap">mark-up,</FONT> mark-down or commission and may not
represent actual transactions. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">97 </P>


<p Style='page-break-before:always'>
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<h5 align="left"><a href="#toc">Table of Contents</a></h5>

 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund&#146;s NAV per Common share at the close of business on [ ] was $[ ] and the last reported sale price of
a Common Share on the NYSE on that day was $[ ], representing a [ ]% premium to such NAV. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:18pt; font-family:Times New Roman"><A NAME="pro302337_18"></A>Anti-Takeover and Other Provisions
in the Declaration of Trust </P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Declaration and the Bylaws include provisions that could limit the ability of other entities or persons to acquire control
of the Fund or to convert the Fund to <FONT STYLE="white-space:nowrap">open-end</FONT> status. The Fund&#146;s Trustees are divided into three classes. At each annual meeting of shareholders, the term of one class will expire and each Trustee
elected to that class will hold office until the third annual meeting thereafter. The classification of the Board of Trustees in this manner could delay for an additional year the replacement of a majority of the Board of Trustees. In addition, the
Declaration provides that a Trustee may be removed only for cause and only (i)&nbsp;by action of at least seventy-five percent (75%)&nbsp;of the outstanding shares of the classes or series of shares entitled to vote for the election of such Trustee,
or (ii)&nbsp;by written instrument, signed by at least seventy-five percent (75%)&nbsp;of the remaining Trustees, specifying the date when such removal shall become effective. Cause for these purposes shall require willful misconduct, dishonesty or
fraud on the part of the Trustee in the conduct of his office or such Trustee being convicted of a felony. </P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">As described below, the Declaration grants
special approval rights with respect to certain matters to members of the Board who qualify as &#147;Continuing Trustees,&#148; which term means a Trustee who either (i)&nbsp;has been a member of the Board for a period of at least <FONT
STYLE="white-space:nowrap">thirty-six</FONT> months (or since the commencement of the Fund&#146;s operations, if less than <FONT STYLE="white-space:nowrap">thirty-six</FONT> months) or (ii)&nbsp;was nominated to serve as a member of the Board of
Trustees by a majority of the Continuing Trustees then members of the Board. </P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Declaration requires the affirmative vote or consent of at least
seventy-five percent (75%)&nbsp;of the Board of Trustees and holders of at least seventy-five percent (75%)&nbsp;of the Fund&#146;s shares to authorize certain Fund transactions not in the ordinary course of business, including a merger or
consolidation or share exchange, issuance or transfer by the Fund of the Fund&#146;s shares having an aggregate fair market value of $1,000,000 or more (except as may be made pursuant to a public offering, the Fund&#146;s dividend reinvestment plan
or upon exercise of any stock subscription rights), a sale, lease, exchange, mortgage, pledge, transfer or other disposition of Fund assets, having an aggregated fair market value of $1,000,000 or more, or any shareholder proposal regarding specific
investment decisions, unless the transaction is authorized by both a majority of the Trustees and seventy-five percent (75%)&nbsp;of the Continuing Trustees (in which case no shareholder authorization would be required by the Declaration, but may be
required in certain cases under the 1940 Act). The Declaration also requires the affirmative vote or consent of holders of at least seventy-five percent (75%)&nbsp;of the Fund&#146;s shares entitled to vote on the matter to authorize a conversion of
the Fund from a <FONT STYLE="white-space:nowrap">closed-end</FONT> to an <FONT STYLE="white-space:nowrap">open-end</FONT> investment company, unless the conversion is authorized by both a majority of the Trustees and seventy-five percent
(75%)&nbsp;of the Continuing Trustees (in which case shareholders would have only the minimum voting rights required by the 1940 Act with respect to the conversion). Also, the Declaration provides that the Fund may be terminated at any time by vote
or consent of at least seventy-five percent (75%)&nbsp;of the Fund&#146;s shares or, alternatively, by vote or consent of both a majority of the Trustees and seventy-five percent (75%)&nbsp;of the Continuing Trustees. See &#147;Anti-Takeover and
Other Provisions in the Declaration of Trust&#148; in the Statement of Additional Information for a more detailed summary of these provisions. </P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The
Trustees may from time to time grant other voting rights to shareholders with respect to these and other matters in the Bylaws, certain of which are required by the 1940 Act. </P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The overall effect of these provisions is to render more difficult the accomplishment of a merger or the assumption of control of the Fund by a third party.
These provisions also provide, however, the advantage of potentially requiring persons seeking control of the Fund to negotiate with its management regarding the price to be paid and facilitating the continuity of the Fund&#146;s investment
objectives and policies. The provisions of the Declaration and Bylaws described above could have the effect of depriving the Common Shareholders of opportunities to sell their Common Shares at a premium over the then current market price of the
Common Shares by discouraging a third party from seeking to obtain control of the Fund in a tender offer or similar transaction. The Board of Trustees of the Fund has considered the foregoing anti-takeover provisions and concluded that they are in
the best interests of the Fund and its shareholders, including Common Shareholders. </P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The foregoing is intended only as a summary and is qualified in its
entirety by reference to the full text of the Declaration and the Bylaws, both of which are on file with the SEC. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">98 </P>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>

 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Under Massachusetts law, shareholders could, in certain circumstances, be held personally liable for the
obligations of the Fund. However, the Declaration contains an express disclaimer of shareholder liability for debts or obligations of the Fund and requires that notice of such limited liability be given in each agreement, obligation or instrument
entered into or executed by the Fund or the Trustees. The Declaration further provides for indemnification out of the assets and property of the Fund for all loss and expense of any shareholder held personally liable for the obligations of the Fund.
Thus, the risk of a shareholder incurring financial loss on account of shareholder liability is limited to circumstances in which the Fund would be unable to meet its obligations. The Fund believes that the likelihood of such circumstances is
remote. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:18pt; font-family:Times New Roman"><A NAME="pro302337_19"></A>Repurchase of Common Shares; Conversion to <FONT STYLE="white-space:nowrap">Open-End</FONT> Fund </P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund is a <FONT STYLE="white-space:nowrap">closed-end</FONT> investment company and as such its shareholders will not have the right to cause the Fund to
redeem their shares. Instead, the Common Shares will trade in the open market at a price that will be a function of factors relating to the Fund such as dividend levels and stability (which will in turn be affected by Fund expenses, including the
costs of any reverse repurchase agreements, dollar rolls, borrowings and other leverage used by the Fund, levels of dividend and interest payments by the Fund&#146;s portfolio holdings, levels of appreciation/depreciation of the Fund&#146;s
portfolio holdings, regulation affecting the timing and character of the Fund&#146;s distributions and other factors), portfolio credit quality, liquidity, call protection, market supply and demand and similar factors relating to the Fund&#146;s
portfolio holdings. The market price of the Common Shares may also be affected by general market or economic conditions, including market trends affecting securities values generally or values of <FONT STYLE="white-space:nowrap">closed-end</FONT>
fund shares more specifically. Shares of a <FONT STYLE="white-space:nowrap">closed-end</FONT> investment company may frequently trade at prices lower than NAV. The Fund&#146;s Board of Trustees regularly monitors the relationship between the market
price and NAV of the Common Shares. If the Common Shares were to trade at a substantial discount to NAV for an extended period of time, the Board of Trustees may consider the repurchase of its Common Shares on the open market or in private
transactions, the making of a tender offer for such shares or the conversion of the Fund to an <FONT STYLE="white-space:nowrap">open-end</FONT> investment company. The Fund cannot assure you that its Board of Trustees will decide to take or propose
any of these actions, or that share repurchases or tender offers will actually reduce any market discount. See &#147;Tax Matters&#148; in the Statement of Additional Information for a discussion of the tax implications of a tender offer by the Fund.
</P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">If the Fund were to convert to an <FONT STYLE="white-space:nowrap">open-end</FONT> company, the Common Shares likely would no longer be listed on the
NYSE. In contrast to a <FONT STYLE="white-space:nowrap">closed-end</FONT> investment company, shareholders of an <FONT STYLE="white-space:nowrap">open-end</FONT> investment company may require the company to redeem their shares at any time (except
in certain circumstances as authorized by or under the 1940 Act) at their NAV, less any redemption charge that is in effect at the time of redemption. </P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Before deciding whether to take any action to convert the Fund to an <FONT STYLE="white-space:nowrap">open-end</FONT> investment company, the Board of Trustees
would consider all relevant factors, including the extent and duration of the discount, the liquidity of the Fund&#146;s portfolio, the impact of any action that might be taken on the Fund or its shareholders, and market considerations. Based on
these considerations, even if the Common Shares should trade at a discount, the Board of Trustees may determine that, in the interest of the Fund and its shareholders, no action should be taken. See the Statement of Additional Information under
&#147;Repurchase of Common Shares; Conversion to <FONT STYLE="white-space:nowrap">Open-End</FONT> Fund&#148; for a further discussion of possible action to reduce or eliminate any such discount to NAV. </P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:18pt; font-family:Times New Roman"><A NAME="pro302337_20"></A>[Tax Matters] [To be updated.] </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>U.S. Federal Income Tax Matters </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The
following is a summary discussion of certain U.S. federal income tax consequences that may be relevant to a Common Shareholder that acquires, holds and/or disposes of Common Shares of the Fund, and reflects provisions of the Code, existing Treasury
regulations, rulings published by the Internal Revenue Service (&#147;IRS&#148;), and other applicable authority, as of the date of this prospectus. These authorities are subject to change by legislative or administrative action, possibly with
retroactive effect. The following discussion is only a summary of some of the important tax considerations generally applicable to investments in the Fund. For more detailed information regarding tax considerations, see the Statement of Additional
Information. There may be other and different tax considerations applicable to particular investors, such as insurance companies, financial institutions, broker-dealers, <FONT STYLE="white-space:nowrap">tax-deferred</FONT> retirement plans and <FONT
STYLE="white-space:nowrap">non-U.S.</FONT> shareholders (as defined below). In addition, income earned through an investment in the Fund may be subject to state, local and foreign taxes. Common Shareholders should consult their own tax advisers
regarding their particular situation and the possible application of U.S. federal, state, local, foreign or other tax laws. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">99 </P>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>

 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><I>Taxation of the Fund </I></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The Fund has elected to be treated as a regulated investment company (&#147;RIC&#148;) under Subchapter M of the Code and intends each year to
qualify and be eligible to be treated as such. In order for the Fund to qualify as a RIC, it must meet an income and asset diversification test each year. To satisfy the income test, the Fund must derive at least 90% of its gross income in each
taxable year from dividends, interest, payments with respect to certain securities loans, and gains from the sale or other disposition of stock, securities or foreign currencies, or other income (including, but not limited to, gains from options,
futures or forward contracts) derived with respect to its business of investing in such stock, securities or currencies and net income derived from interests in &#147;qualified publicly traded partnerships&#148; (as defined in the Code). To satisfy
the asset diversification test, the Fund must diversify its holdings so that at the end of each quarter of the Fund&#146;s taxable year, (a)&nbsp;at least 50% of the value of its total assets consists of cash and cash items (including receivables),
U.S. Government securities, securities of other RICs, and other securities limited, with respect to any one issuer, to no more than 5% of the value of the Fund&#146;s total assets and 10% of the outstanding voting securities of such issuer, and
(b)&nbsp;not more than 25% of the value of the Fund&#146;s total assets is invested in the securities (other than those of the U.S. Government or other RICs) of any one issuer or of two or more issuers which the Fund controls and which are engaged
in the same, similar or related trades or businesses, or in the securities of one or more &#147;qualified publicly traded partnerships&#148; (as defined in the Code). If the Fund qualifies as a RIC and satisfies certain distribution requirements,
the Fund (but not its shareholders) will not be subject to U.S. federal income tax to the extent it distributes its investment company taxable income (as that term is defined in the Code, without regard to the deduction for dividends paid), its net <FONT
STYLE="white-space:nowrap">tax-exempt</FONT> income, if any, and its net capital gains (the excess of net long-term capital gains over net short-term capital loss, determined in each case with reference to any capital loss carryforwards) in a timely
manner to its shareholders in the form of dividends or capital gain distributions. The Fund intends to distribute substantially all of such income and gains each year. </P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">If the Fund does retain any investment company taxable income, it will be subject to tax at regular corporate rates on the amount retained. If
the Fund retains any net capital gain, it also will be subject to tax at regular corporate rates on the amount retained. If the Fund retains any net capital gain and pays tax on such amount, it may designate the retained amount as undistributed
capital gain in a notice to its shareholders who would then (i)&nbsp;be required to include in income for U.S. federal income tax purposes, as long-term capital gain, their shares of such undistributed amount, and (ii)&nbsp;be entitled to credit
their proportionate shares of the tax paid by the Fund on such undistributed amount against their U.S. federal income tax liabilities, if any, and to claim such refunds on a properly filed U.S. tax return to the extent the credit exceeds such
liabilities. If the Fund makes this designation, for U.S. federal income tax purposes, the tax basis of Common Shares of the Fund owned by a shareholder will be increased by an amount equal under current law to the difference between the amount of
undistributed capital gains included in the Common Shareholder&#146;s gross income under clause (i)&nbsp;of the preceding sentence and the tax deemed paid by the Common Shareholder under clause (ii)&nbsp;of the preceding sentence. The Fund is not
required to, and there can be no assurance that the Fund will, make this designation if it retains all or a portion of its net capital gain in a taxable year. </P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">A nondeductible excise tax at the rate of 4% will be imposed on the excess, if any, of the Fund&#146;s &#147;required distribution&#148; over
its actual distributions in any calendar year. Generally, the required distribution is 98% of the Fund&#146;s ordinary income for the calendar year plus 98.2% of its capital gain net income recognized during the
<FONT STYLE="white-space:nowrap">one-year</FONT> period ending on October&nbsp;31 (or later if the Fund is permitted to elect and so elects), plus undistributed amounts from prior years. For purposes of the required excise tax distribution, a
RIC&#146;s ordinary gains and losses from the sale, exchange, or other taxable disposition of property that would otherwise be taken into account after October&nbsp;31 (or later if the Fund makes the election referred to immediately above) are
generally treated as arising on January&nbsp;1 of the following calendar year. Also, for purposes of the excise tax, the Fund will be treated as having distributed any amount for which it is subject to corporate income tax for the taxable year
ending within the calendar year. The Fund intends to make distributions sufficient to avoid imposition of the excise tax, although there can be no assurance that it will be able to do so. The Fund may determine to pay the excise tax in a year to the
extent it is deemed to be in the best interest of the Fund (<I>e.g.</I>, if the excise tax is de minimis). </P> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The Fund&#146;s intention to
qualify for treatment as a RIC may negatively affect the Fund&#146;s return to Common Shareholders by limiting its ability to acquire or continue to hold positions that would otherwise be consistent with its investment strategy or by requiring it to
engage in transactions it would otherwise not engage in, resulting in additional transaction costs. If the Fund were to fail to meet the income, diversification, or distribution test, the Fund could in some cases cure such failure, including by
paying a fund-level tax, paying interest, making additional distributions, or disposing of certain assets. If the Fund were ineligible to or otherwise did not cure such failure for any taxable year, or if the Fund were otherwise to fail to qualify
as a RIC accorded special tax treatment for such </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">100 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
year, the Fund would be subject to tax on its taxable income at corporate rates, and all distributions from earnings and profits, including any distributions of net
<FONT STYLE="white-space:nowrap">tax-exempt</FONT> income and net long-term capital gains, would be taxable to Common Shareholders as dividend income. In addition, the Fund could be required to recognize unrealized gains, pay substantial taxes and
interest and make substantial distributions before <FONT STYLE="white-space:nowrap">re-qualifying</FONT> as a RIC that is accorded special tax treatment. </P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">As described under &#147;Use of Leverage&#148; above, if at any time when Preferred Shares are outstanding the Fund does not meet applicable
asset coverage requirements, it will be required to suspend distributions to Common Shareholders until the requisite asset coverage is restored. Any such suspension may cause the Fund to pay a U.S. federal income and excise tax on undistributed
income or gains and may, in certain circumstances, prevent the Fund from qualifying for treatment as a RIC. The Fund may repurchase or otherwise retire Preferred Shares in an effort to comply with the distribution requirement applicable to regulated
investment companies. </P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><I>Distributions </I></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The Fund intends to make monthly distributions of net investment income. Unless a Common Shareholder elects to receive distributions in cash,
all distributions to Common Shareholders whose shares are registered with the Plan Agent will be automatically reinvested in additional Common Shares of the Fund pursuant to the Plan. For U.S. federal income tax purposes, all dividends are generally
taxable in the same manner, whether a shareholder takes them in cash or they are reinvested pursuant to the Plan in additional Common Shares of the Fund. A shareholder whose distributions are reinvested in Common Shares of the Fund under the Plan
will be treated as having received a dividend equal to either (i)&nbsp;if newly issued Common Shares are issued under the Plan, generally the fair market value of the newly issued Common Shares issued to the Common Shareholder or (ii)&nbsp;if
reinvestment is made through open-market purchases under the Plan, the amount of cash allocated to the Common Shareholder for the purchase of Common Shares on its behalf in the open market. See &#147;Dividend Reinvestment Plan&#148; above. </P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">For U.S. federal income tax purposes, distributions of net investment income are generally taxable as ordinary income. Taxes on distributions
of capital gains are determined by how long the Fund owned the investments that generated them, rather than how long a shareholder has owned his or her Common Shares of the Fund. In general, the Fund will recognize long-term capital gain or loss on
investments it has owned (or is deemed to have owned) for more than one year, and short-term capital gain or loss on investments it has owned (or is deemed to have owned) for one year or less. Distributions of net capital gain (that is, the excess
of net long-term capital gain over net short-term capital loss, determined in each case with reference to any loss carryforwards) that are properly reported by the Fund as capital gain dividends (&#147;Capital Gain Dividends&#148;) will be taxable
to shareholders as long-term capital gains includible in net capital gain and taxed to individuals at reduced rates. </P> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Distributions of net
short-term capital gain (as reduced by any net long-term capital loss for the taxable year) will be taxable to shareholders as ordinary income. The Fund may report certain dividends as derived from &#147;qualified dividend income,&#148; which, when
received by a <FONT STYLE="white-space:nowrap">non-corporate</FONT> shareholder, will be taxed at the rates applicable to net capital gain, provided holding period and other requirements are met at both the Common Shareholder and Fund levels. </P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In general, dividends of net investment income received by corporate shareholders of the Fund will qualify for the 70% dividends-received
deduction generally available to corporations to the extent of the amount of eligible dividends received by the Fund from domestic corporations for the taxable year. </P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">If, in and with respect to any taxable year, the Fund makes a distribution in excess of its current and accumulated &#147;earnings and
profits,&#148; the excess distribution will be treated as a return of capital to the extent of a shareholder&#146;s tax basis in his or her Common Shares of the Fund, and thereafter as capital gain. A return of capital is not taxable, but it reduces
a shareholder&#146;s basis in his or her shares, thus reducing any loss or increasing any gain on a subsequent taxable disposition by the Common Shareholder of such shares. </P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The IRS currently requires a RIC that the IRS recognizes as having two or more &#147;classes&#148; of stock for U.S. federal income tax
purposes to allocate to each such class proportionate amounts of each type of its income (such as ordinary income and capital gains) based upon the percentage of total dividends distributed to each class for the tax year. Accordingly, the Fund
intends each tax year to allocate Capital Gain Dividends between and among its Common Shares and each series of its Preferred Shares in proportion to the total dividends paid to each class with respect to such tax year. Dividends qualifying and not
qualifying for the dividends received deduction or as qualified dividend income will similarly be allocated between and among Common Shares and each series of Preferred Shares. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">101 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The determination of the character for U.S. federal income tax purposes of any distribution from
the Fund (<I>i.e.</I>, ordinary income dividends, Capital Gain Dividends, qualified dividends, or return of capital distributions) will be made as of the end of the Fund&#146;s taxable year. Generally, the Fund will provide shareholders with a
written statement reporting the amount of any capital gain distributions or other distributions. </P> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Dividends and distributions on the
Fund&#146;s Common Shares are generally subject to federal income tax as described herein to the extent they do not exceed the Fund&#146;s realized income and gains, even though such dividends and distributions may economically represent a return of
a particular shareholder&#146;s investment. Such distributions are likely to occur in respect of the Fund&#146;s Common Shares purchased at a time when the Fund&#146;s NAV reflects unrealized gains or income or gains that are realized but not yet
distributed. Such realized income and gains may be required to be distributed even when the Fund&#146;s NAV also reflects unrealized losses. </P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">A distribution by the Fund will be treated as paid on December&nbsp;31 of any calendar year if it is declared by the Fund in October, November
or December with a record date in such a month and paid by the Fund during January of the following calendar year. Such distributions will be taxable to shareholders in the calendar year in which the distributions are declared, rather than the
calendar year in which the distributions are received. </P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><I>Sale or Exchange of Common Shares </I></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Common Shareholders who sell or exchange their Common Shares of the Fund will generally recognize gain or loss in an amount equal to the
difference between the amount received and the Common Shareholder&#146;s adjusted tax basis in the Common Shares sold or exchanged. If the Common Shares of the Fund are held as a capital asset, any gain or loss realized upon a taxable disposition of
the Common Shares will be treated as long-term capital gain or loss if the shares have been held for more than 12 months. Otherwise, the gain or loss on the taxable disposition of Common Shares of the Fund will be treated as short-term capital gain
or loss. However, any loss realized upon a taxable disposition of Common Shares of the Fund held by a shareholder for six months or less will be treated as long-term, rather than short-term, to the extent of Capital Gain Dividends received (or
deemed received) by the Common Shareholder with respect to the shares. For purposes of determining whether Common Shares of the Fund have been held for six months or less, the holding period is suspended for any periods during which the Common
Shareholder&#146;s risk of loss is diminished as a result of holding one or more other positions in substantially similar or related property, or through certain options or short sales. Any loss realized on a sale or exchange of Common Shares of the
Fund will be disallowed to the extent those Common Shares are replaced by other substantially identical shares within a period of 61 days beginning 30 days before and ending 30 days after the date of disposition of the Common Shares (including
through the reinvestment of distributions, which could occur, for example, if the Common Shareholder is a participant in the Plan). In that event, the basis of the replacement shares will be adjusted to reflect the disallowed loss. </P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><I>Medicare Tax </I></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">A new 3.8% Medicare
contribution tax will be imposed on the &#147;net investment income&#148; of individuals, estates and trusts whose income exceeds certain threshold amounts. Net investment income generally includes for this purpose dividends, including any Capital
Gain Dividends paid by the Fund, and net capital gains recognized on the sale or exchange of Common Shares of the Fund. </P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><I>Foreign Taxes </I></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Income received by the Fund from sources within foreign countries may be subject to withholding and other taxes imposed by such countries. Tax
treaties between certain countries and the U.S. may reduce or eliminate such taxes. The Fund does not expect to be eligible to elect to &#147;pass through&#148; such foreign taxes and therefore does not expect that Common Shareholders will be
entitled to a credit or deduction in respect of such taxes. </P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><I>Certain Fund Investments </I></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">From time to time, a substantial portion of the Fund&#146;s investments in debt obligations could be treated as having &#147;original issue
discount&#148; (&#147;OID&#148;) and/or &#147;market discount&#148; for U.S. federal income tax purposes, which, in some cases, could be significant and could cause the Fund to recognize income in respect of these investments before or without
receiving cash representing such income. If so, the Fund could be required to pay out as an income distribution each year an amount which is greater than the total amount of cash interest the Fund actually received. As a result, the Fund could be
required at times to liquidate investments (including at potentially disadvantageous times or prices) in order to satisfy its distribution requirements or to avoid incurring Fund-level U.S. federal income or excise taxes. If the Fund liquidates
portfolio securities to raise cash, the Fund may realize gain or loss on such liquidations; in the event the Fund realizes net long-term or short-term capital gains from such liquidation transactions, its Common Shareholders may receive larger
capital gain or ordinary dividends, respectively, than they would in the absence of such transactions. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">102 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Investments in debt obligations that are at risk of or in default present special tax issues for
the Fund. Tax rules are not entirely clear about issues such as whether or to what extent the Fund should recognize market discount on a debt obligation; when the Fund may cease to accrue interest, OID or market discount; when and to what extent the
Fund may take deductions for bad debts or worthless securities; and how the Fund should allocate payments received on obligations in default between principal and income. These and other related issues will be addressed by the Fund when, as, and if
it invests in such securities in order to seek to ensure that it distributes sufficient income to preserve its status as a RIC and avoid becoming subject to U.S. federal income or excise tax. </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">A portion of the interest paid or accrued on certain high yield discount obligations owned by the Fund may not, and interest paid on debt
obligations, if any, that are considered for tax purposes to be payable in the equity of the issuer or a related party will not be deductible to the issuer. This may affect the cash flow of the issuer. If a portion of the interest paid or accrued on
certain high yield discount obligations is not deductible, that portion will be treated as a dividend paid by the issuer for purposes of the corporate dividends received deduction. In such cases, if the issuer of the high yield discount obligations
is a domestic corporation, dividend payments by the Fund may be eligible for the dividends-received deduction to the extent of the deemed dividend portion of such interest. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The Fund&#146;s transactions in derivative instruments (e.g., options, futures, forward contracts, structured notes and swap agreements), as
well as any of its other hedging, short sale, securities loan or similar transactions, may be subject to uncertainty with respect to their tax treatment, and to one or more special tax rules (e.g., notional principal contract, straddle, constructive
sale, wash sale, and short sale rules). The aforementioned rules may affect whether gains and losses recognized by the Fund are treated as ordinary or capital or as short-term or long-term, accelerate the recognition of income or gains to the Fund,
defer losses to the Fund, and cause adjustments in the holding periods of the Fund&#146;s securities. These rules could therefore affect the amount, timing and/or character of distributions to Common Shareholders. Because the tax treatment and the
tax rules applicable to these types of transactions are in some cases uncertain under current law, an adverse determination or future guidance by the IRS with respect to these rules or treatment (which determination or guidance could be retroactive)
may affect whether the Fund has made sufficient distributions, and otherwise satisfied the relevant requirements, to maintain its qualification as a RIC and avoid the Fund-level tax. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">It is possible that the Fund&#146;s use of derivatives and hedging activities will produce a difference between its book income and its
taxable income. If such a difference arises, and the Fund&#146;s book income is less than its taxable income, the Fund could be required to make distributions exceeding book income to qualify as a RIC that is accorded special tax treatment and to
eliminate Fund-level tax. In the alternative, if the Fund&#146;s book income exceeds its taxable income (including realized capital gains), the distribution (if any) of such excess generally will be treated as (i)&nbsp;a dividend to the extent of
the Fund&#146;s remaining earnings and profits, (ii)&nbsp;thereafter, as a return of capital to the extent of the recipient&#146;s basis in its Common Shares, and (iii)&nbsp;thereafter as gain from the sale or exchange of a capital asset. </P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Any investment by the Fund in equity securities of REITs may result in the Fund&#146;s receipt of cash in excess of the REIT&#146;s earnings;
if the Fund distributes these amounts, these distributions could constitute a return of capital to Fund shareholders for U.S. federal income tax purposes. Investments in REIT equity securities also may require the Fund to accrue and distribute
income not yet received. To generate sufficient cash to make the requisite distributions, the Fund may be required to sell securities in its portfolio (including when it is not advantageous to do so) that it otherwise would have continued to hold.
Dividends received by the Fund from a REIT will not qualify for the corporate dividends-received deduction and generally will not constitute qualified dividend income. </P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The Fund may invest directly or indirectly in residual interests in REMICs (including by investing in residual interests in CMOs with respect
to which an election to be treated as a REMIC is in effect) or equity interests in taxable mortgage pools (&#147;TMPs&#148;). Under a notice issued by the IRS in October 2006 and Treasury regulations that have yet to be issued but may apply
retroactively, a portion of the Fund&#146;s income (including income allocated to the Fund from a REIT or other pass-through entity) that is attributable to a residual interest in a REMIC or an equity interest in a TMP (referred to in the Code as an
&#147;excess inclusion&#148;) will generally be subject to U.S. federal income tax. This notice also provides, and the regulations are expected to provide, that excess inclusion income of a RIC will be allocated to shareholders of the RIC in
proportion to the dividends received by such shareholders, with the same consequences as if the Common Shareholders held the related interest directly. As a result, the Fund may not be a suitable investment for certain
<FONT STYLE="white-space:nowrap">tax-exempt</FONT> investors. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">103 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In general, excess inclusion income allocated to Common Shareholders (i)&nbsp;cannot be offset by
net operating losses (subject to a limited exception for certain thrift institutions), (ii)&nbsp;will constitute unrelated business taxable income (&#147;UBTI&#148;) to entities (including a qualified pension plan, an individual retirement account,
a 401(k) plan, a Keogh plan or other <FONT STYLE="white-space:nowrap">tax-exempt</FONT> entity) subject to tax on UBTI, thereby potentially requiring such an entity that is allocated excess inclusion income, and otherwise might not be required to
file a tax return, to file a tax return and pay tax on such income; and (iii)&nbsp;in the case of a foreign shareholder, will not qualify for any reduction in U.S. federal withholding tax. A shareholder will be subject to U.S. federal income tax on
such inclusions notwithstanding any exemption from such income tax otherwise available under the Code. Charitable remainder trusts and other <FONT STYLE="white-space:nowrap">tax-exempt</FONT> shareholders are urged to consult their tax advisers
concerning the consequences of investing in the Fund. </P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><I>Backup Withholding </I></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Backup withholding is generally required with respect to taxable distributions or the gross proceeds of a sale of Common Shares of the Fund
paid to any <FONT STYLE="white-space:nowrap">non-corporate</FONT> shareholder who fails to properly furnish a correct taxpayer identification number, who has under-reported dividend or interest income, or who fails to certify that he or she is not
subject to such withholding. The backup withholding rate is 28%. Amounts withheld as a result of backup withholding are remitted to the U.S. Treasury but do not constitute an additional tax imposed on the Common Shareholder; such amounts may be
claimed as a credit on the Common Shareholder&#146;s U.S. federal income tax return, provided the appropriate information is furnished to the IRS. </P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><I><FONT
STYLE="white-space:nowrap">Non-U.S.</FONT> Shareholders </I></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Absent a specific statutory exemption, dividends other than Capital Gain
Dividends paid to a Common Shareholder that is not a &#147;United States person&#148; within the meaning of the Code (a <FONT STYLE="white-space:nowrap">&#147;non-U.S.</FONT> shareholder&#148;) are subject to withholding of U.S. federal income tax
at a rate of 30% (or lower applicable treaty rate). Capital Gain Dividends paid to <FONT STYLE="white-space:nowrap">non-U.S.</FONT> shareholders are generally not subject to withholding. Effective for taxable years of the Fund beginning before
January&nbsp;1, 2014, the Fund is not required to withhold any amounts with respect to distributions of (i)&nbsp;U.S.-source interest income that would not be subject to U.S. federal income tax if earned directly by an individual <FONT
STYLE="white-space:nowrap">non-U.S.</FONT> shareholder, and (ii)&nbsp;net short-term capital gains in excess of net long-term capital losses, in each case to the extent the Fund properly reports such distributions in a written notice to
shareholders. It is currently unclear whether Congress will extend these exemptions from withholding for taxable years beginning on or after January&nbsp;1, 2014, or what the terms of any such an extension would be. </P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><I>Other Reporting and Withholding Requirements </I></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The &#147;Foreign Account Tax Compliance Act (&#147;FATCA&#148;) generally requires the Fund to obtain information sufficient to identify the
status of each of its shareholders under FATCA. If a shareholder fails to provide this information or otherwise fails to comply with FATCA, the Fund may be required to withhold under FATCA at a rate of 30% with respect to that shareholder on
dividends, including Capital Gain Dividends, and the proceeds of the sale, redemption or exchange of Fund shares. </P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><I>Shares Purchased Through <FONT
STYLE="white-space:nowrap">Tax-Qualified</FONT> Plans </I></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Special tax rules apply to investments though defined contribution plans and
other <FONT STYLE="white-space:nowrap">tax-qualified</FONT> plans. Common Shareholders should consult their tax advisors to determine the suitability of the Fund&#146;s Common Shares as an investment through such plans and the precise effect of an
investment on their particular tax situation. </P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><I>General </I></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The foregoing discussion relates solely to U.S. federal income tax laws. Dividends and distributions also may be subject to state and local
taxes. Common Shareholders are urged to consult their tax advisors regarding specific questions as to federal, state, local, and, where applicable, foreign taxes. Foreign investors should consult their tax advisors concerning the tax consequences of
ownership of Common Shares of the Fund. </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The foregoing is a general and abbreviated summary of the applicable provisions of the Code and
related regulations currently in effect. For the complete provisions, reference should be made to the pertinent Code sections and regulations. The Code and regulations are subject to change by legislative or administrative actions. </P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Please see &#147;Tax matters&#148; in the Statement of Additional Information for additional information regarding the tax aspects of investing in Common
Shares of the Fund.] </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">104 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:18pt; font-family:Times New Roman"><A NAME="pro302337_21"></A>Custodian and Transfer Agent </P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The custodian of the assets of the Fund is State Street Bank and Trust Company, 801 Pennsylvania Avenue, Kansas City, Missouri 64105. The custodian performs
custodial and fund accounting services as well as <FONT STYLE="white-space:nowrap">sub-administrative</FONT> and compliance services on behalf of the Fund. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">American Stock Transfer&nbsp;&amp; Trust Company, LLC, 6201 15<SUP STYLE="font-size:85%; vertical-align:top">th</SUP> Avenue, Brooklyn, New York 11219, serves
as the Fund&#146;s transfer agent, registrar, dividend disbursement agent and shareholder servicing agent, as well as agent for the Fund&#146;s Dividend Reinvestment Plan. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:18pt; font-family:Times New Roman"><A NAME="pro302337_22"></A>Independent Registered Public Accounting Firm </P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">[&nbsp;&nbsp; ] serves as independent registered public accounting firm for the Fund. [&nbsp;&nbsp; ] provides audit services, tax and other audit related
services to the Fund. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:18pt; font-family:Times New Roman"><A NAME="pro302337_23"></A>Legal Matters </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Certain legal matters will be passed on for the Fund by Ropes&nbsp;&amp; Gray LLP, Boston, Massachusetts. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">105 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:18pt; font-family:Times New Roman"><A NAME="pro302337_24"></A>Table of Contents for Statement of Additional Information <B><FONT
STYLE="font-family:Times New Roman; font-size:10pt">[To be updated]</FONT></B> </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">


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<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:8pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-bottom:1.00pt solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"><B>Page</B></TD>
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<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#sai302337_1">The Fund</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">[&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">]&nbsp;</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#sai302337_2">Investment Objectives and Policies</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">[&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">]&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#sai302337_3">Investment Restrictions</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">[&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">]&nbsp;</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#sai302337_4">Management of the Fund</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">[&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">]&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#sai302337_5">Investment Manager</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">[&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">]&nbsp;</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#sai302337_6">Portfolio Transactions</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">[&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">]&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#sai302337_7">Distributions</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">[&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">]&nbsp;</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#sai302337_8">Anti-Takeover and Other Provisions in the Declaration of Trust</A></P></TD>

<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">[&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">]&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#sai302337_9">Repurchase of Common Shares; Conversion to <FONT STYLE="white-space:nowrap">Open-End
</FONT> Fund</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">[&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">]&nbsp;</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#sai302337_10">Tax Matters</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">[&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">]&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#sai302337_11">Performance Related and Comparative Information</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">[&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">]&nbsp;</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#sai302337_12">Custodian, Transfer Agent and Dividend Disbursement Agent</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">[&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">]&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#sai302337_13">Independent Registered Public Accounting Firm</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">[&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">]&nbsp;</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#sai302337_14">Counsel</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">[&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">]&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#sai302337_15">Registration Statement</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">[&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">]&nbsp;</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#sai302337_16">Financial Statements</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">[&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">]&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#sai302337_17">Appendix A &#150; Procedures for Shareholders to Submit Nominee
Candidates</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="white-space:nowrap">A-1</FONT></TD>
<TD NOWRAP VALIGN="bottom">&nbsp;&nbsp;</TD></TR>
</TABLE>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">106 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B><A NAME="pro302337_25"></A>APPENDIX A </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>DESCRIPTION OF SECURITIES RATINGS </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>DESCRIPTION OF SECURITIES RATINGS </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Fund&#146;s
investments may range in quality from securities rated in the lowest category to securities rated in the highest category (as rated by Moody&#146;s, S&amp;P or Fitch or, if unrated, determined by PIMCO to be of comparable quality). The percentage of
the Fund&#146;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: </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><I>High Quality Debt Securities</I>&nbsp;are those rated in one of the two highest rating categories (the highest category for commercial paper) or, if
unrated, deemed comparable by PIMCO. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><I>Investment Grade Debt Securities</I>&nbsp;are those rated in one of the four highest rating categories or, if
unrated, deemed comparable by PIMCO. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><I>Below Investment Grade, High Yield Securities (&#147;Junk Bonds&#148;)</I>&nbsp;are those rated lower than Baa3
by Moody&#146;s, <FONT STYLE="white-space:nowrap">BBB-</FONT> by S&amp;P or Fitch and comparable securities. They are deemed predominately speculative with respect to the issuer&#146;s ability to repay principal and interest. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The following is a description of Moody&#146;s, S&amp;P&#146;s and Fitch&#146;s rating categories applicable to fixed income securities. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Moody&#146;s Investors Service, Inc. </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Long-Term
Corporate Obligation Ratings </B></P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Moody&#146;s long-term obligation ratings are opinions of the relative credit risk of fixed income obligations with an
original maturity of one year or more. They address the possibility that a financial obligation will not be honored as promised. Such ratings use Moody&#146;s Global Scale and reflect both the likelihood of default and any financial loss suffered in
the event of default. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Aaa: Obligations rated Aaa are judged to be of the highest quality,&nbsp;subject to the lowest level of&nbsp;credit risk. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Aa: Obligations rated Aa are judged to be of high quality and are subject to very low credit risk. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">A: Obligations rated A are judged to be upper-medium grade and are subject to low credit risk. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Baa: Obligations rated Baa are judged to be medium-grade and subject to moderate credit risk and as such may possess certain speculative characteristics. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Ba: Obligations rated Ba are judged to&nbsp;be speculative&nbsp;and are subject to substantial credit risk. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">B: Obligations rated B are considered speculative and are subject to high credit risk. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Caa: Obligations rated Caa are judged to be speculative of poor standing and are subject to very high credit risk. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Ca: Obligations rated Ca are highly speculative and are likely in, or very near, default, with some prospect of recovery of principal and interest. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">C: Obligations rated C are the lowest rated and are typically in default, with little prospect for recovery of principal or interest. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Moody&#146;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 <FONT STYLE="white-space:nowrap">mid-range</FONT> ranking; and the modifier 3 indicates a ranking in the lower end of that generic rating category. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">107 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Medium-Term Note Program Ratings </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Moody&#146;s assigns provisional ratings to medium-term note (MTN) programs and definitive ratings to the individual debt securities issued from them
(referred to as drawdowns or notes). </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">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&#146;s assigns provisional ratings to MTN programs. A provisional rating is denoted by a (P)&nbsp;in front of the rating.
</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">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&#146;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. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Moody&#146;s encourages market participants to contact Moody&#146;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. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Short-Term Ratings </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Moody&#146;s short-term ratings are
opinions of the ability of issuers to honor short-term financial obligations. Ratings may be assigned to issuers, short-term programs or to individual short-term debt instruments. Such obligations generally have an original maturity not exceeding
thirteen months, unless explicitly noted. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Moody&#146;s employs the following designations to indicate the relative repayment ability of rated issuers:
</P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><FONT STYLE="white-space:nowrap">P-1:</FONT> Issuers (or supporting institutions) rated <FONT STYLE="white-space:nowrap">Prime-1</FONT> have a superior
ability to repay short-term debt obligations. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><FONT STYLE="white-space:nowrap">P-2:</FONT> Issuers (or supporting institutions) rated <FONT
STYLE="white-space:nowrap">Prime-2</FONT> have a strong ability to repay short-term debt obligations. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><FONT STYLE="white-space:nowrap">P-3:</FONT>
Issuers (or supporting institutions) rated <FONT STYLE="white-space:nowrap">Prime-3</FONT> have an acceptable ability to repay short-term obligations. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">NP: Issuers (or supporting institutions) rated Not Prime do not fall within any of the Prime rating categories. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>National Scale Long-Term Ratings </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Moody&#146;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&#146;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 (<B><I>e.g.</I></B>, Aaa.br for Brazil). </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Aaa.n: Issuers or issues rated Aaa.n demonstrate the strongest creditworthiness relative to other domestic issuers. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Aa.n: Issuers or issues rated Aa.n demonstrate very strong creditworthiness relative to other domestic issuers. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">A.n: Issuers or issues rated A.n present above-average creditworthiness relative to other domestic issuers. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Baa.n: Issuers or issues rated Baa.n represent average creditworthiness relative to other domestic issuers. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Ba.n: Issuers or issues rated Ba.n demonstrate below-average creditworthiness relative to other domestic issuers. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">B.n: Issuers or issues rated B.n demonstrate weak creditworthiness relative to other domestic issuers. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">108 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Caa.n: Issuers or issues rated Caa.n demonstrate very weak creditworthiness relative to other domestic issuers.
</P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Ca.n: Issuers or issues rated Ca.n demonstrate extremely weak creditworthiness relative to other domestic issuers. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">C.n: Issuers or issues rated C.n demonstrate the weakest creditworthiness relative to other domestic issuers. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Moody&#146;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 <FONT STYLE="white-space:nowrap">mid-range</FONT> ranking; and the modifier 3 indicates a ranking in the lower end of that generic rating category. National scale
long-term ratings of D.ar and E.ar may also be applied to Argentine obligations. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>National Scale Short-Term Ratings </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Moody&#146;s short-term NSRs are opinions of the ability of issuers in a given country, relative to other domestic issuers, to repay debt obligations that
have an original maturity not exceeding one year. Short-term NSRs in one country should not be compared with short-term NSRs in another country, or with Moody&#146;s global ratings. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">There are four categories of short-term national scale ratings, generically denoted <FONT STYLE="white-space:nowrap">N-1</FONT> through <FONT
STYLE="white-space:nowrap">N-4</FONT> as defined below. </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">In each specific country, the first two letters indicate the country in which the issuer is
located (<I>e.g.</I>, <FONT STYLE="white-space:nowrap">BR-1</FONT> through <FONT STYLE="white-space:nowrap">BR-4</FONT> for Brazil). </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><FONT
STYLE="white-space:nowrap">N-1:</FONT> Issuers rated <FONT STYLE="white-space:nowrap">N-1</FONT> have the strongest ability to repay short-term senior unsecured debt obligations relative to other domestic issuers. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><FONT STYLE="white-space:nowrap">N-2:</FONT> Issuers rated <FONT STYLE="white-space:nowrap">N-2</FONT> have an above average ability to repay short-term
senior unsecured debt obligations relative to other domestic issuers. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><FONT STYLE="white-space:nowrap">N-3:</FONT> Issuers rated <FONT
STYLE="white-space:nowrap">N-3</FONT> have an average ability to repay short-term senior unsecured debt obligations relative to other domestic issuers. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><FONT
STYLE="white-space:nowrap">N-4:</FONT> Issuers rated <FONT STYLE="white-space:nowrap">N-4</FONT> have a below average ability to repay short-term senior unsecured debt obligations relative to other domestic issuers. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The short-term rating symbols <FONT STYLE="white-space:nowrap">P-1.za,</FONT> <FONT STYLE="white-space:nowrap">P-2.za,</FONT>
<FONT STYLE="white-space:nowrap">P-3.za</FONT> and NP.za are used in South Africa. National scale short-term ratings of <FONT STYLE="white-space:nowrap">AR-5</FONT> and <FONT STYLE="white-space:nowrap">AR-6</FONT> may also be applied to Argentine
obligations. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>US Municipal Short-Term Debt and Demand Obligation Ratings Short-Term Obligation Ratings </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">There are three rating categories for short-term municipal obligations that are considered investment grade. These ratings are designated as Municipal
Investment Grade (MIG) and are divided into three levels&#151;MIG 1 through MIG 3. In addition, those short-term obligations that are of speculative quality are designated SG, or speculative grade. MIG ratings expire at the maturity of the
obligation. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">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. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">MIG 2: This designation denotes strong credit quality. Margins of
protection are ample, although not as large as in the preceding group. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">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. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">SG: This designation denotes speculative-grade credit
quality. Debt instruments in this category may lack sufficient margins of protection. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">109 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Demand Obligation Ratings </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">In the case of variable rate demand obligations (VRDOs), a <FONT STYLE="white-space:nowrap">two-component</FONT> rating is assigned: a long- or short-term
debt rating and a demand obligation rating. The first element represents Moody&#146;s evaluation of risk associated with scheduled principal and interest payments. The second element represents Moody&#146;s evaluation of risk associated with the
ability to receive purchase price upon demand (&#147;demand feature&#148;). The second element uses a rating from a variation of the MIG scale called the Variable Municipal Investment Grade (VMIG) scale. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">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 that ensure the timely payment of purchase price upon demand. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">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 that ensure the timely payment of purchase price upon demand. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">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 that ensure the timely payment of purchase price upon demand. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">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 an investment grade short-term rating or may lack the structural and/or legal protections necessary to ensure the
timely payment of purchase price upon demand. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Standard&nbsp;&amp; Poor&#146;s Ratings Services </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Long-Term Issue Credit Ratings </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Issue credit ratings are
based, in varying degrees, on Standard&nbsp;&amp; Poor&#146;s analysis of the following considerations: </P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">&#8718; Likelihood of payment&#151;capacity and
willingness of the obligor to meet its financial commitment on an obligation in accordance with the terms of the obligation; </P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">&#8718; Nature of and
provisions of the obligation and the promise Standard&nbsp;&amp; Poor&#146;s imputes; </P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">&#8718; Protection afforded by, and relative position of, the
obligation in the event of bankruptcy, reorganization, or other arrangement under the laws of bankruptcy and other laws affecting creditors&#146; rights. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">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 the 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.) </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Investment Grade </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">AAA: An obligation rated &#145;AAA&#146; has the highest rating assigned by Standard&nbsp;&amp; Poor&#146;s. The obligor&#146;s capacity to meet its financial
commitment on the obligation is extremely strong. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">AA: An obligation rated &#145;AA&#146; differs from the highest-rated obligations only to a small
degree. The obligor&#146;s capacity to meet its financial commitment on the obligation is very strong. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">A: An obligation rated &#145;A&#146; is somewhat
more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher-rated categories. However, the obligor&#146;s capacity to meet its financial commitment on the obligation is still strong. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">BBB: An obligation rated &#145;BBB&#146; exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">110 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Speculative Grade </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Obligations rated &#145;BB&#146;, &#145;B&#146;, &#145;CCC&#146;, &#145;CC&#146;, and &#145;C&#146; are regarded as having significant speculative
characteristics. &#145;BB&#146; indicates the least degree of speculation and &#145;C&#146; the highest. While such obligations will likely have some quality and protective characteristics, these may be outweighed by large uncertainties or major
exposures to adverse conditions. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">BB: An obligation rated &#145;BB&#146; is less vulnerable to nonpayment than other speculative issues. However, it faces
major ongoing uncertainties or exposure to adverse business, financial, or economic conditions which could lead to the obligor&#146;s inadequate capacity to meet its financial commitment on the obligation. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">B: An obligation rated &#145;B&#146; is more vulnerable to nonpayment than obligations rated &#145;BB&#146;, but the obligor currently has the capacity to
meet its financial commitment on the obligation. Adverse business, financial, or economic conditions will likely impair the obligor&#146;s capacity or willingness to meet its financial commitment on the obligation. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">CCC: An obligation rated &#145;CCC&#146; is currently vulnerable to nonpayment, and is dependent upon favorable business, financial, and economic conditions
for the obligor to meet its financial commitment 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 commitment on the obligation. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">CC: An obligation rated &#145;CC&#146; is currently highly vulnerable to nonpayment. The &#145;CC&#146; rating is used when a default has not yet occurred,
but Standard&nbsp;&amp; Poor&#146;s expects default to be a virtual certainty, regardless of the anticipated time to default. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">C: An obligation rated
&#145;C&#146; is currently highly vulnerable to nonpayment, and the obligation is expected to have lower relative seniority or lower ultimate recovery compared to obligations that are rated higher. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">D: An obligation rated &#145;D&#146; is in default or in breach of an imputed promise. For <FONT STYLE="white-space:nowrap">non-hybrid</FONT> capital
instruments, the &#145;D&#146; rating category is used when payments on an obligation are not made on the date due, unless Standard&nbsp;&amp; Poor&#146;s believes that such payments will be made within five business days in the absence of a stated
grace period or within the earlier of the stated grace period or 30 calendar days. The &#145;D&#146; 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. An obligation&#146;s rating is lowered to &#145;D&#146; if it is subject to a distressed exchange offer. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">NR: This indicates that no rating has been requested, that there is insufficient information on which to base a rating, or that Standard&nbsp;&amp;
Poor&#146;s does not rate a particular obligation as a matter of policy. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Plus (+)&nbsp;or minus (-): The ratings from &#145;AA&#146; to &#145;CCC&#146;
may be modified by the addition of a plus (+)&nbsp;or minus (-) sign to show relative standing within the major rating categories. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Short-Term Issue
Credit Ratings </B></P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><FONT STYLE="white-space:nowrap">A-1:</FONT> A short-term obligation rated <FONT STYLE="white-space:nowrap">&#145;A-1&#146;</FONT> is
rated in the highest category by Standard&nbsp;&amp; Poor&#146;s. The obligor&#146;s capacity to meet its financial commitment on the obligation is strong. Within this category, certain obligations are designated with a plus sign (+). This indicates
that the obligor&#146;s capacity to meet its financial commitment on these obligations is extremely strong. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><FONT STYLE="white-space:nowrap">A-2:</FONT>
A short-term obligation rated <FONT STYLE="white-space:nowrap">&#145;A-2&#146;</FONT> is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher rating categories. However, the
obligor&#146;s capacity to meet its financial commitment on the obligation is satisfactory. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><FONT STYLE="white-space:nowrap">A-3:</FONT> A short-term
obligation rated <FONT STYLE="white-space:nowrap">&#145;A-3&#146;</FONT> exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet
its financial commitment on the obligation. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">111 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">B: A short-term obligation rated &#145;B&#146; is regarded as vulnerable and has significant speculative
characteristics.&nbsp;The obligor currently has the capacity to meet its financial commitments; however, it faces major ongoing uncertainties which could lead to the obligor&#146;s inadequate capacity to meet its financial commitments. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">C: A short-term obligation rated &#145;C&#146; is currently vulnerable to nonpayment and is dependent upon favorable business, financial, and economic
conditions for the obligor to meet its financial commitment on the obligation. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">D: A short-term obligation rated &#145;D&#146; is in default or in breach
of an imputed promise. For <FONT STYLE="white-space:nowrap">non-hybrid</FONT> capital instruments, the &#145;D&#146; rating category is used when payments on an obligation are not made on the date due, unless Standard&nbsp;&amp; Poor&#146;s 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 &#145;D&#146; 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. An obligation&#146;s rating is lowered to &#145;D&#146; if it is subject to a distressed exchange
offer. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">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, <FONT STYLE="white-space:nowrap">&#145;AAA/A-1+&#146;</FONT> or <FONT
STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">&#145;A-1+/A-1&#146;).</FONT></FONT> 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, <FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">&#145;SP-1+/A-1+&#146;).</FONT></FONT> </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Active Qualifiers </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Standard&nbsp;&amp; Poor&#146;s uses&nbsp;five qualifiers that limit the scope of a rating. The structure of the transaction can require the use of a qualifier
such as a &#145;p&#146; qualifier, which indicates the rating addressed the principal portion of the obligation only. Likewise, the qualifier can indicate a limitation on the type of information used, such as &#147;pi&#148; for public information. A
qualifier appears as a suffix and is part of the rating. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">L: Ratings qualified with &#145;L&#146; apply only to amounts invested up to federal deposit
insurance limits. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">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 &#145;p&#146; suffix indicates that the rating addresses the principal portion of the obligation only and
that the interest is not rated. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">pi: Ratings with a &#145;pi&#146; suffix are based on an analysis of an issuer&#146;s published financial information, as
well as additional information in the public domain. They do not, however, reflect <FONT STYLE="white-space:nowrap">in-depth</FONT> meetings with an issuer&#146;s management and therefore may be based on less comprehensive information than ratings
without a &#145;pi&#146; suffix. Ratings with a &#145;pi&#146; suffix are reviewed annually based on a new year&#146;s financial statements, but may be reviewed on an interim basis if a major event occurs that may affect the issuer&#146;s credit
quality. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">prelim: Preliminary ratings, with the &#145;prelim&#146; 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 Standard&nbsp;&amp; Poor&#146;s of appropriate documentation. Standard&nbsp;&amp; Poor&#146;s reserves the right not to issue a final rating. Moreover,
if a final rating is issued, it may differ from the preliminary rating. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">&#8718; Preliminary ratings may be assigned to obligations, most commonly
structured and project finance issues, pending receipt of final documentation and legal opinions. </P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">&#8718; Preliminary ratings are assigned to Rule 415
Shelf Registrations. As specific issues, with defined terms, are offered from the master registration, a final rating may be assigned to them in accordance with Standard&nbsp;&amp; Poor&#146;s policies. </P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">&#8718; Preliminary ratings may be assigned to obligations that will likely be issued upon the obligor&#146;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). </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">112 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">&#8718; Preliminary ratings may be assigned to entities that are being formed or that are in the process of being
independently established when, in Standard&nbsp;&amp; Poor&#146;s opinion, documentation is close to final. Preliminary ratings may also be assigned to the&nbsp;obligations of these entities. </P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">&#8718; 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, Standard&nbsp;&amp; Poor&#146;s would
likely withdraw these preliminary ratings. </P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">&#8718; A preliminary recovery rating may be assigned to an obligation that has a preliminary issue credit
rating. </P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">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. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Inactive Qualifiers (no longer applied or outstanding) </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">*:This symbol that indicated that the rating was contingent upon Standard&nbsp;&amp; Poor&#146;s receipt of an executed copy of the escrow agreement or
closing documentation confirming investments and cash flows. Discontinued use in August 1998. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">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&#146;s bonds were deemed taxable.
Discontinued use in January 2001. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">G: The letter &#145;G&#146; followed the rating symbol when a fund&#146;s portfolio consisted primarily of direct U.S.
government securities. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">pr: The letters &#145;pr&#146; 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. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">q: A &#145;q&#146;
subscript indicates that the rating is based solely on quantitative analysis of publicly available information. Discontinued use in April 2001. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">r: The
&#145;r&#146; modifier was assigned to securities containing extraordinary risks, particularly market risks, which are not covered in the credit rating. The absence of an &#145;r&#146; modifier should not be taken as an indication that an obligation
would not exhibit extraordinary <FONT STYLE="white-space:nowrap">non-credit</FONT> related risks. Standard&nbsp;&amp; Poor&#146;s discontinued the use of the &#145;r&#146; modifier for most obligations in June 2000 and for the balance of obligations
(mainly structured finance transactions) in November 2002. </P> <P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Fitch Ratings </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Long-Term Credit Ratings </B></P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Investment Grade </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">AAA: Highest credit quality. &#145;AAA&#146; ratings denote the lowest expectation of credit 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. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">AA: Very high credit
quality. &#145;AA&#146; ratings denote expectations of very&nbsp;low credit risk. They indicate very strong capacity for&nbsp;payment of financial commitments. This capacity is not significantly vulnerable to foreseeable events. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">113 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">A: High credit quality. &#145;A&#146; ratings denote expectations of low credit 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. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">BBB: Good credit quality. &#145;BBB&#146; ratings indicate that expectations of credit 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. </P> <P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Speculative Grade </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">BB: Speculative. &#145;BB&#146; ratings indicate an elevated vulnerability to credit risk, particularly in the event of adverse changes in business or economic
conditions over time; however, business or financial alternatives may be available to allow financial commitments to be met. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">B: Highly speculative.
&#145;B&#146; ratings indicate that material credit risk is present. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">CCC: Substantial credit risk. &#145;CCC&#146; ratings indicate that substantial
credit risk is present. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">CC: Very high levels of credit risk. &#145;CC&#146; ratings indicate very high levels of credit risk. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">C: Exceptionally high levels of credit risk. &#145;C&#146; indicates exceptionally high levels of credit risk. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Defaulted obligations typically are not assigned &#145;RD&#146; or&nbsp;&#145;D&#146; ratings, but are instead rated in the &#145;B&#146; to &#145;C&#146;
rating categories, depending upon their recovery prospects and other relevant characteristics. This approach better aligns obligations that have comparable overall expected loss but varying vulnerability to default and loss. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The modifiers &#147;+&#148; or &#147;-&#148; may be appended to a rating to denote relative status within major rating categories. Such suffixes are not added
to the &#145;AAA&#146; obligation rating category, or to corporate finance obligation ratings in the categories below &#145;CCC.&#146; </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The subscript
&#145;emr&#146; is appended to a rating to denote embedded market risk which is beyond the scope of the rating. The designation is intended to make clear that the rating solely addresses the counterparty risk of the issuing bank. It is not meant to
indicate any limitation in the analysis of the counterparty risk, which in all other respects follows published Fitch criteria for analyzing the issuing financial institution. Fitch does not rate these instruments where the principal is to any
degree subject to market risk. </P> <P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Recovery Ratings </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Recovery Ratings are assigned to selected individual securities and obligations, most frequently for individual obligations of corporate issuers with Issuer
Default Ratings (IDRs) in speculative grade categories. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">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. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Recovery Rating scale is based upon 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. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">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, but actual recoveries for a given
security may deviate materially from historical averages. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">RR1:<I>&nbsp;Outstanding recovery prospects given default.</I>&nbsp;&#145;RR1&#146; rated
securities have characteristics consistent with securities historically recovering <FONT STYLE="white-space:nowrap">91%-100%</FONT> of current principal and related interest. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">114 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">RR2:<I>&nbsp;Superior recovery prospects given default.</I>&nbsp;&#145;RR2&#146; rated securities have
characteristics consistent with securities historically recovering <FONT STYLE="white-space:nowrap">71%-90%</FONT> of current principal and related interest. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">RR3:<I>&nbsp;Good recovery prospects given default.</I>&nbsp;&#145;RR3&#146; rated securities have characteristics consistent with securities historically
recovering <FONT STYLE="white-space:nowrap">51%-70%</FONT> of current principal and related interest. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">RR4:<I>&nbsp;Average recovery prospects given
default.</I>&nbsp;&#145;RR4&#146; rated securities have characteristics consistent with securities historically recovering <FONT STYLE="white-space:nowrap">31%-50%</FONT> of current principal and related interest. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">RR5:<I>&nbsp;Below average recovery prospects given default.</I>&nbsp;&#145;RR5&#146; rated securities have characteristics consistent with securities
historically recovering <FONT STYLE="white-space:nowrap">11%-30%</FONT> of current principal and related interest. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">RR6:<I>&nbsp;Poor recovery prospects
given default.</I>&nbsp;&#145;RR6&#146; rated securities have characteristics consistent with securities historically recovering <FONT STYLE="white-space:nowrap">0%-10%</FONT> of current principal and related interest. </P>
<P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Short-Term Credit Ratings </B></P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">A short-term issuer or
obligation rating is based in all cases on the short-term vulnerability to default of the rated entity or security stream and relates to the capacity to meet financial obligations in accordance with the documentation governing the relevant
obligation. Short-Term Ratings are assigned to obligations whose initial maturity is viewed as &#147;short term&#148; based on market convention. 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. </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">F1: Highest short-term credit quality. Indicates the strongest intrinsic capacity for timely
payment of financial commitments; may have an added &#147;+&#148; to denote any exceptionally strong credit feature. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">F2: Good short-term credit quality.
Good intrinsic capacity for timely payment of financial commitments. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">F3: Fair short-term credit quality. The intrinsic capacity for timely payment of
financial commitments is adequate. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">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. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">C: High short-term default risk. Default is a real
possibility. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">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. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">D: Default. Indicates a broad-based default event for an entity, or the default
of a short-term obligation. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">115 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">[Insert PIMCO logo] </P>
<P STYLE="margin-top:24pt; margin-bottom:0pt; font-size:15pt; font-family:Times New Roman" ALIGN="center"><U>Up to [ ] Shares </U></P> <P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:18pt; font-family:Times New Roman" ALIGN="center"><B>PIMCO
Dynamic Income Fund </B></P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:15pt; font-family:Times New Roman" ALIGN="center"><U>Common Shares </U></P> <P STYLE="font-size:18pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P><center>
<P STYLE="line-height:6.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1.00pt solid #000000;width:21%">&nbsp;</P></center> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:15pt; font-family:Times New Roman" ALIGN="center"><U>PROSPECTUS</U>
</P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P><center> <P STYLE="line-height:6.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1.00pt solid #000000;width:21%">&nbsp;</P></center>
<P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">[Date] </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">116 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:8pt; font-family:ARIAL"><FONT COLOR="#ff0000">The information in this preliminary prospectus is not complete and may be changed. We may not sell
these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any
state where the offer or sale is not permitted. </FONT></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><FONT COLOR="#ff0000"><B>SUBJECT TO COMPLETION, DATED ________ </B></FONT></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>FORM OF PROSPECTUS SUPPLEMENT </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>(To Prospectus dated _______, 2017) </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:18pt; font-family:Times New Roman"><B>PIMCO Dynamic Income Fund </B></P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Common Shares </B></P>
<P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">PIMCO Dynamic Income Fund (the &#147;Fund&#148;) is
offering for sale [ ] of its common shares of beneficial interest (the &#147;Common Shares&#148;). The Common Shares are traded on the New York Stock Exchange under the trading or &#147;ticker&#148; symbol &#147;PDI.&#148; The last reported sale
price for the Common Shares on [ ] was $[ ] per share. The net asset value (&#147;NAV&#148;) of the Common Shares at the close of business on [ ] was $[ ] per share. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">You should review the information set forth under &#147;Principal Risks of the Fund&#148; on page&nbsp;[ ] of the accompanying prospectus before investing in
Common Shares </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><U>Per Share</U></P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><U>Total</U><SUP STYLE="font-size:85%; vertical-align:top">(1)</SUP></P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">&nbsp;Public offering price</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">[&nbsp;&nbsp; ]</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">$[ &nbsp;&nbsp;]</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">&nbsp;Underwriting discounts and commissions</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">[&nbsp;&nbsp; ]</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">$[&nbsp;&nbsp; ]</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;Proceeds, before expenses, to the fund</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000">[&nbsp;&nbsp; ]</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000">$[ &nbsp;&nbsp;]</TD></TR>
</TABLE> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">(1) The aggregate expenses of the offering are estimated to be $[ ], which represents approximately $[ ] per share. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The underwriters may also purchase up to an additional [ ] Common Shares from the Fund at the public offering price, less underwriting discounts and
commissions if any, within [ ]&nbsp;days after the date of this prospectus supplement. If the over-allotment option is exercised in full, the total proceeds, before expenses, to the Fund would be $[ ] and the total underwriting discounts and
commissions would be $[ ]. The Common Shares will be ready for delivery on or about [ ]. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">You should read this prospectus supplement and the accompanying
prospectus before deciding whether to invest in the Common Shares and retain them for future reference. The prospectus supplement and the accompanying prospectus contain important information about the Fund. Material that has been incorporated by
reference and other information about us can be obtained from us by calling toll-free (844) <FONT STYLE="white-space:nowrap">33-PIMCO</FONT> <FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">(844-337-4626)</FONT></FONT> or by writing
to the Fund at c/o Pacific Investment Management Company LLC, 1633 Broadway, New York, New York 10019. You may also obtain a copy of the Statement of Additional Information (and other information regarding the Fund) from the Securities and Exchange
Commission&#146;s (&#147;SEC&#148;) Public Reference Room in Washington, D.C. by calling (202) <FONT STYLE="white-space:nowrap">551-8090.</FONT> The SEC charges a fee for copies. The Fund&#146;s Statement of Additional Information and most recent
annual and semiannual reports are available, free of charge, on the Fund&#146;s website (http://www.pimco.com). You can obtain the same information, free of charge, from the SEC&#146;s web site (http://www.sec.gov). </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Investment in the Fund&#146;s Common Shares involves substantial risks arising from, among other strategies, the Fund&#146;s ability to invest in debt
instruments that are, at the time of purchase, rated below investment grade (below Baa3 by Moody&#146;s Investors Service, Inc. (&#147;Moody&#146;s&#148;) or below BBB by either Standard </B></P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">1 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>
&amp; Poor&#146;s Ratings Services, a division of The McGraw-Hill Company, Inc. (&#147;S&amp;P&#148;) or Fitch, Inc. (&#147;Fitch&#148;)) or unrated but determined by PIMCO to be of comparable
quality, the Fund&#146;s exposure to foreign and emerging markets securities and currencies and to mortgage-related and other asset-backed securities, and the Fund&#146;s use of leverage. Debt securities of below investment grade quality are
regarded as having predominantly speculative characteristics with respect to capacity to pay interest and to repay principal, and are commonly referred to as &#147;high yield&#148; securities or &#147;junk bonds.&#148; The Fund&#146;s exposure to
foreign securities and currencies, and particularly to emerging markets securities and currencies, involves special risks, including foreign currency risk and the risk that the securities may decline in response to unfavorable political and legal
developments, unreliable or untimely information or economic and financial instability. Mortgage-related and other asset-backed securities are subject to extension and prepayment risk and often have complicated structures that make them difficult to
value.&nbsp;&nbsp;&nbsp;&nbsp;Because of the risks associated with investing in high yield securities, foreign and emerging market securities (and related exposure to foreign currencies) and mortgage-related and other asset-backed securities, and
using leverage, an investment in the Fund should be considered speculative. Before investing in the Common Shares, you should read the discussion of the principal risks of investing in the Fund in &#147;Principal Risks of the Fund.&#148; Certain of
these risks are summarized in &#147;Prospectus Summary&#151;Principal Risks of the Fund.&#148; </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>The Securities and Exchange Commission has not
approved or disapproved of these securities or determined that this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. </B></P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">2 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Table of Contents [To be updated] </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Prospectus Supplement </P> <P STYLE="line-height:1.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>
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<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#pro302337_25">About this Prospectus Supplement</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">[&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">]&nbsp;</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#pro302337_26">Summary of Fund Expenses</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">[&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">]&nbsp;</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#pro302337_27">Use of Proceeds</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">[&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">]&nbsp;</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#pro302337_28">Financial Highlights</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">[&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">]&nbsp;</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#pro302337_29">Price Range of Common Shares</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">[&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">]&nbsp;</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#pro302337_30">Underwriting</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">[&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">]&nbsp;</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#pro302337_31">Legal Matters</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">[&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">]&nbsp;</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#pro302337_32">[Unaudited] Financial Statements as of [&nbsp;&nbsp; ]</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">[&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">]&nbsp;</TD></TR>
</TABLE>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">3 </P>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>

 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B><A NAME="pro302337_25"></A>ABOUT THIS PROSPECTUS SUPPLEMENT </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>You should rely only on the information contained or incorporated by reference in this prospectus supplement and the accompanying prospectus. The Fund has
not, and the underwriters have not, authorized anyone to provide you with inconsistent information. If anyone provides you with inconsistent information, you should not assume that the Fund or the underwriters have authorized or verified it. The
Fund is not, and the underwriters are not, making an offer of these securities in any state where the offer is not permitted. You should not assume that the information contained in this prospectus supplement and the accompanying prospectus is
accurate as of any date other than the date on the front hereof or thereof. The Fund&#146;s business, financial condition, results of operations and prospects may have changed since those date. </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">This document has two parts. The first part is this prospectus supplement, which describes the terms of this offering of Common Shares and also adds to and
updates information contained in the accompanying prospectus. The second part is the accompanying prospectus, which gives more general information and disclosure. To the extent the information contained in this prospectus supplement differs from or
is additional to the information contained in the accompanying prospectus, you should rely only on the information contained in this prospectus supplement. You should read this prospectus supplement and the accompanying prospectus before investing
in the Common Shares. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">4 </P>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>

 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:18pt; font-family:Times New Roman"><A NAME="pro302337_26"></A>Summary of Fund Expenses </P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The following table is intended to assist investors in understanding the fees and expenses (annualized) that an investor in Common Shares of the Fund would
bear, directly or indirectly, as a result of an offering. The table assumes the use of leverage in the form of reverse repurchase agreements and credit default swaps in an amount equal to [ ]% of the Fund&#146;s total assets (including the amount of
leverage obtained through the use of such instruments), which reflects approximately the percentage of the Fund&#146;s total assets attributable to such leverage as of [&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;], 2016, and shows Fund expenses
as a percentage of net assets attributable to Common Shares. The table and example below are based on the Fund&#146;s capital structure as of [ ]. The extent of the Fund&#146;s assets attributable to leverage following an offering, and the
Fund&#146;s associated expenses, are likely to vary (perhaps significantly) from these assumptions. </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">


<TR>
<TD WIDTH="95%"></TD>
<TD VALIGN="bottom" WIDTH="3%"></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>


<TR BGCOLOR="#cceeff" STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><B>Shareholder Transaction Expenses</B></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:3.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Sales load (as a percentage of offering price)</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">[&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">]%&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:3.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Offering Expenses Borne by Common Shareholders (as a percentage of offering price)</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">[&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">]%&nbsp;</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:3.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Dividend Reinvestment Plan Fees <SUP STYLE="font-size:85%; vertical-align:top">(1)</SUP></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">None</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;&nbsp;</TD></TR>
</TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">


<TR>
<TD WIDTH="73%"></TD>
<TD VALIGN="bottom" WIDTH="13%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="13%"></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:7.5pt">
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:7.5pt; font-family:Times New Roman" ALIGN="center"><B>Percentage&nbsp;of&nbsp;Net&nbsp;Assets</B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:7.5pt; font-family:Times New Roman" ALIGN="center"><B>Attributable&nbsp;to</B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:7.5pt; font-family:Times New Roman" ALIGN="center"><B>Common&nbsp;Shares</B></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:7.5pt; font-family:Times New Roman" ALIGN="center"><B>(assuming&nbsp;leverage&nbsp;is&nbsp;utilized)</B></P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD COLSPAN="2" VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD></TR>


<TR STYLE="font-size:1px; ">
<TD COLSPAN="8" VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><B>Annual Expenses</B></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:3.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Management Fees (2)</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">[&nbsp;&nbsp;&nbsp;]%</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD></TR>
<TR BGCOLOR="#cceeff" STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:3.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Interest Payments on Borrowed Funds<SUP STYLE="font-size:85%; vertical-align:top">
(3)</SUP></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">[&nbsp;&nbsp;&nbsp;]%</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:3.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Other Expenses<SUP STYLE="font-size:85%; vertical-align:top">(4)</SUP></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">[&nbsp;&nbsp;&nbsp;]%</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD></TR>
<TR BGCOLOR="#cceeff" STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:3.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Total Annual Expenses</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">[&nbsp;&nbsp;&nbsp;]%</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:6pt">
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD></TR>
<TR STYLE="font-size:1px; ">
<TD COLSPAN="8" VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD></TR>
</TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">(1)</TD>
<TD ALIGN="left" VALIGN="top">You will pay brokerage charges if you direct your broker or the plan agent to sell your Common Shares that you acquired pursuant to a dividend reinvestment plan. You may also pay a pro rata share of brokerage
commissions incurred in connection with open-market purchases pursuant to the Fund&#146;s Dividend Reinvestment Plan. See &#147;Dividend Reinvestment Plan.&#148; </TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>

<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">(2)</TD>
<TD ALIGN="left" VALIGN="top">Management Fees include fees payable to the Investment Manager for advisory services and for supervisory, administrative and other services. The Fund pays for the advisory, supervisory and administrative services it
requires under what is essentially an <FONT STYLE="white-space:nowrap">all-in</FONT> fee structure. See &#147;Management of the Fund &#151; Investment Manager.&#148; </TD></TR></TABLE>
<P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">(3)</TD>
<TD ALIGN="left" VALIGN="top">Assumes the use of leverage in the form of reverse repurchase agreements and credit default swaps representing [ ]% of the Fund&#146;s total assets (including the amounts of leverage obtained through the use of such
instruments) at an annual interest rate cost to the Fund of [ ]%, which is based on current market conditions. See &#147;Leverage&#151;Effects of Leverage.&#148; The actual amount of interest expense borne by the Fund will vary over time in
accordance with the level of the Fund&#146;s use of reverse repurchase agreements, credit default swaps, dollar rolls and/or borrowings and variations in market interest rates. Borrowing expense is required to be treated as an expense of the Fund
for accounting purposes. Any associated income or gains (or losses) realized from leverage obtained through such instruments is not reflected in the Annual Expenses table above, but would be reflected in the Fund&#146;s performance results.
</TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">(4)</TD>
<TD ALIGN="left" VALIGN="top">Other expenses are estimated for the Fund&#146;s current fiscal year ending [&nbsp;&nbsp;]. </TD></TR></TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>EXAMPLE
</B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The following example illustrates the expenses that you would pay on a $1,000 investment in Common Shares of the Fund (including the total sales load
or commission of $[&nbsp;&nbsp; ] and the other estimated costs of this offering to be borne by the Common Shareholders of $[ ]), assuming (1)&nbsp;that the Fund&#146;s net assets do not increase or decrease, (2)&nbsp;that the Fund incurs total
annual expenses of [&nbsp;&nbsp; ]% of net assets attributable to Common Shares in years 1 through 10 (assuming assets attributable to reverse repurchase agreements and credit default swaps representing [&nbsp;&nbsp; ]% of the Fund&#146;s total
assets) and (3)&nbsp;a 5% annual return<SUP STYLE="font-size:85%; vertical-align:top">(1)</SUP>: </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">5 </P>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>


<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:8pt" ALIGN="center">


<TR>
<TD WIDTH="80%"></TD>
<TD VALIGN="bottom" WIDTH="3%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="3%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="3%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="3%"></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:8pt">
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"><B>1&nbsp;Year</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"><B>3&nbsp;Years</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"><B>5&nbsp;Years</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"><B>10&nbsp;Years</B></TD>
<TD VALIGN="bottom">&nbsp;</TD></TR>


<TR STYLE="font-size:1px; ">
<TD COLSPAN="16" VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Total Expenses Incurred</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">[&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">]&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">[&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">]&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">[&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">]&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">$</TD>
<TD VALIGN="bottom" ALIGN="right">[&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">]&nbsp;</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:6pt">
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD></TR>
<TR STYLE="font-size:1px; ">
<TD COLSPAN="16" VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD></TR>
</TABLE>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><SUP STYLE="font-size:85%; vertical-align:top">(1)</SUP>&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"><SUP STYLE="font-size:85%; vertical-align:top"></SUP><SUP STYLE="font-size:85%; vertical-align:top"></SUP><B>The example above should not be considered a representation of future expenses. Actual expenses may be higher
or lower than those shown.</B> The example assumes that the estimated Interest Payments on Borrowed Funds and Other Expenses set forth in the Annual Expenses table are accurate, that the rate listed under Total Annual Expenses remains the same each
year and that all dividends and distributions are reinvested at NAV. Actual expenses may be greater or less than those assumed. Moreover, the Fund&#146;s actual rate of return may be greater or less than the hypothetical 5% annual return shown in
the example. </TD></TR></TABLE> <P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:18pt; font-family:Times New Roman"><A NAME="pro302337_27"></A>Use of Proceeds </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The net proceeds of an offering will be invested in accordance with the Fund&#146;s investment objective and policies as set forth below. It is presently
anticipated that the Fund will be able to invest substantially all of the net proceeds of an offering in investments that meet its investment objective and policies within 30 days of receipt by the Fund. Pending such investment, it is anticipated
that the proceeds of an offering will be invested in high grade, short-term securities, credit linked trust certificates, and/or high yield securities index future contracts or similar derivative instruments designed to give the Fund exposure to the
securities and markets in which it intends to invest while the Investment manager selects specific investments. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:18pt; font-family:Times New Roman"><A NAME="pro302337_28"></A>Financial
Highlights </P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The information in the table below for the fiscal period ended June&nbsp;30, 2015<SUP STYLE="font-size:85%; vertical-align:top">(1)</SUP>,and
the fiscal years ended June&nbsp;30, 2016, March&nbsp;31, 2015, March&nbsp;31, 2014, and March&nbsp;31, 2013, is derived from the Fund&#146;s financial statements for the fiscal year ended June&nbsp;30, 2016 audited by [ ] (&#147;[ ]&#148;), whose
report on such financial statements is contained in the Fund&#146;s June&nbsp;30, 2016 Annual Report and is incorporated by reference into the Statement of Additional Information. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">[To be updated.] </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><SUP STYLE="font-size:85%; vertical-align:top">(1)</SUP> On December&nbsp;16, 2014, the Board approved a change of the Fund&#146;s fiscal year end from
March&nbsp;31 to June 30. Information is provided for the &#147;stub&#148; period from April&nbsp;1, 2015 through the Fund&#146;s new fiscal year end of June&nbsp;30, 2015. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:18pt; font-family:Times New Roman"><A NAME="pro302337_29"></A>Price Range of Common Shares </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The
following table sets forth for the quarters indicated, the high and low sale prices on the New York Stock Exchange per share of the Common Shares and the NAV and the premium or discount from NAV per share at which the Common Shares were trading,
expressed as a percentage of NAV, at each of the high and low sale prices provided. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">[To be updated.] </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The last reported price for the Common Shares on [ ] was $[ ]&nbsp;per share. </P>
<P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:18pt; font-family:Times New Roman"><A NAME="pro302337_30"></A>Underwriting [To be updated] </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">6 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:18pt; font-family:Times New Roman"><A NAME="pro302337_31"></A>Legal Matters </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Certain legal matters will be passed on for the Fund by Ropes&nbsp;&amp; Gray LLP, Boston, Massachusetts. Certain legal matters will be passed upon for the
underwriters by [&nbsp;&nbsp; ]. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:18pt; font-family:Times New Roman"><A NAME="pro302337_32"></A>[Unaudited] Financial Statements as of [&nbsp;&nbsp; ] </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">[To be updated.] </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">7 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">[Insert PIMCO Logo] </P>
<P STYLE="margin-top:24pt; margin-bottom:0pt; font-size:15pt; font-family:Times New Roman" ALIGN="center">[&#149;] <U>Shares</U> </P> <P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:18pt; font-family:Times New Roman" ALIGN="center"><B>PIMCO
Dynamic Income Fund </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:15pt; font-family:Times New Roman" ALIGN="center"><U>Common Shares </U></P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P><center>
<P STYLE="line-height:6.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1.00pt solid #000000;width:21%">&nbsp;</P></center> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:15pt; font-family:Times New Roman" ALIGN="center"><U>PROSPECTUS
SUPPLEMENT </U></P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P><center> <P STYLE="line-height:6.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1.00pt solid #000000;width:21%">&nbsp;</P></center>
<P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">[Date] </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">[Underwriters] </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">8 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><FONT COLOR="#ff0000"><B>The information in this Statement of Additional Information is not complete and may be
changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This Statement of Additional Information, which is not a prospectus, is not an offer to sell these securities
and it is not soliciting an offer to buy these securities in any state or jurisdiction where the offer or sale is not permitted. </B></FONT></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><FONT COLOR="#ff0000"><B>Subject to Completion dated [&nbsp;&nbsp;&nbsp;&nbsp;], 2017 </B></FONT></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>PIMCO DYNAMIC INCOME FUND </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>Statement of Additional Information </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>[date] </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">PIMCO Dynamic Income Fund (the
&#147;Fund&#148;) is a diversified, <FONT STYLE="white-space:nowrap">closed-end</FONT> management investment company. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">This Statement of Additional
Information relating to the common shares of the Fund (the &#147;Common Shares&#148;) is not a prospectus, and should be read in conjunction with the Fund&#146;s prospectus relating thereto dated [ ] (the &#147;Prospectus&#148;) and any related
prospectus supplement. This Statement of Additional Information does not include all information that a prospective investor should consider before purchasing Common Shares, and investors should obtain and read the Prospectus and any related
prospectus supplement prior to purchasing such shares. A copy of the Prospectus and any related prospectus supplement may be obtained without charge by calling
<FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">844-377-4626.</FONT></FONT> You may also obtain a copy of the Prospectus or any related prospectus supplement on the Web site of the Securities and Exchange Commission (the
&#147;SEC&#148;) at http://www.sec.gov. Capitalized terms used but not defined in this Statement of Additional Information have the meanings ascribed to them in the Prospectus and any related prospectus supplement. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">1 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B><A NAME="toc"></A>TABLE OF CONTENTS [To be updated] </B></P>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:12pt" ALIGN="center">


<TR>
<TD WIDTH="95%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>


<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="top"><A HREF="#sai302337_1">The Fund</A></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">&nbsp;</TD>
<TD VALIGN="top" ALIGN="right">[&nbsp;&nbsp;&nbsp;&nbsp;]</TD>
<TD NOWRAP VALIGN="top">&nbsp;&nbsp;</TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="4"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="top"><A HREF="#sai302337_2">Investment Objective and Policies</A></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">&nbsp;</TD>
<TD VALIGN="top" ALIGN="right">[&nbsp;&nbsp;&nbsp;&nbsp;]</TD>
<TD NOWRAP VALIGN="top">&nbsp;&nbsp;</TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="4"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="top"><A HREF="#sai302337_3">Investment Restrictions</A></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">&nbsp;</TD>
<TD VALIGN="top" ALIGN="right">[&nbsp;&nbsp;&nbsp;&nbsp;]</TD>
<TD NOWRAP VALIGN="top">&nbsp;&nbsp;</TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="4"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="top"><A HREF="#sai302337_4">Management of the Fund</A></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">&nbsp;</TD>
<TD VALIGN="top" ALIGN="right">[&nbsp;&nbsp;&nbsp;&nbsp;]</TD>
<TD NOWRAP VALIGN="top">&nbsp;&nbsp;</TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="4"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="top"><A HREF="#sai302337_5">Investment Manager</A></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">&nbsp;</TD>
<TD VALIGN="top" ALIGN="right">[&nbsp;&nbsp;&nbsp;&nbsp;]</TD>
<TD NOWRAP VALIGN="top">&nbsp;&nbsp;</TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="4"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="top"><A HREF="#sai302337_6">Portfolio Transactions</A></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">&nbsp;</TD>
<TD VALIGN="top" ALIGN="right">[&nbsp;&nbsp;&nbsp;&nbsp;]</TD>
<TD NOWRAP VALIGN="top">&nbsp;&nbsp;</TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="4"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="top"><A HREF="#sai302337_7">Distributions</A></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">&nbsp;</TD>
<TD VALIGN="top" ALIGN="right">[&nbsp;&nbsp;&nbsp;&nbsp;]</TD>
<TD NOWRAP VALIGN="top">&nbsp;&nbsp;</TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="4"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="top"><A HREF="#sai302337_8">Anti-Takeover And Other Provisions in the Declaration of Trust</A></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">&nbsp;</TD>
<TD VALIGN="top" ALIGN="right">[&nbsp;&nbsp;&nbsp;&nbsp;]</TD>
<TD NOWRAP VALIGN="top">&nbsp;&nbsp;</TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="4"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="top"><A HREF="#sai302337_9">Repurchase of Common Shares; Conversion to <FONT STYLE="white-space:nowrap">Open-End</FONT> Fund</A></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">&nbsp;</TD>
<TD VALIGN="top" ALIGN="right">[&nbsp;&nbsp;&nbsp;&nbsp;]</TD>
<TD NOWRAP VALIGN="top">&nbsp;&nbsp;</TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="4"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="top"><A HREF="#sai302337_10">Tax Matters</A></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">&nbsp;</TD>
<TD VALIGN="top" ALIGN="right">[&nbsp;&nbsp;&nbsp;&nbsp;]</TD>
<TD NOWRAP VALIGN="top">&nbsp;&nbsp;</TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="4"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="top"><A HREF="#sai302337_11">Performance Related and Comparative Information</A></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">&nbsp;</TD>
<TD VALIGN="top" ALIGN="right">[&nbsp;&nbsp;&nbsp;&nbsp;]</TD>
<TD NOWRAP VALIGN="top">&nbsp;&nbsp;</TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="4"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="top"><A HREF="#sai302337_12">Custodian, Transfer Agent and Dividend Disbursement Agent</A></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">&nbsp;</TD>
<TD VALIGN="top" ALIGN="right">[&nbsp;&nbsp;&nbsp;&nbsp;]</TD>
<TD NOWRAP VALIGN="top">&nbsp;&nbsp;</TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="4"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="top"><A HREF="#sai302337_13">Independent Registered Public Accounting firm</A></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">&nbsp;</TD>
<TD VALIGN="top" ALIGN="right">[&nbsp;&nbsp;&nbsp;&nbsp;]</TD>
<TD NOWRAP VALIGN="top">&nbsp;&nbsp;</TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="4"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="top"><A HREF="#sai302337_14">Counsel</A></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">&nbsp;</TD>
<TD VALIGN="top" ALIGN="right">[&nbsp;&nbsp;&nbsp;&nbsp;]</TD>
<TD NOWRAP VALIGN="top">&nbsp;&nbsp;</TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="4"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="top"><A HREF="#sai302337_15">Registration Statement</A></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">&nbsp;</TD>
<TD VALIGN="top" ALIGN="right">[&nbsp;&nbsp;&nbsp;&nbsp;]</TD>
<TD NOWRAP VALIGN="top">&nbsp;&nbsp;</TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="4"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="top"><A HREF="#sai302337_16">Financial Statements</A></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">&nbsp;</TD>
<TD VALIGN="top" ALIGN="right">[&nbsp;&nbsp;&nbsp;&nbsp;]</TD>
<TD NOWRAP VALIGN="top">&nbsp;&nbsp;</TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="4"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="top"><A HREF="#sai302337_17">Appendix A &#150; Procedures for Shareholders to Submit Nominee Candidates</A></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top">&nbsp;</TD>
<TD NOWRAP VALIGN="top" ALIGN="right">A&#150;1</TD>
<TD NOWRAP VALIGN="top">&nbsp;&nbsp;</TD></TR>
</TABLE>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">2 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B><A NAME="sai302337_1"></A>THE FUND </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund commenced operations on May&nbsp;30, 2012, following the initial public offering of its common shares. The Fund was organized as a Massachusetts
business trust on January&nbsp;19, 2011. Prior to commencing operations on May&nbsp;30, 2012, the Fund had no operations other than matters relating to its organization and registration as a diversified,
<FONT STYLE="white-space:nowrap">closed-end</FONT> management company registered under the Investment Company Act of 1940, as amended (the &#147;1940 Act&#148;). </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B><A NAME="sai302337_2"></A>INVESTMENT OBJECTIVE AND POLICIES </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The investment objective and general investment policies of the Fund are described in the Prospectus. Additional information concerning the characteristics of
certain of the Fund&#146;s investments is set forth below. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>High Yield Securities (&#147;Junk Bonds&#148;) and Securities of Distressed Companies
</B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund may invest in debt instruments that are, at the time of purchase, rated below investment grade, or unrated but determined by PIMCO to be of
comparable quality. However, the Fund will not normally invest more than 20% of its total assets in debt instruments, other than mortgage-related and other asset-backed securities, that are, at the time of purchase, rated CCC+ or lower by
Standard&nbsp;&amp; Poor&#146;s Financial Services, LLC (&#147;S&amp;P&#148;) and Fitch, Inc. (&#147;Fitch&#148;) and Caa1 or lower by Moody&#146;s Investors Services Inc. (&#147;Moody&#146;s&#148;), or that are unrated but determined by PIMCO to be
of comparable quality to securities so rated. The Fund may invest without limit in mortgage-related and other asset-backed securities regardless of rating&#151;i.e., of any credit quality. For purposes of applying the foregoing policies, in the case
of securities with split ratings (i.e., a security receiving two different ratings from two different rating agencies), the Fund will apply the higher of the applicable ratings. Subject to the aforementioned investment restrictions, the Fund may
invest in securities of stressed issuers, which include securities at risk of being in default as to the repayment of principal and/or interest at the time of acquisition by the Fund or that are rated in the lower rating categories by one or more
nationally recognized statistical rating organizations (for example, Ca or lower by Moody&#146;s or CC or lower by S&amp;P or Fitch) or, if unrated, are determined by PIMCO to be of comparable quality. Below investment grade securities are commonly
referred to as &#147;high yield&#148; securities or &#147;junk bonds.&#148; A description of the ratings categories used is set forth in Appendix A to the Prospectus. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">A security is considered to be below &#147;investment grade&#148; quality if it is either (1)&nbsp;not rated in one of the four highest rating categories by
one of the nationally recognized statistical rating organizations (&#147;NRSROs&#148;) (i.e., rated Ba or below by Moody&#146;s, BB or below by S&amp;P or BB or below by Fitch) or (2)&nbsp;if unrated, determined by PIMCO to be of comparable quality
to obligations so rated. Investments in securities rated below investment grade are described as &#147;speculative&#148; by Moody&#146;s, S&amp;P and Fitch, and are common referred to as &#147;high yield&#148; securities or &#147;junk bonds.&#148;
Additional information about Moody&#146;s, S&amp;P&#146;s and Fitch&#146;s securities ratings is included in Appendix A to the Prospectus. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Investors
should consider the risks associated with high yield securities and debt securities of distressed companies before investing in the Fund. Investment in high yield securities and debt </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">3 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">
securities of distressed companies generally provides greater income and increased opportunity for capital appreciation than investments in higher quality securities, but it also typically
entails greater price volatility and principal and income risk. Analysis of the creditworthiness of issuers of debt securities that are high yield or of distressed companies may be more complex than for issuers of higher quality debt. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund&#146;s investments in high yield securities, debt securities of distressed companies and unrated securities of similar credit quality may subject it
to greater levels of credit risk, call risk and liquidity risk than funds that do not invest in such securities. These securities are considered predominantly speculative with respect to an issuer&#146;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 the Fund&#146;s ability to sell these securities
at an advantageous time or price. A projection of an economic downturn, for example, could cause a decline in prices of high yield securities and debt securities of distressed companies because the advent of a recession could lessen the ability of a
highly leveraged company to make principal and interest payments on its debt securities, and a high yield security may lose significant market value before a default occurs. If an issuer of high yield or distressed company securities defaults, in
addition to risking payment of all or a portion of interest and principal, the Fund may incur additional expenses to seek recovery. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Issuers of high yield
securities may have the right to &#147;call&#148; or redeem the issue prior to maturity, which may result in the Fund having to reinvest the proceeds in other high yield securities that may pay lower interest rates. The Fund may also be subject to
greater levels of liquidity risk than funds that do not invest in these securities. In addition, the high yield securities and distressed company securities in which the Fund 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 and distressed company 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 and distressed company debt difficult to sell at an
advantageous time or price than other types of securities or instruments. These factors may result in the Fund being unable to realize full value for these securities and/or may result in the Fund 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 the Fund. Because of the risks involved in investing in high yield securities and distressed company securities, an investment in the Fund should be
considered speculative. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Analysis of the creditworthiness of issuers of high yield securities and distressed company securities may be more complex than
for issuers of higher quality debt securities, and achievement of the Fund&#146;s investment objectives may, to the extent of its investments in high yield and distressed company securities, depend more heavily on PIMCO&#146;s creditworthiness
analysis than would be the case if the Fund were investing in higher quality securities. </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">High yield securities structured as <FONT STYLE="white-space:nowrap">&#147;zero-coupon&#148;</FONT> bonds or <FONT
STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">&#147;payment-in-kind&#148;</FONT></FONT> securities (&#147;PIKs&#148;) tend to be especially volatile as they are particularly sensitive to downward pricing pressures from rising interest
rates or widening spreads and may require the Fund to make taxable distributions of imputed income without receiving the actual cash currency. PIMCO seeks to reduce these risks through credit analysis and attention to current developments and trends
in both the economy and financial markets. Even though such securities do not pay current interest in cash, the Fund nonetheless is required to accrue interest income on these investments and to distribute the interest income on a current basis.
Thus, the Fund could be required at times to sell other investments in order to satisfy its distribution requirements (including when it is not advantageous to do so). </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The secondary market on which high yield securities are traded may be less liquid than the market for higher grade securities. Less liquidity in the secondary
trading market could adversely affect the price at which the Fund could sell a high yield security, and could adversely affect the daily net asset value of the shares. Lower liquidity in secondary markets could adversely affect the value of high
yield/high risk securities held by the Fund. While lower rated securities typically are less sensitive to interest rate changes than higher rated securities, the market prices of high yield/high risk securities structured as zero coupon bonds or
PIKs may be affected to a greater extent by interest rate changes. For instance, adverse publicity and investor perceptions, whether or not based on fundamental analysis, may decrease the values and liquidity of high yield securities, especially in
a thinly traded market. When secondary markets for high yield securities are less liquid than the market for higher grade securities, it may be more difficult to value the securities because such valuation may require more research, and elements of
judgment may play a greater role in the valuation because there is less reliable, objective data available. PIMCO seeks to minimize the risks of investing in all securities through <FONT STYLE="white-space:nowrap">in-depth</FONT> credit analysis and
attention to current developments in interest rates and market conditions. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The use of credit ratings as the sole method of evaluating high yield
securities and debt securities of distressed companies can involve certain risks. For example, credit ratings evaluate the safety of principal and interest payments, not the market value risk of high yield securities. Also, credit rating agencies
may fail to change credit ratings in a timely fashion to reflect events since the security was last rated. PIMCO does not rely solely on credit ratings when selecting securities for the Fund, and develops its own independent analysis of issuer
credit quality. If a credit rating agency changes the rating of a portfolio security held by the Fund, the Fund may retain the portfolio security if PIMCO deems it in the best interest of shareholders. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Mortgage-Related and Other Asset-Backed Instruments </B></P> <P STYLE="margin-top:24pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The
Fund may invest in a variety of mortgage-related and other asset-backed instruments issued by government agencies or other governmental entities or by private originators or issuers. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">As a matter of fundamental policy, the Fund will normally invest at least 25% of its total assets (i.e., concentrate) in privately issued (commonly known as <FONT
STYLE="white-space:nowrap">&#147;non-angency&#148;)</FONT> mortgage-related securities. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Mortgage-related assets include, but are not limited to, any
mortgage-related assets issued or guaranteed as to principal or interest by the U.S. Government or its agencies or instrumentalities, such as assets representing interests in, collateralized or backed by, or whose values are
</P>
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determined in whole or in part by reference to any number of mortgages or pools of mortgages or the payment experience of such mortgages or pools of mortgages, including Real Estate Mortgage
Investment Conduits (&#147;REMICs&#148;), which could include resecuritizations of REMICs <FONT STYLE="white-space:nowrap">(&#147;Re-REMICs&#148;),</FONT> mortgage pass-through securities, inverse floaters, collateralized mortgage obligations,
collateralized loan obligations, multiclass pass-through securities, private mortgage pass- through securities, and stripped mortgage securities (generally interest-only and principal-only securities). Exposures to mortgage-related assets through
derivatives or other financial instruments will be considered investments in mortgage-related assets. Mortgage-related assets also may include, without limitation, commercial and residential mortgage loans, and may relate to domestic or <FONT
STYLE="white-space:nowrap">non-U.S.</FONT> mortgages. The value of some mortgage-related or other asset-backed securities (&#147;ABS&#148;) in which the Fund invests may be particularly sensitive to changes in prevailing interest rates, and, like
other fixed income investments, the ability of the Fund to utilize these instruments successfully may depend in part upon the ability of PIMCO to forecast interest rates and other economic factors correctly. See &#147;&#150;Mortgage Pass-Through
Securities&#148; below. The Fund may also invest in debt securities which are secured with collateral consisting of mortgage-related assets, and in other types of mortgage-related and ABS. See &#147;&#150;Collateralized Mortgage Obligations
(&#147;CMOs&#148;)&#148; below. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The mortgage-related assets in which the Fund may invest may pay variable or fixed rates of interest. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Through investments in mortgage-related assets, including those that are issued by private issuers, the Fund may have some exposure to subprime loans as well
as to the mortgage and credit markets generally. Private issuers include commercial banks, savings associations, mortgage companies, investment banking firms, finance companies and special purpose finance entities (called special purpose vehicles or
SPVs) and other entities that acquire and package mortgage loans for resale as mortgage-related assets. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">In addition, mortgage-related assets that are
issued by private issuers are not subject to the underwriting requirements for the underlying mortgages that are applicable to those mortgage-related assets that have a government or government-sponsored entity guarantee. As a result, the mortgage
loans underlying private mortgage-related assets may, and frequently do, have less favorable collateral, credit risk or other underwriting characteristics than government or government-sponsored mortgage-related assets and have wider variances in a
number of terms including interest rate, term, size, purpose and borrower characteristics. Privately issued pools more frequently include second mortgages, high
<FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">loan-to-value</FONT></FONT> mortgages and manufactured housing loans. The coupon rates and maturities of the underlying mortgage loans in a private-label mortgage-related assets pool
may vary to a greater extent than those included in a government guaranteed pool, and the pool may include subprime mortgage loans. Subprime loans refer to loans made to borrowers with weakened credit histories or with a lower capacity to make
timely payments on their loans. For these reasons, the loans underlying these securities have had in many cases higher default rates than those loans that meet government underwriting requirements. </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund may purchase privately issued mortgage-related assets that are originated, packaged and serviced by
third party entities. It is possible these third parties could have interests that are in conflict with the holders of mortgage-related assets, and such holders (such as the Fund) could have rights against the third parties or their affiliates. For
example, if a loan originator, servicer or its affiliates engaged in negligence or willful misconduct in carrying out its duties, then a holder of the mortgage-related asset could seek recourse against the originator/servicer or its affiliates, as
applicable. Also, as a loan originator/servicer, the originator/servicer or its affiliates may make certain representations and warranties regarding the quality of the mortgages and properties underlying a mortgage-related asset. If one or more of
those representations or warranties is false, then the holders of the mortgage-related assets (such as the Fund) could trigger an obligation of the originator/servicer or its affiliates, as applicable, to repurchase the mortgages from the issuing
trust. Notwithstanding the foregoing, many of the third parties that are legally bound by trust and other documents have failed to perform their respective duties, as stipulated in such trust and other documents, and investors have had limited
success in enforcing terms. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Privately issued mortgage-related assets 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 assets held in the Fund&#146;s portfolio may be particularly difficult to value because of the
complexities involved in assessing the value of the underlying mortgage loans. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The risk of <FONT STYLE="white-space:nowrap">non-payment</FONT> is greater
for mortgage-related assets that are backed by mortgage pools that contain subprime loans, but a level of risk exists for all loans. Market factors adversely affecting mortgage loan repayments may include a general economic turndown, high
unemployment, a general slowdown in the real estate market, a drop in the market prices of real estate, or an increase in interest rates resulting in higher mortgage payments by holders of adjustable rate mortgages. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Mortgage-related securities that are issued or guaranteed by the U.S. Government, its agencies or instrumentalities, are not subject to the Fund&#146;s
industry concentration restriction (see &#147;Investment Restrictions&#148;) by virtue of the exclusion from that restriction available to all U.S. Government securities. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B><I>Mortgage Pass-Through Securities</I></B><I>.</I> Mortgage pass-through securities are securities representing interests in &#147;pools&#148; of mortgage
loans secured by residential or commercial real property. Interests in pools of mortgage-related securities differ from other forms of debt securities, which normally provide for periodic payment of interest in fixed or variable amounts with
principal payments at maturity or specified call dates. Instead, these securities provide a monthly payment that consists of both interest and principal payments. In effect, these payments are a &#147;pass-through&#148; of the monthly payments made
by the individual borrowers on their residential or commercial mortgage loans, net of any fees paid to the issuer or guarantor of such securities. Additional payments are caused by repayments of principal resulting from the sale of the underlying
property, refinancing or foreclosure, net of fees or costs that may be incurred. Some mortgage-related securities (such as securities issued by the Government National Mortgage Association (&#147;Ginnie Mae&#148; or &#147;GNMA&#148;)) are described
as &#147;modified pass-through.&#148; These securities entitle the holder to receive all interest and principal payments owed on the mortgage pool, net of certain fees, at the scheduled payment dates regardless of whether or not the mortgagor
actually makes the payment. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The rate of prepayments on underlying mortgages will affect the price and volatility of a mortgage-related security, and may
have the effect of shortening or extending the effective duration of the security relative to what was anticipated at the time of purchase. Early repayment </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">7 </P>


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of principal on some mortgage-related securities (arising from prepayments of principal due to the sale of the underlying property, refinancing, or foreclosure, net of fees and costs that may be
incurred) may expose the Fund 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. Like other fixed
income securities, 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. Adjustable rate mortgage-related and other ABS are also subject to some interest rate risk. For example, because interest rates on most adjustable rate mortgage- and other ABS only reset periodically (e.g., monthly or
quarterly), changes in prevailing interest rates (and particularly sudden and significant changes) can be expected to cause some fluctuations in the market value of these securities, including declines in value as interest rates rise. In addition,
to the extent that unanticipated rates of prepayment on underlying mortgages increase the effective duration of a mortgage-related security, the volatility of such security can be expected to increase. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The residential mortgage market in the United States recently has experienced difficulties that may adversely affect the performance and market value of
certain of the Fund&#146;s mortgage-related investments. Delinquencies and losses on residential mortgage loans (especially subprime and second-lien mortgage loans) generally have increased recently and may continue to increase, and a decline in or
flattening of housing values (as has recently been experienced and may continue to be experienced in many housing markets) may exacerbate such delinquencies and losses. Borrowers with adjustable rate mortgage loans are more sensitive to changes in
interest rates, which affect their monthly mortgage payments, and may be unable to secure replacement mortgages at comparably low interest rates. Also, a number of residential mortgage loan originators have experienced serious financial difficulties
or bankruptcy. Owing largely to the foregoing, reduced investor demand for mortgage loans and mortgage-related securities and increased investor yield requirements have caused limited liquidity in the secondary market for mortgage-related
securities, which can adversely affect the market value of mortgage-related securities. It is possible that such limited liquidity in such secondary markets could continue or worsen. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B><I>Agency Mortgage-Related Securities.</I></B> Payment of principal and interest on some mortgage pass-through securities (but not the market value of the
securities themselves) may be guaranteed by the full faith and credit of the U.S. Government (in the case of securities guaranteed by GNMA) or guaranteed by agencies or instrumentalities of the U.S. Government (in the case of securities guaranteed
by the Federal National Mortgage Association (&#147;Fannie Mae&#148; or &#147;FNMA&#148;) or the Federal Home Loan Mortgage Corporation (&#147;Freddie Mac&#148; or &#147;FHLMC&#148;)). The principal governmental guarantor of mortgage-related
securities is GNMA. GNMA is a wholly-owned U.S. Government corporation within the United States Department of Housing and Urban Development (the &#147;Department of Housing and Urban Development&#148; or &#147;HUD&#148;). GNMA 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 (such as savings and loan institutions, commercial banks and mortgage bankers) and
backed by pools of mortgages insured by the Federal Housing Administration (the &#147;FHA&#148;), or guaranteed by the Department of Veterans Affairs (the &#147;VA&#148;). </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">8 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Government-related guarantors (i.e., not backed by the full faith and credit of the U.S. Government) include FNMA
and FHLMC. FNMA was, until recently, a government-sponsored corporation owned entirely by private stockholders, and subject to general regulation by HUD and the Office of Federal Housing Enterprise Oversight. As described below under &#147;U.S.
Government Securities,&#148; FNMA is now under conservatorship by the Federal Housing Finance Agency (&#147;FHFA&#148;). FNMA primarily purchases conventional (i.e., not insured or guaranteed by any government agency) residential mortgages from a
list of approved seller/servicers, which includes state and federally chartered savings and loan associations, mutual savings banks, commercial banks, credit unions and mortgage bankers, although it may purchase other types of mortgages as well.
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. Instead, they are supported only by the discretionary authority of
the U.S. Government to purchase the agency&#146;s obligations. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">FHLMC was created by Congress in 1970 for the purpose of increasing the availability of
mortgage credit for residential housing. It was, until recently, a government-sponsored corporation formerly owned by the twelve Federal Home Loan Banks and then owned entirely by private stockholders. As described below under U.S. Government
Securities, FHLMC is now under conservatorship by the FHFA. FHLMC issues Participation Certificates (&#147;PCs&#148;) which represent interests in conventional mortgages from FHLMC&#146;s national portfolio. FHLMC guarantees the timely payment of
interest and ultimate collection of principal, but PCs are not backed by the full faith and credit of the U.S. Government. Instead, they are supported only by the discretionary authority of the U.S. Government to purchase the agency&#146;s
obligations. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">On September&nbsp;6, 2008, the FHFA placed FNMA and FHLMC into conservatorship. As the conservator, the FHFA succeeded to all rights,
titles, powers and privileges of FNMA and FHLMC and of any stockholder, officer or director of FNMA and FHLMC with respect to FNMA and FHLMC and the assets of FNMA and FHLMC. FHFA selected a new chief executive officer and chairman of the board of
directors for each of FNMA and FHLMC. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">In connection with the conservatorship, the U.S. Treasury entered into a Senior Preferred Stock Purchase Agreement
with each of FNMA and FHLMC pursuant to which the U.S. Treasury will purchase up to an aggregate of $100&nbsp;billion of each of FNMA and FHLMC to maintain a positive net worth in each enterprise. This agreement contains various covenants that
severely limit each enterprise&#146;s operations. In exchange for entering into these agreements, the U.S. Treasury received $1&nbsp;billion of each enterprise&#146;s senior preferred stock and warrants to purchase 79.9% of each enterprise&#146;s
common stock. On February&nbsp;18, 2009, the U.S. Treasury announced that it was doubling the size of its commitment to each enterprise under the Senior Preferred Stock Program to $200&nbsp;billion. The U.S. Treasury&#146;s obligations under the
Senior Preferred Stock Program are for an indefinite period of time for a maximum amount of $200&nbsp;billion per enterprise. In 2009, the U.S. Treasury further amended the Senior Preferred Stock Purchase Agreement to allow the cap on the U.S.
Treasury&#146;s funding commitment to increase as necessary to accommodate any cumulative reduction in FNMA&#146;s and FHLMC&#146;s net worth through the end of 2012. In August 2012, the Senior Preferred Stock Purchase Agreement was further amended
to, among other things, accelerate the wind down of the retained portfolio, terminate the requirement that FNMA and FHLMC each pay a 10% dividend annually on all amounts received under the funding commitment, and require the submission of an annual
risk management plan to the U.S. Treasury. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">9 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">FNMA and FHLMC are continuing to operate as going concerns while in conservatorship and each remains liable for
all of its obligations, including its guaranty obligations, associated with its mortgage-backed securities. The Senior Preferred Stock Purchase Agreement is intended to enhance each of FNMA&#146;s and FHLMC&#146;s ability to meet its obligations.
The FHFA has indicated that the conservatorship of each enterprise will end when the director of FHFA determines that FHFA&#146;s plan to restore the enterprise to a safe and solvent condition has been completed. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Under the Federal Housing Finance Regulatory Reform Act of 2008 (the &#147;Reform Act&#148;), which was included as part of the Housing and Economic Recovery
Act of 2008, FHFA, as conservator or receiver, has the power to repudiate any contract entered into by FNMA or FHLMC prior to FHFA&#146;s appointment as conservator or receiver, as applicable, if FHFA determines, in its sole discretion, that
performance of the contract is burdensome and that repudiation of the contract promotes the orderly administration of FNMA&#146;s or FHLMC&#146;s affairs. The Reform Act requires FHFA to exercise its right to repudiate any contract within a
reasonable period of time after its appointment as conservator or receiver. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">FHFA, in its capacity as conservator, has indicated that it has no intention
to repudiate the guaranty obligations of FNMA or FHLMC because FHFA views repudiation as incompatible with the goals of the conservatorship. However, in the event that FHFA, as conservator or if it is later appointed as receiver for FNMA or FHLMC,
were to repudiate any such guaranty obligation, the conservatorship or receivership estate, as applicable, would be liable for actual direct compensatory damages in accordance with the provisions of the Reform Act. Any such liability could be
satisfied only to the extent of FNMA&#146;s or FHLMC&#146;s assets available therefor. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">In the event of repudiation, the payments of interest to holders
of FNMA or FHLMC mortgage-backed securities would be reduced if payments on the mortgage loans represented in the mortgage loan groups related to such mortgage-backed securities are not made by the borrowers or advanced by the servicer. Any actual
direct compensatory damages for repudiating these guaranty obligations may not be sufficient to offset any shortfalls experienced by such mortgage-backed security holders. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Further, in its capacity as conservator or receiver, FHFA has the right to transfer or sell any asset or liability of FNMA or FHLMC without any approval,
assignment or consent. Although FHFA has stated that it has no present intention to do so, if FHFA, as conservator or receiver, were to transfer any such guaranty obligation to another party, holders of FNMA or FHLMC mortgage-backed securities would
have to rely on that party for satisfaction of the guaranty obligation and would be exposed to the credit risk of that party. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">In addition, certain rights
provided to holders of mortgage-backed securities issued by FNMA and FHLMC under the operative documents related to such securities may not be enforced against FHFA, or enforcement of such rights may be delayed, during the conservatorship or any
future receivership. The operative documents for FNMA and FHLMC mortgage-backed </P>
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securities may provide (or with respect to securities issued prior to the date of the appointment of the conservator may have provided) that upon the occurrence of an event of default on the part
of FNMA or FHLMC, in its capacity as guarantor, which includes the appointment of a conservator or receiver, holders of such mortgage-backed securities have the right to replace FNMA or FHLMC as trustee if the requisite percentage of mortgage-backed
securities holders consent. The Reform Act prevents mortgage-backed security holders from enforcing such rights if the event of default arises solely because a conservator or receiver has been appointed. The Reform Act also provides that no person
may exercise any right or power to terminate, accelerate or declare an event of default under certain contracts to which FNMA or FHLMC is a party, or obtain possession of or exercise control over any property of FNMA or FHLMC, or affect any
contractual rights of FNMA or FHLMC, without the approval of FHFA, as conservator or receiver, for a period of 45 or 90 days following the appointment of FHFA as conservator or receiver, respectively. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">In addition, in a February 2011 report to Congress from the Treasury Department and the Department of Housing and Urban Development, the Obama administration
provided a plan to reform America&#146;s housing finance market. The plan would reduce the role of and eventually eliminate FNMA and FHLMC. Notably, the plan does not propose similar significant changes to GNMA, which guarantees payments on
mortgage-related securities backed by federally insured or guaranteed loans such as those issued by the FHA or guaranteed by the VA. The report also identified three proposals for Congress and the administration to consider for the long-term
structure of the housing finance markets after the elimination of FNMA and FHLMC, including implementing: (i)&nbsp;a privatized system of housing finance that limits government insurance to very limited groups of creditworthy <FONT
STYLE="white-space:nowrap">low-</FONT> and moderate-income borrowers; (ii)&nbsp;a privatized system with a government backstop mechanism that would allow the government to insure a larger share of the housing finance market during a future housing
crisis; and (iii)&nbsp;a privatized system where the government would offer reinsurance to holders of certain highly-rated mortgage-related securities insured by private insurers and would pay out under the reinsurance arrangements only if the
private mortgage insurers were insolvent. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B><I>Privately Issued Mortgage-Related <FONT STYLE="white-space:nowrap">(Non-Agency)</FONT>
Securities.</I></B> Commercial banks, savings and loan institutions, private mortgage insurance companies, mortgage bankers and other secondary market issuers also create pass-through pools of conventional residential mortgage loans. Such issuers
may be the originators and/or servicers of the underlying mortgage loans as well as the guarantors of the mortgage-related securities. Pools created by such <FONT STYLE="white-space:nowrap">non-governmental</FONT> 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 the former pools. However, timely payment of interest and principal of these pools may be supported
by various forms of insurance or guarantees, including individual loan, title, pool and hazard insurance and letters of credit, which may be issued by governmental entities, private insurers or the mortgage poolers. The insurance and guarantees are
issued by governmental entities, private insurers and the mortgage poolers. Such insurance and guarantees, and the creditworthiness of the issuers thereof, will be considered in determining whether a mortgage-related security meets the Fund&#146;s
investment quality standards. There can be no assurance that the private insurers or guarantors can meet their obligations under the insurance policies or guarantee arrangements. The Fund may buy mortgage-related securities without insurance or
guarantees if, through an examination of the loan experience and practices of the originator/servicers and poolers, PIMCO determines that the securities meet the Fund&#146;s quality standards. Securities issued by certain private organizations may
not be readily marketable. </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The assets underlying mortgage-related securities may be represented by a portfolio of first lien residential
mortgages (including both whole mortgage loans and mortgage participation interests) or portfolios of mortgage pass-through securities issued or guaranteed by GNMA, FNMA or FHLMC. Mortgage loans underlying a mortgage-related security may in turn be
insured or guaranteed by the FHA or the VA. In the case of private issue mortgage-related securities whose underlying assets are neither U.S. Government securities nor U.S. Government-insured mortgages, to the extent that real properties securing
such assets may be located in the same geographical region, the security may be subject to a greater risk of default than other comparable securities in the event of adverse economic, political or business developments that may affect such region
and, ultimately, the ability of residential homeowners to make payments of principal and interest on the underlying mortgages. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B><I>Collateralized
Mortgage Obligations (&#147;CMOs&#148;).</I></B> A CMO is a hybrid between a mortgage-backed bond and a mortgage pass-through security. Similar to a bond, interest and prepaid principal is paid, in most cases, semi-annually or on a monthly basis.
CMOs may be collateralized by whole mortgage loans or private mortgage bonds, but are more typically collateralized by portfolios of mortgage pass-through securities issued or guaranteed by GNMA, FNMA or FHLMC, and their income streams. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">CMOs are structured into multiple classes, often referred to as &#147;tranches,&#148; with each class bearing a different stated maturity and entitled to a
different schedule for payments of principal and interest, including prepayments. Actual maturity and average life will depend upon the prepayment experience of the collateral. CMOs provide for a modified form of call protection through a de facto
breakdown of the underlying pool of mortgages according to how quickly the loans are repaid. Monthly payment of principal received from the pool of underlying mortgages, including prepayments, is first returned to investors holding the shortest
maturity class. Investors holding the longer maturity classes receive principal only after the first class has been retired. An investor is partially guarded against a sooner than desired return of principal because of the sequential payments. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">In a typical CMO transaction, a corporation (&#147;issuer&#148;) issues multiple series (e.g., A, B, C, Z) of CMO bonds (&#147;Bonds&#148;). Proceeds of the
Bond offering are used to purchase mortgages or mortgage pass-through certificates (&#147;Collateral&#148;). The Collateral is pledged to a third party trustee as security for the Bonds. Principal and interest payments from the Collateral are used
to pay principal on the Bonds in the order A, B, C, Z. The Series A, B, and C Bonds all bear current interest. Interest on the Series Z Bond is accrued and added to principal and a like amount is paid as principal on the Series A, B, or C Bond
currently being paid off. When the Series A, B, and C Bonds are paid in full, interest and principal on the Series Z Bond begin to be paid currently. With some CMOs, the issuer serves as a conduit to allow loan originators (primarily builders or
savings and loan associations) to borrow against their loan portfolios. CMOs may be less liquid and may exhibit greater price volatility than other types of mortgage- or ABS. </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">As CMOs have evolved, some classes of CMO bonds have become more common. For example, the Fund may invest in <FONT
STYLE="white-space:nowrap">parallel-pay</FONT> and planned amortization class (&#147;PAC&#148;) CMOs and multi-class pass-through certificates. <FONT STYLE="white-space:nowrap">Parallel-pay</FONT> CMOs and multi-class pass-through certificates are
structured to provide payments of principal on each payment date to more than one class. These simultaneous payments are taken into account in calculating the stated maturity date or final distribution date of each class, which, as with other CMO
and multi-class pass-through structures, must be retired by its stated maturity date or final distribution date but may be retired earlier. PACs generally require payments of a specified amount of principal on each payment date. PACs are <FONT
STYLE="white-space:nowrap">parallel-pay</FONT> CMOs with the required principal amount on such securities having the highest priority after interest has been paid to all classes. Any CMO or multi-class pass-through structure that includes PAC
securities must also have support tranches&#151;known as support bonds, companion bonds or <FONT STYLE="white-space:nowrap">non-PAC</FONT> bonds&#151;which lend or absorb principal cash flows to allow the PAC securities to maintain their stated
maturities and final distribution dates within a range of actual prepayment experience. These support tranches are subject to a higher level of maturity risk compared to other mortgage-related securities, and usually provide a higher yield to
compensate investors. If principal cash flows are received in amounts outside a <FONT STYLE="white-space:nowrap">pre-determined</FONT> range such that the support bonds cannot lend or absorb sufficient cash flows to the PAC securities as intended,
the PAC securities are subject to heightened maturity risk. Consistent with the Fund&#146;s investment objectives and policies, PIMCO may invest in various tranches of CMO bonds, including support bonds. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B><I>FHLMC Collateralized Mortgage Obligations.</I></B> FHLMC CMOs are debt obligations of FHLMC issued in multiple classes having different maturity dates
which are secured by the pledge of a pool of conventional mortgage loans purchased by FHLMC. Payments of principal and interest on the CMOs are made semi-annually, as opposed to monthly. The amount of principal payable on each semi-annual payment
date is determined in accordance with FHLMC&#146;s mandatory sinking fund schedule, which in turn, is equal to approximately 100% of FHA prepayment experience applied to the mortgage collateral pool. All sinking fund payments in the CMOs are
allocated to the retirement of the individual classes of bonds in the order of their stated maturities. Payment of principal on the mortgage loans in the collateral pool in excess of the amount of FHLMC&#146;s minimum sinking fund obligation for any
payment date are paid to the holders of the CMOs as additional sinking fund payments. Because of the &#147;pass-through&#148; nature of all principal payments received on the collateral pool in excess of FHLMC&#146;s minimum sinking fund
requirement, the rate at which principal of the CMOs is actually repaid is likely to be such that each class of bonds will be retired in advance of its scheduled maturity date. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">If collection of principal (including prepayments) on the mortgage loans during any semi-annual payment period is not sufficient to meet FHLMC&#146;s minimum
sinking fund obligation on the next sinking fund payment date, FHLMC agrees to make up the deficiency from its general funds. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Criteria for the mortgage
loans in the pool backing the FHLMC CMOs are identical to those of FHLMC PCs. FHLMC has the right to substitute collateral in the event of delinquencies and/or defaults. </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B><I>Commercial Mortgage-Backed Securities.</I></B> Commercial mortgage-backed securities include securities
that reflect an interest in, and are secured by, mortgage loans on commercial real property. The market for commercial mortgage-backed securities developed more recently and in terms of total outstanding principal amount of issues is relatively
small compared to the market for residential single-family mortgage-backed securities. 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. Commercial mortgage-backed securities may be
less liquid and exhibit greater price volatility than other types of mortgage- or ABS. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B><I>CMO Residuals.</I></B> CMO residuals are mortgage securities
issued by agencies or instrumentalities of the U.S. Government or by private originators of, or investors in, mortgage loans, including savings and loan associations, homebuilders, mortgage banks, commercial banks, investment banks and special
purpose entities of the foregoing. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The cash flow generated by the mortgage assets underlying a series of CMOs is applied first to make required payments
of principal and interest on the CMOs and second to pay the related administrative expenses and any management fee of the issuer. The residual in a CMO structure generally represents the interest in any excess cash flow remaining after making the
foregoing payments. Each payment of such excess cash flow to a holder of the related CMO residual represents income and/or a return of capital. The amount of residual cash flow resulting from a CMO will depend on, among other things, the
characteristics of the mortgage assets, the coupon rate of each class of CMO, prevailing interest rates, the amount of administrative expenses and the prepayment experience on the mortgage assets in the same manner as an interest only
(&#147;IO&#148;) class of stripped mortgage-backed securities. In particular, the yield to maturity on CMO residuals is extremely sensitive to prepayments on the related underlying mortgage assets. In addition, if a series of a CMO includes a class
that bears interest at an adjustable rate, the yield to maturity on the related CMO residual will also be extremely sensitive to changes in the level of the index upon which interest rate adjustments are based. The Fund may fail to recoup some or
all of its initial investment in a CMO residual. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">CMO residuals are generally purchased and sold by institutional investors through several investment
banking firms acting as brokers or dealers. The CMO residual market has developed fairly recently and CMO residuals currently may not have the liquidity of other more established securities trading in other markets. CMO residuals may, or pursuant to
an exemption therefrom, may not, have been registered under the Securities Act of 1933, as amended (the &#147;Securities Act&#148;). CMO residuals, whether or not registered under the Securities Act, may be subject to certain restrictions on
transferability, and may be deemed &#147;illiquid.&#148; As used in this Statement of Additional Information, the term CMO residual does not include residual interests in real estate mortgage investment conduits. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B><I>Adjustable Rate Mortgage Backed Securities.</I></B> Adjustable rate mortgage-backed securities (&#147;ARMs&#148;) have interest rates that reset at
periodic intervals. Acquiring ARMs permits the Fund to participate in increases in prevailing current interest rates through periodic adjustments in the coupons of mortgages underlying the pool on which ARMs are based. Such ARMs generally have
higher current yield and lower price fluctuations than is the case with more traditional fixed income debt securities of comparable rating and maturity. In addition, when prepayments of </P>
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principal are made on the underlying mortgages during periods of rising interest rates, the Fund can reinvest the proceeds of such prepayments at rates higher than those at which they were
previously invested. Mortgages underlying most ARMs, however, have limits on the allowable annual or lifetime increases that can be made in the interest rate that the mortgagor pays. Therefore, if current interest rates rise above such limits over
the period of the limitation, the Fund, when holding an ARM, does not benefit from further increases in interest rates. Moreover, when interest rates are in excess of coupon rates (i.e., the rates being paid by mortgagors) of the mortgages, ARMs
behave more like fixed income securities and less like adjustable rate securities and are subject to the risks associated with fixed income securities. In addition, during periods of rising interest rates, increases in the coupon rate of adjustable
rate mortgages generally lag current market interest rates slightly, thereby creating the potential for capital depreciation on such securities. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B><I>Stripped Mortgage-Backed Securities</I></B><B>.</B> Stripped mortgage-backed securities (&#147;SMBS&#148;) are derivative multi-class mortgage
securities. SMBS may be issued by agencies or instrumentalities of the U.S. Government, or by private originators of, or investors in, mortgage loans, including savings and loan associations, mortgage banks, commercial banks, investment banks and
special purpose entities of the foregoing. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">SMBS are usually structured with two classes that receive different proportions of the interest and principal
distributions on a pool of mortgage assets. A common type of SMBS will have one class receiving some of the interest and most of the principal from the mortgage assets, while the other class will receive most of the interest and the remainder of the
principal. In the most extreme case, one class will receive all of the interest (the &#147;IO&#148; class), while the other class will receive all of the principal (the &#147;PO&#148; class). The yield to maturity on an IO class is extremely
sensitive to the rate of principal payments (including prepayments) on the related underlying mortgage assets, and a rapid rate of principal payments may have a material adverse effect on the Fund&#146;s yield to maturity from these securities. If
the underlying mortgage assets experience greater than anticipated prepayments of principal, the Fund may fail to recoup some or all of its initial investment in these securities even if the security is in one of the highest rating categories. SMBS
may be deemed &#147;illiquid.&#148; </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B><I>Other Mortgage-Related Assets.</I></B> Other mortgage-related assets include securities other than those
described above that directly or indirectly represent a participation in, or are secured by and payable from, mortgage loans on real property, including mortgage dollar rolls, CMO residuals or SMBS. Other mortgage-related securities may be equity or
debt securities issued by agencies or instrumentalities of the U.S. Government or by private originators of, or investors in, mortgage loans, including savings and loan associations, homebuilders, mortgage banks, commercial banks, investment banks,
partnerships, trusts and special purpose entities of the foregoing. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B><I>Asset-Backed Securities</I></B><I>.</I> The Fund may invest in, or have
exposure to, ABS, which are securities that represent a participation in, or are secured by and payable from, a stream of payments generated by particular assets, most often a pool or pools of similar assets (e.g., trade receivables). The credit
quality of these securities depends primarily upon the quality of the underlying assets and the level of credit support and/or enhancement provided. </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The underlying assets (e.g<I>.</I>, loans) are subject to prepayments that shorten the securities&#146; weighted
average maturity and may lower their return. If the credit support or enhancement is exhausted, losses or delays in payment may result if the required payments of principal and interest are not made. The value of these securities also may change
because of changes in the market&#146;s perception of the creditworthiness of the servicing agent for the pool, the originator of the pool, or the financial institution or trust providing the credit support or enhancement. Typically, there is no
perfected security interest in the collateral that relates to the financial assets that support ABS. Asset-backed securities have many of the same characteristics and risks as the mortgage backed securities described above. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund may purchase or have exposure to commercial paper, including asset-backed commercial paper (&#147;ABCP&#148;), that is issued by structured
investment vehicles or other conduits. These conduits may be sponsored by mortgage companies, investment banking firms, finance companies, hedge funds, private equity firms and special purpose finance entities. ABCP typically refers to a short-term
debt security, the payment of which is supported by cash flows from underlying assets, or one or more liquidity or credit support providers, or both. Assets backing ABCP include credit card, car loan and other consumer receivables and home or
commercial mortgages, including subprime mortgages. The repayment of ABCP issued by a conduit depends primarily on the cash collections received from the conduit&#146;s underlying asset portfolio and the conduit&#146;s ability to issue new ABCP.
Therefore, there could be losses to the Fund if investing in ABCP in the event of credit or market value deterioration in the conduit&#146;s underlying portfolio, mismatches in the timing of the cash flows of the underlying asset interests and the
repayment obligations of maturing ABCP, or the conduit&#146;s inability to issue new ABCP. To protect investors from these risks, ABCP programs may be structured with various protections, such as credit enhancement, liquidity support, and commercial
paper stop-issuance and wind-down triggers. However, there can be no guarantee that these protections will be sufficient to prevent losses to investors in ABCP. Some ABCP programs provide for an extension of the maturity date of the ABCP if, on the
related maturity date, the conduit is unable to access sufficient liquidity through the issue of additional ABCP. This may delay the sale of the underlying collateral and the Fund may incur a loss if the value of the collateral deteriorates during
the extension period. Alternatively, if collateral for ABCP deteriorates in value, the collateral may be required to be sold at inopportune times or at prices insufficient to repay the principal and interest on the ABCP. ABCP programs may provide
for the issuance of subordinated notes as an additional form of credit enhancement. The subordinated notes are typically of a lower credit quality and have a higher risk of default. To the extent the Fund purchases these subordinated notes, it will
have a higher likelihood of loss than investors in the senior notes. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Some ABS, particularly home equity loan transactions, are subject to interest-rate
risk and prepayment risk. A change in interest rates can affect the pace of payments on the underlying loans, which in turn, affects total return on the securities. Asset-backed securities also carry credit or default risk. If many borrowers on the
underlying loans default, losses could exceed the credit enhancement level and result in losses to investors in an Asset-backed securities transaction. Finally, ABS have structure risk due to a unique characteristic known as early amortization, or
early payout, risk. Built into the structure of most ABS are triggers for early </P>
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payout, designed to protect investors from losses. These triggers are unique to each transaction and can include: a big rise in defaults on the underlying loans, a sharp drop in the credit
enhancement level, or even the bankruptcy of the originator. Once early amortization begins, all incoming loan payments (after expenses are paid) are used to pay investors as quickly as possible based upon a predetermined priority of payment. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B><I>Collateralized Bond Obligations, Collateralized Loan Obligations and other Collateralized Debt Obligations.</I></B><I>&nbsp;&nbsp;&nbsp;&nbsp;</I>The
Fund may invest in each of CBOs, CLOs, other CDOs and other similarly structured securities. CBOs, CLOs and CDOs are types of asset-backed securities. A CBO is a trust which is often backed by a diversified pool of high risk, below investment grade
fixed income securities. The collateral can be from many different types of fixed-income securities such as high-yield debt, residential privately-issued mortgage-related securities, commercial privately-issued mortgage-related securities, trust
preferred securities and emerging market debt. 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. CBOs, CLOs and other CDOs may charge management fees and
administrative expenses. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">For CBOs, CLOs and CDOs, the cash flows from the trust are split into two or more portions, called tranches, varying in risk and
yield. The riskiest portion is the &#147;equity&#148; tranche which bears the bulk of defaults from the bonds or loans in the trust and serves to protect the other, more senior tranches from default in all but the most severe circumstances. Since
they are partially protected from defaults, senior tranches from a CBO trust, CLO trust or trust of another CDO typically have higher ratings and lower yields than their underlying securities, and can be rated investment grade. Despite the
protection from the equity tranche, CBO, CLO or other CDO 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 CBO, CLO or other CDO securities as a class. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The risks of an investment in a CBO, CLO or other CDO depend largely on the
type of the collateral securities and the class of the instrument in which the Fund invests. Normally, CBOs, CLOs and other CDOs are privately offered and sold, and thus, are not registered under the securities laws. As a result, investments in
CBOs, CLOs and other CDOs may be characterized by the Fund as illiquid securities, however an active dealer market may exist for CBOs, CLOs and other CDOs allowing them to qualify for Rule 144A under the Securities Act. In addition to the normal
risks associated with debt instruments discussed elsewhere in this prospectus and in the Statement of Additional Information and the prospectus (e.g., prepayment risk, credit risk, liquidity risk, market risk, structural risk, legal risk and
interest rate risk (which may be exacerbated if the interest rate payable on a structured financing changes based on multiples of changes in interest rates or inversely to changes in interest rates) and default risk), CBOs, CLOs and other CDOs carry
additional risks including, but are not limited to: (i)&nbsp;the possibility that distributions from collateral securities will not be adequate to make interest or other payments; (ii)&nbsp;the quality of the collateral may decline in value or
default; (iii)&nbsp;the risk that the Fund may invest in CBOs, CLOs or other CDOs that are subordinate to other classes; (iv)&nbsp;the complex structure of the security may not be fully understood at the time of investment and may produce
</P>
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disputes with the issuer or unexpected investment results; (v)&nbsp;the investment return achieved by the Fund could be significantly different than those predicted by financial models;
(vi)&nbsp;the lack of a readily available secondary market for CDOs; (vii)&nbsp;risk of forced &#147;fire sale&#148; liquidation due to technical defaults such as coverage test failures; and (viii)&nbsp;the CDO&#146;s manager may perform poorly.
</P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B><I>Other Asset-Backed Securities.</I></B> Similarly, PIMCO expects that other asset-backed securities (unrelated to mortgage loans) will be offered to
investors in the future and may be purchased by the Fund. Several types of asset-backed securities have already been offered to investors, including Enhanced Equipment Trust Certificates (&#147;EETCs&#148;) and Certificates for Automobile
Receivables<SUP STYLE="font-size:85%; vertical-align:top">SM</SUP> (&#147;CARS<SUP STYLE="font-size:85%; vertical-align:top">SM</SUP>&#148;). </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">EETCs are
typically issued by specially-created trusts established by airlines, railroads, or other transportation corporations.&nbsp;The proceeds of EETCs are used to purchase equipment, such as airplanes, railroad cars, or other equipment, which in turn
serve as collateral for the related issue of the EETCs. The equipment generally is leased by the airline, railroad or other corporation, which makes rental payments to provide the projected cash flow for payments to EETC holders.&nbsp;Holders of
EETCs must look to the collateral securing the certificates, typically together with a guarantee provided by the lessee corporation or its parent company for the payment of lease obligations, in the case of default in the payment of principal and
interest on the EETCs.&nbsp;However, because principal and interest payments on EETCs are funded in the ordinary course by the lessee corporation, the Fund treats EETCs as corporate bonds/obligations for purposes of compliance testing and related
classifications. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">CARS<SUP STYLE="font-size:85%; vertical-align:top">SM</SUP> represent undivided fractional interests in a trust whose assets consist of
a pool of motor vehicle retail installment sales contracts and security interests in the vehicles securing the contracts. Payments of principal and interest on CARS<SUP STYLE="font-size:85%; vertical-align:top">SM</SUP> are passed through monthly to
certificate holders, and are guaranteed up to certain amounts and for a certain time period by a letter of credit issued by a financial institution unaffiliated with the trustee or originator of the trust. An investor&#146;s return on CARS<SUP
STYLE="font-size:85%; vertical-align:top">SM</SUP> may be affected by early prepayment of principal on the underlying vehicle sales contracts. If the letter of credit is exhausted, the trust may be prevented from realizing the full amount due on a
sales contract because of state law requirements and restrictions relating to foreclosure sales of vehicles and the obtaining of deficiency judgments following such sales or because of depreciation, damage or loss of a vehicle, the application of
federal and state bankruptcy and insolvency laws, or other factors. As a result, certificate holders may experience delays in payments or losses if the letter of credit is exhausted. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Consistent with the Fund&#146;s investment objectives and policies, PIMCO also may invest in other types of asset-backed and related securities (such as
credit card receivables or student loans). Other asset-backed securities may be collateralized by the fees earned by service providers. The value of asset-backed securities may be substantially dependent on the servicing of the underlying asset
pools and are therefore subject to risks associated with the negligence by, or defalcation of, their servicers. In certain circumstances, the mishandling of related documentation may also affect the rights of the security holders in and to the
underlying collateral. The insolvency of entities that generate receivables or that utilize the assets may result in added costs and delays in addition to losses associated with a decline in the value of the underlying assets. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">18 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Investors should note that Congress from time to time may consider actions that would limit or remove the
explicit or implicit guarantee of the payment of principal and/or interest on many types of asset-backed securities. Any such action would likely adversely impact the value of such securities. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Real Estate Securities and Related Derivatives </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund
may gain exposure to the real estate sector by investing in real-estate linked derivatives, real estate investment trusts (&#147;REITs&#148;) and common, preferred and convertible securities of issuers in real estate-related industries. Each of
these types of investments are subject to risks similar to those associated with direct ownership of real estate, including loss to casualty or condemnation, increases in property taxes and operating expenses, zoning law amendments, changes in
interest rates, overbuilding and increased competition, variations in market value, adverse changes in the real estate markets generally or in specific sectors of the real estate industry and possible environmental liabilities. Real estate-related
investments may entail leverage and may be highly volatile. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">REITs are pooled investment vehicles that own, and typically operate, income-producing 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. REITs are subject to
management fees and other expenses, and so the Fund would bear its proportionate share of the costs of the REITs&#146; operations if it invests in REITs. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">There are three general categories of REITs: Equity REITs, Mortgage REITs and Hybrid REITs. Equity REITs invest primarily in direct fee ownership or leasehold
ownership of real property; they derive most of their income from rents. Mortgage REITs invest mostly in mortgages on real estate, which may secure construction, development or long-term loans, and the main source of their income is mortgage
interest payments. Hybrid REITs hold both ownership and mortgage interests in real estate. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">REITs, no matter the type, involve additional risk factors.
These include poor performance by the REIT&#146;s manager, adverse changes to the tax laws, and failure by the REIT to qualify for <FONT STYLE="white-space:nowrap">tax-free</FONT> pass-through of income under the Internal Revenue Code of 1986, as
amended (the &#147;Code&#148;). In addition, some REITS have limited diversification because they invest in a limited number of properties, a narrow geographic area, or a single type of property. Also, the organizational documents of a REIT may
contain provisions that make changes in control of the REIT difficult and time-consuming. Finally, private REITs are not traded on a national securities exchange. As such, these products are generally illiquid. This reduces the ability of the Fund
to redeem its investment early. Private REITS are also generally harder to value and may bear higher fees than public REITs. </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Foreign <FONT STYLE="white-space:nowrap">(Non-U.S.)</FONT> Securities </B></P>
<P STYLE="margin-top:24pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund may invest without limit in instruments of corporate and other foreign <FONT STYLE="white-space:nowrap">(non-U.S.)</FONT> issuers, and in instruments
traded principally outside of the United States. The Fund may invest in sovereign and other debt securities issued by foreign governments and their respective <FONT STYLE="white-space:nowrap">sub-divisions,</FONT> agencies or instrumentalities,
government sponsored enterprises and supranational government entities. The Fund may also invest directly in foreign currencies, including local emerging market currencies. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The foreign securities in which the Fund may invest include without limit Eurodollar obligations and &#147;Yankee Dollar&#148; obligations. Eurodollar
obligations are U.S. dollar-denominated certificates of deposit and time deposits issued outside the U.S. capital markets by foreign branches of U.S. banks and by foreign banks. Yankee Dollar obligations are U.S. dollar-denominated obligations
issued in the U.S. capital markets by foreign banks. Eurodollar and Yankee Dollar obligations are generally subject to the same risks that apply to domestic debt issues, notably credit risk, interest rate risk, market risk and liquidity risk.
Additionally, Eurodollar (and to a limited extent, Yankee Dollar) obligations are subject to certain sovereign risks. One such risk is the possibility that a sovereign country might prevent capital, in the form of U.S. dollars, from flowing across
its borders. Other risks include adverse political and economic developments; the extent and quality of government regulation of financial markets and institutions; the imposition of foreign withholding or other taxes; and the expropriation or
nationalization of foreign issuers. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund may also invest in American Depositary Receipts (&#147;ADRs&#148;), European Depositary Receipts
(&#147;EDRs&#148;) or Global Depositary Receipts (&#147;GDRs&#148;). ADRs are U.S. dollar-denominated receipts issued generally by domestic banks and represent the deposit with the bank of a security of a
<FONT STYLE="white-space:nowrap">non-U.S.</FONT> issuer. EDRs are foreign currency-denominated receipts similar to ADRs and are issued and traded in Europe, and are publicly traded on exchanges or <FONT STYLE="white-space:nowrap"><FONT
STYLE="white-space:nowrap">over-the-counter</FONT></FONT> in the United States. GDRs may be offered privately in the United States and also trade in public or private markets in other countries. ADRs, EDRs and GDRs may be issued as sponsored or
unsponsored programs. In sponsored programs, an issuer has made arrangements to have its securities trade in the form of ADRs, EDRs or GDRs. In unsponsored programs, the issuer may not be directly involved in the creation of the program. Although
regulatory requirements with respect to sponsored and unsponsored programs are generally similar, in some cases it may be easier to obtain financial information from an issuer that has participated in the creation of a sponsored program. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Investing in <FONT STYLE="white-space:nowrap">non-U.S.</FONT> securities involves special risks and considerations not typically associated with investing in
U.S. securities. These include: differences in accounting, auditing and financial reporting standards, generally higher commission rates on <FONT STYLE="white-space:nowrap">non-U.S.</FONT> portfolio transactions, the possibility of expropriation or
confiscatory taxation, adverse changes in investment or exchange control regulations (which may include suspension of the ability to transfer currency from a country), market disruption, the possibility of security suspensions, political instability
which can affect U.S. investments in <FONT STYLE="white-space:nowrap">non-U.S.</FONT> countries and potential restrictions on the flow of international capital. In addition, foreign securities and the Fund&#146;s income in respect of those
securities may be subject to foreign taxes, including taxes withheld from payments on those securities, which would reduce the Fund&#146;s return on such securities. <FONT STYLE="white-space:nowrap">Non-U.S.</FONT> securities often
</P>
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trade with less frequency and volume than domestic securities and therefore may exhibit greater price volatility. Changes in foreign exchange rates will affect the value of those securities that
are denominated or quoted in currencies other than the U.S. dollar. The currencies of <FONT STYLE="white-space:nowrap">non-U.S.</FONT> countries may experience significant declines against the U.S. dollar, and devaluation may occur subsequent to
investments in these currencies by the Fund. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Investment in sovereign debt can involve a high degree of risk. The governmental entity that controls the
repayment of sovereign debt may not be able or willing to repay the principal and/or interest when due in accordance with the terms of the debt. A governmental entity&#146;s willingness or ability to repay principal and interest due in a timely
manner may be affected by, among other factors, its cash flow situation, the extent of its foreign reserves, the availability of sufficient foreign exchange on the date a payment is due, the relative size of the debt service burden to the economy as
a whole, the governmental entity&#146;s policy toward the International Monetary Fund, and the political constraints to which a governmental entity may be subject. Governmental entities may also depend on expected disbursements from foreign
governments, multilateral agencies and others to reduce principal and interest arrearages on their debt. The commitment on the part of these governments, agencies and others to make such disbursements may be conditioned on a governmental
entity&#146;s implementation of economic reforms and/or economic performance and the timely service of such debtor&#146;s obligations. Failure to implement such reforms, achieve such levels of economic performance or repay principal or interest when
due may result in the cancellation of such third parties&#146; commitments to lend funds to the governmental entity, which may further impair such debtor&#146;s ability or willingness to service its debts in a timely manner. Consequently,
governmental entities may default on their sovereign debt. Holders of sovereign debt (including the Fund) may be requested to participate in the rescheduling of such debt and to extend further loans to governmental entities. There is no bankruptcy
proceeding by which sovereign debt on which governmental entities have defaulted may be collected in whole or in part. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The investments in foreign
currency denominated debt obligations and hedging activities by the Fund will likely produce a difference between the Fund&#146;s book income and its taxable income. This difference may cause a portion of the Fund&#146;s income distributions to
constitute returns of capital for tax purposes or require the Fund to make distributions exceeding book income to qualify as a regulated investment company for U.S. federal tax purposes. The Fund&#146;s investments in
<FONT STYLE="white-space:nowrap">non-U.S.</FONT> securities may increase or accelerate the amount of ordinary income recognized by shareholders. See &#147;Taxation.&#148; </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B><I>Euro- and <FONT STYLE="white-space:nowrap">EU-related</FONT> risks.</I></B><B><I></I></B>&nbsp;The global economic crisis brought several small
economies in Europe to the brink of bankruptcy and many other economies into recession and weakened the banking and financial sectors of many European countries. For example, the governments of Greece, Spain, Portugal, and the Republic of Ireland
have all experienced large public budget deficits, the effects of which are still yet unknown and may slow the overall recovery of the European economies from the global economic crisis. In addition, due to large public deficits, some European
countries may be dependent on assistance from other European governments and institutions or other central banks or supranational agencies such as the International Monetary Fund. Assistance may be dependent on a country&#146;s implementation of
reforms or reaching a certain level of performance. Failure to reach those objectives or an insufficient level of assistance could result in a deep economic downturn which could significantly affect the value of a Fund&#146;s European investments.
</P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">21 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Economic and Monetary Union of the European Union (&#147;EMU&#148;) is comprised of the European Union
(&#147;EU&#148;) members that have adopted the euro currency. By adopting the euro as its currency, a member state relinquishes control of its own monetary policies. As a result, European countries are significantly affected by fiscal and monetary
policies implemented by the EMU and European Central Bank. The euro currency may not fully reflect the strengths and weaknesses of the various economies that comprise the EMU and Europe generally. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">It is possible that one or more EMU member countries could abandon the euro and return to a national currency and/or that the euro will cease to exist as a
single currency in its current form.&nbsp;The effects of such an abandonment or a country&#146;s forced expulsion from the euro on that country, the rest of the EMU, and global markets are impossible to predict, but are likely to be
negative.&nbsp;The exit of any country out of the euro may have an extremely destabilizing effect on other eurozone countries and their economies and a negative effect on the global economy as a whole.&nbsp;Such an exit by one country may also
increase the possibility that additional countries may exit the euro should they face similar financial difficulties.&nbsp;In addition, in the event of one or more countries&#146; exit from the euro, it may be difficult to value investments
denominated in euros or in a replacement currency. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund may face potential risks associated with the referendum on the United Kingdom&#146;s
continued membership in the EU, which resulted in a vote for the United Kingdom to leave the EU.&nbsp;The vote to leave the EU may result in substantial volatility in foreign exchange markets and may lead to a sustained weakness in the British
pound&#146;s exchange rate against the United States dollar, the euro and other currencies, which may impact Fund returns.&nbsp;The vote to leave the EU may result in a sustained period of market uncertainty, as the United Kingdom seeks to negotiate
the terms of its exit.&nbsp;It may also destabilize some or all of the other EU member countries and/or the Eurozone.&nbsp;These developments could result in losses to the Fund, as there may be negative effects on the value of Fund&#146;s
investments and/or on Fund&#146;s ability to enter into certain transactions or value certain investments, and these developments may make it more difficult for the Fund to exit certain investments at an advantageous time or price.&nbsp;Such events
could result from, among other things, increased uncertainty and volatility in the United Kingdom, the EU and other financial markets; fluctuations in asset values; fluctuations in exchange rates; decreased liquidity of investments located, traded
or listed within the United Kingdom, the EU or elsewhere; changes in the willingness or ability of financial and other counterparties to enter into transactions or the price and terms on which other counterparties are willing to transact; and/or
changes in legal and regulatory regimes to which Fund investments are or become subject. Any of these events, as well as an exit or expulsion of an EU member state other than the United Kingdom from the EU, could negatively impact Fund returns. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B><I>Investments in Russia.</I></B> The Fund may invest in securities and instruments that are economically tied to Russia. Investments in Russia are subject
to various risks such as political, economic, legal, market and currency risks. The risks include uncertain political and economic policies, short term market volatility, poor accounting standards, corruption and crime, an inadequate regulatory
system, and unpredictable taxation. Investments in Russia are particularly subject to </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">22 </P>


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the risk that economic sanctions may be imposed by the United States and/or other countries. Such sanctions &#151; which may impact companies in many sectors, including energy, financial services
and defense, among others &#151; may negatively impact the Fund&#146;s performance and/or ability to achieve their investment objectives. The Russian securities market is characterized by limited volume of trading, resulting in difficulty in
obtaining accurate prices. The Russian securities market, as compared to U.S. markets, has significant price volatility, less liquidity, a smaller market capitalization and a smaller number of traded securities. There may be little publicly
available information about issuers. Settlement, clearing and registration of securities transactions are subject to risks because of registration systems that may not be subject to effective government supervision. This may result in significant
delays or problems in registering the transfer of securities. Russian securities laws may not recognize foreign nominee accounts held with a custodian bank, and therefore the custodian may be considered the ultimate owner of securities they hold for
their clients. Ownership of securities issued by Russian companies is recorded by companies themselves and by registrars instead of through a central registration system. It is possible that the ownership rights of the Fund could be lost through
fraud or negligence. While applicable Russian regulations impose liability on registrars for losses resulting from their errors, it may be difficult for the Fund to enforce any rights it may have against the registrar or issuer of the securities in
the event of loss of share registration. Adverse currency exchange rates are a risk and there may be a lack of available currency hedging instruments. Investments in Russia may be subject to the risk of nationalization or expropriation of assets.
Oil, natural gas, metals, and timber account for a significant portion of Russia&#146;s exports, leaving the country vulnerable to swings in world prices.<I> </I> </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Emerging Market Securities </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund may invest without
limit in investment grade sovereign debt. The Fund may invest up to 40% of its total assets in securities and instruments that are economically tied to &#147;emerging market&#148; countries other than investments in investment grade sovereign debt,
where as noted above there is no limit. PIMCO considers an instrument to be economically tied to an emerging market security if the security&#146;s &#147;country of exposure&#148; is an emerging market country, as determined by the criteria set
forth below. Alternatively, such as when a &#147;country of exposure&#148; is not available or when PIMCO believes the following tests more accurately reflect which country the security is economically tied to, PIMCO may consider an instrument to be
economically tied to an emerging market country if the issuer or guarantor is a government of an emerging market country (or any political subdivision, agency, authority or instrumentality of such government), if the issuer or guarantor is organized
under the laws of an emerging market country, or if the currency of settlement of the security is a currency of an emerging market country. 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. A security&#146;s &#147;country of exposure&#148; 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 </P>
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the assignment of a country determines the &#147;country of exposure.&#148; The factors, listed in the order in which they are applied, are: (i)&nbsp;if an asset-backed or other collateralized
security, the country in which the collateral backing the security is located, (ii)&nbsp;the &#147;country of risk&#148; of the issuer, (iii)&nbsp;if the security is guaranteed by the government of the country (or any political subdivision, agency,
authority or instrumentality of such government), the country of the government or instrumentality providing the guarantee, (iv)&nbsp;the &#147;country of risk&#148; of the issuer&#146;s ultimate parent, or (v)&nbsp;the country where the issuer is
organized or incorporated under the laws thereof. &#147;Country of risk&#148; is a separate four-part test determined by the following factors, listed in order of importance: (i)&nbsp;management location, (ii)&nbsp;country of primary listing,
(iii)&nbsp;sales or revenue attributable to the country, and (iv)&nbsp;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, the Fund emphasizes countries with relatively low gross natural product per capital 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, and any other specific
factors it believes to be relevant. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The risks of investing in <FONT STYLE="white-space:nowrap">non-U.S.</FONT> securities are particularly high when the
issuers are tied economically to countries with developing or &#147;emerging market&#148; economies. Countries with &#147;emerging market&#148; economies are those with securities markets that are, in the opinion of PIMCO, less sophisticated than
more developed markets in terms of participation by investors, analyst coverage, liquidity and regulation. Investing in emerging market countries involves certain risks not typically associated with investing in U.S. securities, and imposes risks
greater than, or in addition to, risks of investing in <FONT STYLE="white-space:nowrap">non-U.S.,</FONT> developed countries. These risks include: greater risks of nationalization or expropriation of assets or confiscatory taxation; currency
devaluations and other currency exchange rate fluctuations; greater social, economic and political uncertainty and instability (including the risk of war); more substantial government involvement in the economy; less government supervision and
regulation of the securities markets and participants in those markets; controls on foreign investment and limitations on repatriation of invested capital and on the Fund&#146;s ability to exchange local currencies for U.S. dollars; unavailability
of currency hedging techniques in certain emerging market countries; the fact that companies in emerging market countries may be smaller, less seasoned and newly organized companies; the difference in, or lack of, auditing and financial reporting
standards, which may result in unavailability of material information about issuers; the risk that it may be more difficult to obtain and/or enforce a judgment in a court outside the United States; and greater price volatility, substantially less
liquidity and significantly smaller market capitalization of securities markets. In addition, a number of emerging market countries restrict, to various degrees, foreign investment in securities, and high rates of 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. Also, any change in the leadership or politics of emerging market countries, or the countries that
exercise a significant influence over those countries, may halt the expansion of or reverse the liberalization of foreign investment policies now occurring and adversely affect existing investment opportunities. </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund may also invest in Brady Bonds. Brady Bonds are securities created through the exchange of existing
commercial bank loans to sovereign entities for new obligations in connection with debt restructurings under a debt restructuring plan introduced by former U.S. Secretary of the Treasury, Nicholas F. Brady (the &#147;Brady Plan&#148;). Brady Plan
debt restructurings have been implemented in a number of countries, including: Argentina, Bolivia, Brazil, Bulgaria, Costa Rica, the Dominican Republic, Ecuador, Jordan, Mexico, Niger, Nigeria, Panama, Peru, the Philippines, Poland, Uruguay, and
Venezuela. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Brady Bonds may be collateralized or uncollateralized, are issued in various currencies (primarily the U.S. dollar) and are actively traded in
the <FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">over-the-counter</FONT></FONT> secondary market. Brady Bonds are not considered to be U.S. Government securities. U.S. dollar-denominated, collateralized Brady Bonds, which may be
fixed rate par bonds or floating rate discount bonds, are generally collateralized in full as to principal by U.S. Treasury zero coupon bonds having the same maturity as the Brady Bonds. Interest payments on these Brady Bonds generally are
collateralized on a <FONT STYLE="white-space:nowrap">one-year</FONT> or longer rolling-forward basis by cash or securities in an amount that, in the case of fixed rate bonds, is equal to at least one year of interest payments or, in the case of
floating rate bonds, initially is equal to at least one year&#146;s interest payments based on the applicable interest rate at that time and is adjusted at regular intervals thereafter. Certain Brady Bonds are entitled to &#147;value recovery
payments&#148; in certain circumstances, which in effect constitute supplemental interest payments but generally are not collateralized. Brady Bonds are often viewed as having three or four valuation components: (i)&nbsp;the collateralized repayment
of principal at final maturity; (ii)&nbsp;the collateralized interest payments; (iii)&nbsp;the uncollateralized interest payments; and (iv)&nbsp;any uncollateralized repayment of principal at maturity (these uncollateralized amounts constitute the
&#147;residual risk&#148;). </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Most Mexican Brady Bonds issued to date have principal repayments at final maturity fully collateralized by U.S. Treasury
zero coupon bonds (or comparable collateral denominated in other currencies) and interest coupon payments collateralized on an <FONT STYLE="white-space:nowrap">18-month</FONT> rolling-forward basis by funds held in escrow by an agent for the
bondholders. A significant portion of the Venezuelan Brady Bonds and the Argentine Brady Bonds issued to date have principal repayments at final maturity collateralized by U.S. Treasury zero coupon bonds (or comparable collateral denominated in
other currencies) and/or interest coupon payments collateralized on a <FONT STYLE="white-space:nowrap">14-month</FONT> (for Venezuela) or <FONT STYLE="white-space:nowrap">12-month</FONT> (for Argentina) rolling-forward basis by securities held by
the Federal Reserve Bank of New York as collateral agent. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Brady Bonds involve various risk factors including residual risk and the history of defaults
with respect to commercial bank loans by public and private entities of countries issuing Brady Bonds. There can be no assurance that Brady Bonds in which the Fund may invest will not be subject to restructuring arrangements or to requests for new
credit, which may cause the Fund to suffer a loss of interest or principal on any of their holdings. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Foreign Currency Transactions </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund may purchase and sell foreign currency options and foreign currency futures contracts and related options (see &#147;&#150;Derivative
Instruments&#148; below), and may engage in foreign currency transactions either on a spot (cash) basis at the rate prevailing in the currency exchange market at </P>
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the time or through forward currency contracts (&#147;forwards&#148;). The Fund may engage in these transactions in order to protect against uncertainty in the level of future foreign exchange
rates in the purchase and sale of securities or because PIMCO believes a currency to which the Fund is exposed is overvalued. The Fund may also use foreign currency options, foreign currency forward contracts, foreign currency futures and foreign
spot transactions to increase exposure to a foreign currency or to shift exposure to foreign currency fluctuations from one currency to another. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">A
forward contract involves an obligation to purchase or sell a specific currency at a future date, which may be any fixed number of days from the date of the contract agreed upon by the parties, at a price set at the time of the contract. These
contracts may be bought or sold to protect the Fund against a possible loss resulting from an adverse change in the relationship between foreign currencies and the U.S. dollar or to increase exposure to a particular foreign currency. Open positions
in forwards used for <FONT STYLE="white-space:nowrap">non-hedging</FONT> purposes will be covered by the segregation with the Fund&#146;s custodian of assets determined to be liquid by PIMCO in accordance with procedures approved by the Board of
Trustees, and are marked to market daily. Although forwards may be used to minimize the risk of loss due to a decline in the value of the hedged currencies, at the same time, they tend to limit any potential gain which might result should the value
of such currencies increase. Forwards are used primarily to adjust the foreign exchange exposure of the Fund with a view to protecting the outlook, and the Fund might be expected to enter into such contracts under the following circumstances: </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B><I>Lock In.</I></B> When PIMCO desires to lock in the U.S. dollar price on the purchase or sale of a security denominated in a foreign currency. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B><I>Cross Hedge.</I></B> If a particular currency is expected to decrease against another currency, the Fund may sell the currency expected to decrease and
purchase a currency which is expected to increase against the currency sold in an amount approximately equal to some or all of the Fund&#146;s exposure to the currency sold. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B><I>Direct Hedge.</I></B> If PIMCO wants to eliminate substantially all of the risk of owning a particular currency, and/or if PIMCO thinks that the Fund
can benefit from price appreciation in a given country&#146;s bonds but does not want to hold the currency, it may employ a direct hedge back into the U.S. dollar. In either case, the Fund would enter into a forward contract to sell the currency to
which the Fund is exposed through the security and purchase U.S. dollars at an exchange rate established at the time it initiated the contract. The cost of the direct hedge transaction may offset most, if not all, of the yield advantage offered by
the foreign security, but the Fund would hope to benefit from an increase (if any) in the value of the security. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B><I>Proxy Hedge.</I></B> The Fund
might choose to use a proxy hedge, which may be less costly than a direct hedge. In this case, the Fund, having purchased a security, will sell a currency whose value is believed to be closely linked to the currency to which the Fund is exposed
through the security. Interest rates prevailing in the country whose currency was sold would be expected to be closer to those in the United States and lower than those of securities denominated in the currency of the original holding. This type of
hedging entails greater risk than a direct hedge because it is dependent on a stable relationship between the two currencies paired as proxies and the relationships can be very unstable at times. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">26 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B><I>Costs of Hedging.</I></B> When the Fund purchases a <FONT STYLE="white-space:nowrap">non-U.S.</FONT> bond
with a higher interest rate than is available on U.S. bonds of a similar maturity, the additional yield on the <FONT STYLE="white-space:nowrap">non-U.S.</FONT> bond could be substantially reduced or lost if the Fund were to enter into a direct hedge
by selling the foreign currency and purchasing the U.S. dollar. This is what is known as the &#147;cost&#148; of hedging. Proxy hedging attempts to reduce this cost through an indirect hedge back to the U.S. dollar. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">It is important to note that hedging costs are treated as capital transactions and are not, therefore, deducted from the Fund&#146;s dividend distribution and
are not reflected in its yield. Instead such costs will, over time, be reflected in the Fund&#146;s net asset value per share. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund may enter into
foreign currency transactions as a substitute for cash investments and for other investment purposes not involving hedging, including, without limitation, to exchange payments received in a foreign currency into U.S. dollars or in anticipation of
settling a transaction that requires the Fund to deliver a foreign currency. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The forecasting of currency market movement is extremely difficult, and
whether any hedging strategy will be successful is highly uncertain. Moreover, it is impossible to forecast with precision the market value of portfolio securities at the expiration of a foreign currency forward contract. Accordingly, the Fund may
be required to buy or sell additional currency on the spot market (and bear the expense of such transaction) if PIMCO&#146;s predictions regarding the movement of foreign currency or securities markets prove inaccurate. In addition, the use of
cross-hedging transactions may involve special risks, and may leave the Fund in a less advantageous position than if such a hedge had not been established. Because foreign currency forward contracts are privately negotiated transactions, there can
be no assurance that the Fund will have flexibility to roll-over a foreign currency forward contract upon its expiration if it desires to do so. Additionally, there can be no assurance that the other party to the contract will perform its services
thereunder. Under definitions adopted by the U.S. Commodity Futures Trading Commission (the &#147;CFTC&#148;) and the SEC, many <FONT STYLE="white-space:nowrap">non-deliverable</FONT> foreign currency forwards are considered swaps for certain
purposes, including determination of whether such instruments need to be exchange-traded and centrally cleared as discussed further in &#147;Risks of Potential Government Regulation of Derivatives.&#148; These changes are expected to reduce
counterparty risk as compared to <FONT STYLE="white-space:nowrap">bi-laterally</FONT> negotiated contracts. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund may hold a portion of its assets in
bank deposits denominated in foreign currencies, so as to facilitate investment in foreign securities as well as to protect against currency fluctuations and the need to convert such assets into U.S. dollars (thereby also reducing transaction
costs). To the extent these monies are converted back into U.S. dollars, the value of the assets so maintained will be affected favorably or unfavorably by changes in foreign currency exchange rates and exchange control regulations. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B><I>Tax Consequences of Hedging.</I></B> Regulations that may be issued in the future could limit the ability of the Fund to enter into such hedging
transactions. Hedging may also result in the application of the <FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">mark-to-market</FONT></FONT> and straddle provisions of the Code. Those provisions could result in an increase (or
decrease) in the amount of taxable dividends paid by the Fund and could affect whether dividends paid by the Fund are classified as capital gains or ordinary income. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">27 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Foreign Currency Exchange-Related Securities </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B><I>Foreign Currency Warrants.</I></B> Foreign currency warrants such as Currency Exchange Warrants<SUP STYLE="font-size:85%; vertical-align:top">SM</SUP>
are warrants which entitle the holder to receive from their issuer an amount of cash (generally, for warrants issued in the United States, in U.S. dollars) which is calculated pursuant to a predetermined formula and based on the exchange rate
between a specified foreign currency and the U.S. dollar as of the exercise date of the warrant. Foreign currency warrants generally are exercisable upon their issuance and expire as of a specified date and time. Foreign currency warrants have been
issued in connection with U.S. dollar-denominated debt offerings by major corporate issuers in an attempt to reduce the foreign currency exchange risk which, from the point of view of prospective purchasers of the securities, is inherent in the
international fixed income marketplace. Foreign currency warrants may attempt to reduce the foreign exchange risk assumed by purchasers of a security by, for example, providing for a supplemental payment in the event that the U.S. dollar depreciates
against the value of a major foreign currency such as the Japanese yen or the Euro. The formula used to determine the amount payable upon exercise of a foreign currency warrant may make the warrant worthless unless the applicable foreign currency
exchange rate moves in a particular direction (e.g., unless the U.S. dollar appreciates or depreciates against the particular foreign currency to which the warrant is linked or indexed). Foreign currency warrants are severable from the debt
obligations with which they may be offered, and may be listed on exchanges. Foreign currency warrants may be exercisable only in certain minimum amounts, and an investor wishing to exercise warrants who possesses less than the minimum number
required for exercise may be required either to sell the warrants or to purchase additional warrants, thereby incurring additional transaction costs. In the case of any exercise of warrants, there may be a time delay between the time a holder of
warrants gives instructions to exercise and the time the exchange rate relating to exercise is determined, during which time the exchange rate could change significantly, thereby affecting both the market and cash settlement values of the warrants
being exercised. The expiration date of the warrants may be accelerated if the warrants should be delisted from an exchange or if their trading should be suspended permanently, which would result in the loss of any remaining &#147;time value&#148;
of the warrants (i.e., the difference between the current market value and the exercise value of the warrants), and, in the case the warrants were
<FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">&#147;out-of-the-money,&#148;</FONT></FONT></FONT> in a total loss of the purchase price of the warrants. Warrants are generally unsecured obligations
of their issuers and are not standardized foreign currency options issued by the Options Clearing Corporation (&#147;the OCC&#148;). Unlike foreign currency options issued by the OCC, the terms of foreign exchange warrants generally will not be
amended in the event of governmental or regulatory actions affecting exchange rates or in the event of the imposition of other regulatory controls affecting the international currency markets. The initial public offering price of foreign currency
warrants is generally considerably in excess of the price that a commercial user of foreign currencies might pay in the interbank market for a comparable option involving significantly larger amounts of foreign currencies. Foreign currency warrants
are subject to significant foreign exchange risk, including risks arising from complex political or economic factors. </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B><I>Principal Exchange Rate Linked Securities.</I></B> Principal exchange rate linked securities (&#147;PERLs<SUP
STYLE="font-size:85%; vertical-align:top">SM</SUP>&#148;) are debt obligations the principal on which is payable at maturity in an amount that may vary based on the exchange rate between the U.S. dollar and a particular foreign currency at or about
that time. The return on &#147;standard&#148; principal exchange rate linked securities is enhanced if the foreign currency to which the security is linked appreciates against the U.S. dollar, and is adversely affected by increases in the foreign
exchange value of the U.S. dollar; &#147;reverse&#148; principal exchange rate linked securities are like &#147;standard&#148; securities, except that their return is enhanced by increases in the value of the U.S. dollar and adversely impacted by
increases in the value of foreign currency. Interest payments on the securities are generally made in U.S. dollars at rates that reflect the degree of foreign currency risk assumed or given up by the purchaser of the notes (i.e., at relatively
higher interest rates if the purchaser has assumed some of the foreign exchange risk, or relatively lower interest rates if the issuer has assumed some of the foreign exchange risk, based on the expectations of the current market). PERLs may in
limited cases be subject to acceleration of maturity (generally, not without the consent of the holders of the securities), which may have an adverse impact on the value of the principal payment to be made at maturity. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B><I>Performance Indexed Paper.</I></B> Performance indexed paper is U.S. dollar-denominated commercial paper the yield of which is linked to certain foreign
exchange rate movements. The yield to the investor on performance indexed paper is established at maturity as a function of spot exchange rates between the U.S. dollar and a designated currency as of or about that time (generally, the index maturity
two days prior to maturity). The yield to the investor will be within a range stipulated at the time of purchase of the obligation, generally with a guaranteed minimum rate of return that is below, and a potential maximum rate of return that is
above, market yields on U.S. dollar-denominated commercial paper, with both the minimum and maximum rates of return on the investment corresponding to the minimum and maximum values of the spot exchange rate two business days prior to maturity. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>U.S. Government Securities </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">U.S. Government securities
are obligations of, or guaranteed by, the U.S. Government, its agencies or instrumentalities. The U.S. Government does not guarantee the net asset value of the Fund&#146;s shares. U.S. Government securities are subject to market and interest rate
risk, and may be subject to varying degrees of credit risk. Some U.S. Government securities, such as Treasury bills, notes and bonds, and securities guaranteed by GNMA, are supported by the full faith and credit of the United States; others, such as
those of the Federal Home Loan Banks, are supported by the right of the issuer to borrow from the U.S. Treasury; others, such as those of FNMA, are supported by the discretionary authority of the U.S. Government to purchase the agency&#146;s
obligations; and still others, such as those of the Student Loan Marketing Association, are supported only by the credit of the instrumentality. Although U.S. Government-sponsored enterprises such as FHLMC and FNMA may be chartered or sponsored by
Congress, they are not funded by Congressional appropriation and their securities are not issued by the U.S. Treasury or supported by the full faith and credit of the U.S. Government and include increased credit risks. Until recently, FNMA and FHLMC
were government-sponsored enterprises owned entirely by private stockholders. The value of these entities&#146; stock fell sharply in 2008 due to concerns that the entities did not have sufficient capital to offset losses. In <FONT
STYLE="white-space:nowrap">mid-2008,</FONT> the U.S. Treasury was </P>
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authorized to increase the size of home loans that FNMA and FHLMC could purchase in certain residential areas and, until 2009, to lend FNMA and FHLMC emergency funds and to purchase the
entities&#146; stock. More recently, in September 2008, the U.S. Treasury announced that FNMA and FHLMC had been placed in conservatorship by the FHFA, a newly created independent regulator. As the conservator, FHFA succeeded to all rights, titles,
powers and privileges of FNMA and FHLMC and of any stockholder, officer or director of FNMA and FHLMC with respect to FNMA and FHLMC and the assets of FNMA and FHLMC. FHFA selected a new chief executive officer and chairman of the board of directors
for each of FNMA and FHLMC. On September&nbsp;7, 2008, the U.S. Treasury announced three additional steps taken by it in connection with the conservatorship. First, the U.S. Treasury entered into a Senior Preferred Stock Purchase Agreement with each
of FNMA and FHLMC pursuant to which the U.S. Treasury would purchase up to an aggregate of $100&nbsp;billion of each of FNMA and FHLMC to maintain a positive net worth in each enterprise. This agreement contains various covenants that severely limit
each enterprise&#146;s operations. In exchange for entering into these agreements, the U.S. Treasury received $1&nbsp;billion of each enterprise&#146;s senior preferred stock and warrants to purchase 79.9% of each enterprise&#146;s common stock.
Second, the U.S. Treasury announced the creation of a new secured lending facility that is available to each of FNMA and FHLMC as a liquidity backstop. Third, the U.S. Treasury announced the creation of a temporary program to purchase
mortgage-backed securities issued by each of FNMA and FHLMC. On February&nbsp;18, 2009, the U.S. Treasury announced that it was doubling the size of its commitment to each enterprise under the Senior Preferred Stock Program to $200&nbsp;billion. The
U.S. Treasury&#146;s obligations under the Senior Preferred Stock Program are for an indefinite period of time for a maximum amount of $200&nbsp;billion per enterprise. Both the liquidity backstop and the mortgage-backed securities purchase program
expired December&nbsp;31, 2009. FNMA and FHLMC are continuing to operate as going concerns while in conservatorship and each remains liable for all of its obligations, including its guaranty obligations, associated with its mortgage-backed
securities. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Under the Reform Act, which was included as part of the Housing and Economic Recovery Act of 2008, FHFA, as conservator or receiver, has the
power to repudiate any contract entered into by FNMA or FHLMC prior to FHFA&#146;s appointment as conservator or receiver, as applicable, if FHFA determines, in its sole discretion, that performance of the contract is burdensome and that repudiation
of the contract promotes the orderly administration of FNMA&#146;s or FHLMC&#146;s affairs. The Reform Act requires FHFA to exercise its right to repudiate any contract within a reasonable period of time after its appointment as conservator or
receiver. FHFA, in its capacity as conservator, has indicated that it has no intention to repudiate the guaranty obligations of FNMA or FHLMC because FHFA views repudiation as incompatible with the goals of the conservatorship. However, in the event
that FHFA, as conservator or if it is later appointed as receiver for FNMA or FHLMC, were to repudiate any such guaranty obligation, the conservatorship or receivership estate, as applicable, would be liable for actual direct compensatory damages in
accordance with the provisions of the Reform Act. Any such liability could be satisfied only to the extent of FNMA&#146;s or FHLMC&#146;s assets available therefor. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">In the event of repudiation, the payments of interest to holders of FNMA or FHLMC mortgage-backed securities would be reduced if payments on the mortgage
loans represented in the mortgage loan groups related to such mortgage-backed securities are not made by the borrowers </P>
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or advanced by the servicer. Any actual direct compensatory damages for repudiating these guaranty obligations may not be sufficient to offset any shortfalls experienced by such mortgage-backed
security holders. Further, in its capacity as conservator or receiver, FHFA has the right to transfer or sell any asset or liability of FNMA or FHLMC without any approval, assignment or consent. Although FHFA has stated that it has no present
intention to do so, if FHFA, as conservator or receiver, were to transfer any such guaranty obligation to another party, holders of FNMA or FHLMC mortgage-backed securities would have to rely on that party for satisfaction of the guaranty obligation
and would be exposed to the credit risk of that party. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">In addition, certain rights provided to holders of mortgage-backed securities issued by FNMA and
FHLMC under the operative documents related to such securities may not be enforced against FHFA, or enforcement of such rights may be delayed, during the conservatorship or any future receivership. The operative documents for FNMA and FHLMC
mortgage-backed securities may provide (or with respect to securities issued prior to the date of the appointment of the conservator may have provided) that upon the occurrence of an event of default on the part of FNMA or FHLMC, in its capacity as
guarantor, which includes the appointment of a conservator or receiver, holders of such mortgage-backed securities have the right to replace FNMA or FHLMC as trustee if the requisite percentage of mortgage-backed securities holders consent. The
Reform Act prevents mortgage-backed security holders from enforcing such rights if the event of default arises solely because a conservator or receiver has been appointed. The Reform Act also provides that no person may exercise any right or power
to terminate, accelerate or declare an event of default under certain contracts to which FNMA or FHLMC is a party, or obtain possession of or exercise control over any property of FNMA or FHLMC, or affect any contractual rights of FNMA or FHLMC,
without the approval of FHFA, as conservator or receiver, for a period of 45 or 90 days following the appointment of FHFA as conservator or receiver, respectively. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">U.S. Government securities include securities that have no coupons, or have been stripped of their unmatured interest coupons, individual interest coupons
from such securities that trade separately, and evidences of receipt of such securities. Such securities may pay no cash income, and are purchased at a deep discount from their value at maturity. Because interest on zero coupon securities is not
distributed on a current basis but is, in effect, compounded, zero coupon securities tend to be subject to greater risk than interest-paying securities of similar maturities. Custodial receipts issued in connection with <FONT
STYLE="white-space:nowrap">so-called</FONT> trademark zero coupon securities, such as CATs and TIGRs, are not issued by the U.S. Treasury, and are therefore not U.S. Government securities, although the underlying bond represented by such receipt is
a debt obligation of the U.S. Treasury. Other zero coupon Treasury securities (e.g., STRIPs and CUBEs) are direct obligations of the U.S. Government. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Municipal Securities </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund may invest in securities
issued by states, territories, possessions, municipalities and other political subdivisions, agencies, authorities and instrumentalities of states, territories, possessions and multi-state agencies or authorities. Municipal bonds share the
attributes of debt/fixed income securities in general, but are generally issued by states, municipalities and other political subdivisions, agencies, authorities and instrumentalities of states and multi-state agencies. </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B><I>Municipal Securities.</I></B> Municipal securities include debt obligations issued by governmental entities
to obtain funds for various public purposes, including the construction of a wide range of public facilities, the refunding of outstanding obligations, the payment of general operating expenses, and the extension of loans to public institutions and
facilities. Municipal securities can be classified into two principal categories, including &#147;general obligation&#148; bonds and other securities and &#147;revenue&#148; bonds and other securities. General obligation bonds are secured by the
issuer&#146;s full faith, credit and taxing power for the payment of principal and interest. Revenue securities are payable only from the revenues derived from a particular facility or class of facilities or, in some cases, from the proceeds of a
special excise tax or other specific revenue source, such as the user of the facility being financed. Municipal securities also may include &#147;moral obligation&#148; securities, which normally are issued by special purpose public authorities. If
the issuer of moral obligation securities is unable to meet its debt service obligations from current revenues, it may draw on a reserve fund, the restoration of which is a moral commitment but not a legal obligation of the governmental entity that
created the special purpose public authority. Municipal securities may be structured as fixed-, variable- or floating-rate obligations or as <FONT STYLE="white-space:nowrap">zero-coupon,</FONT> PIKs and step-coupon securities and may be privately
placed or publicly offered. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Municipal securities may include municipal bonds, municipal notes and municipal leases. Municipal bonds are debt obligations
of a governmental entity that obligate the municipality to pay the holder a specified sum of money at specified intervals and to repay the principal amount of the loan at maturity. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Municipal notes may be issued by governmental entities and other <FONT STYLE="white-space:nowrap">tax-exempt</FONT> issuers in order to finance short-term
cash needs or, occasionally, to finance construction. Most municipal notes are general obligations of the issuing entity payable from taxes or designated revenues expected to be received within the relevant fiscal period. Municipal notes generally
have maturities of one year or less. Municipal notes can be subdivided into two <FONT STYLE="white-space:nowrap">sub-categories:</FONT> (i)&nbsp;municipal commercial paper and (ii)&nbsp;municipal demand obligations. Municipal commercial paper
typically consists of very short-term unsecured negotiable promissory notes that are sold, for example, to meet seasonal working capital or interim construction financing needs of a governmental entity or agency. While these obligations are intended
to be paid from general revenues or refinanced with long-term debt, they frequently are backed by letters of credit, lending agreements, note repurchase agreements or other credit facility agreements offered by banks or institutions. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Municipal demand obligations can be subdivided into two general types: variable rate demand notes and master demand obligations. Variable rate demand notes
are <FONT STYLE="white-space:nowrap">tax-exempt</FONT> municipal obligations or participation interests that provide for a periodic adjustment in the interest rate paid on the notes. They permit the holder to demand payment of the notes, or to
demand purchase of the notes at a purchase price equal to the unpaid principal balance, plus accrued interest either directly by the issuer or by drawing on a bank letter of credit or guaranty issued with respect to such note. The issuer of the
municipal obligation may have a corresponding right to prepay at its discretion the outstanding principal of the note plus accrued interest upon notice </P>
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comparable to that required for the holder to demand payment. The variable rate demand notes in which the Fund may invest are payable, or are subject to purchase, on demand usually on notice of
seven calendar days or less. The terms of the notes generally provide that interest rates are adjustable at intervals ranging from daily to six months. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Master demand obligations are <FONT STYLE="white-space:nowrap">tax-exempt</FONT> municipal obligations that provide for a periodic adjustment in the interest
rate paid and permit daily changes in the amount borrowed. The interest on such obligations is, in the opinion of counsel for the borrower, excluded from gross income for federal income tax purposes (but not necessarily for alternative minimum tax
purposes). Although there is no secondary market for master demand obligations, such obligations are considered by the Fund to be liquid because they are payable upon demand. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Investing in municipal securities is subject to certain risks. There are variations in the quality of municipal securities, both within a particular
classification and between classifications, and the rates of return on municipal securities can depend on a variety of factors, including general money market conditions, the financial condition of the issuer, general conditions of the municipal
bond market, the size of a particular offering, the maturity of the obligation, and the rating of the issue. The ratings of NRSROs represent their opinions as to the quality of municipal securities. It should be emphasized, however, that these
ratings are general and are not absolute standards of quality, and municipal securities with the same maturity, interest rate, and rating may have different rates of return while municipal securities of the same maturity and interest rate with
different ratings may have the same rate of return. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The payment of principal and interest on most municipal securities purchased by the Fund will depend
upon the ability of the issuers to meet their obligations. An issuer&#146;s obligations under its municipal securities are subject to the provisions of bankruptcy, insolvency, and other laws affecting the rights and remedies of creditors, such as
the United States Bankruptcy Code. The power or ability of an issuer to meet its obligations for the payment of interest on and principal of its municipal securities may be materially adversely affected by litigation or other conditions. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">There are particular considerations and risks relevant to investing in a portfolio of a single state&#146;s municipal securities, such as the greater risk of
the concentration of portfolio holdings. Each state&#146;s municipal securities may include, in addition to securities issued by the relevant state and its political subdivisions, agencies, authorities and instrumentalities, securities issued by the
governments of Guam, Puerto Rico or the U.S. Virgin Islands. These securities may be subject to different risks than municipal securities issued by the relevant state and its political subdivisions, agencies, authorities and instrumentalities. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund ordinarily purchases municipal securities whose interest, in the opinion of bond counsel, is excluded from gross income for federal income tax
purposes. The opinion of bond counsel may assert that such interest is not an item of tax preference for the purposes of the alternative minimum tax or is exempt from certain state or local taxes. There is no assurance that the applicable taxing
authority will agree with this opinion. In the event, for example, the Internal Revenue Service (&#147;IRS&#148;) determines that an 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. As a shareholder of the Fund, you may be required to file an amended tax return as a result, reporting such income as taxable. </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B><I>Municipal Bonds</I></B><B>.</B> The municipal bonds that the Fund may purchase include general obligation
bonds and limited obligation bonds (or revenue bonds), including industrial development bonds issued pursuant to federal tax law. General obligation bonds are obligations involving the credit of an issuer possessing taxing power and are payable from
such issuer&#146;s general revenues and not from any particular source. Limited obligation bonds are payable only from the revenues derived from a particular facility or class of facilities or, in some cases, from the proceeds of a special excise or
other specific revenue source. <FONT STYLE="white-space:nowrap">Tax-exempt</FONT> private activity bonds and industrial development bonds generally are also revenue bonds and thus are not payable from the issuer&#146;s general revenues. The credit
and quality of private activity bonds and industrial development bonds are usually related to the credit of the corporate user of the facilities. Payment of interest on and repayment of principal of such bonds is the responsibility of the user and
any guarantor. The Fund does not expect to be eligible to pass through to shareholders the <FONT STYLE="white-space:nowrap">tax-exempt</FONT> character of interest earned on municipal bonds. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund may invest in <FONT STYLE="white-space:nowrap">pre-refunded</FONT> municipal bonds. <FONT STYLE="white-space:nowrap">Pre-refunded</FONT> municipal
bonds are tax exempt bonds that have been refunded to a call date prior to the final maturity of principal, or, in the case of <FONT STYLE="white-space:nowrap">pre-refunded</FONT> municipal bonds commonly referred to as <FONT
STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">&#147;escrowed-to-maturity</FONT></FONT> bonds,&#148; to the final maturity of principal, and remain outstanding in the municipal market. The payment of principal and interest of the <FONT
STYLE="white-space:nowrap">pre-refunded</FONT> municipal bonds held by the Fund 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 (&#147;Agency Securities&#148;)). As the payment of principal and interest is generated from securities held in an escrow account established by the municipality and an independent escrow agent, 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 <FONT STYLE="white-space:nowrap">pre-refunded</FONT> 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 <FONT STYLE="white-space:nowrap">pre-refund</FONT> the older, higher cost debt. Investments in <FONT STYLE="white-space:nowrap">pre-refunded</FONT> municipal bonds held by the Fund may subject the Fund to interest rate risk, market risk
and credit risk. In addition, while a secondary market exists for <FONT STYLE="white-space:nowrap">pre-refunded</FONT> municipal bonds, if the Fund sells <FONT STYLE="white-space:nowrap">pre-refunded</FONT> 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. To the extent permitted by the SEC and the IRS, the Fund&#146;s investment in <FONT STYLE="white-space:nowrap">pre-refunded</FONT>
municipal bonds backed by U.S. Treasury and Agency securities in the manner described above, will, for purposes of diversification tests applicable to the Fund, be considered an investment in the respective U.S. Treasury and Agency securities. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Under the Code, certain limited obligation bonds are considered &#147;private activity bonds&#148; and interest paid on such bonds is treated as an item of
tax preference for purposes of calculating federal alternative minimum tax liability. </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Economic downturns and budgetary constraints have made municipal bonds more susceptible to downgrade, default and
bankruptcy. In addition, difficulties in the municipal bond markets could result in increased illiquidity, volatility and credit risk, and a decrease in the number of municipal bond investment opportunities. The value of municipal bonds may also be
affected by uncertainties involving the taxation of municipal bonds or the rights of municipal bond holders in the event of a bankruptcy. Proposals to restrict or eliminate the federal income tax exemption for interest on municipal bonds are
introduced before Congress from time to time. These legal uncertainties could affect the municipal bond market generally, certain specific segments of the market, or the relative credit quality of particular securities. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund may purchase and sell portfolio investments to take advantage of changes or anticipated changes in yield relationships, markets or economic
conditions. The Fund may also sell municipal bonds due to changes in PIMCO&#146;s evaluation of the issuer. The secondary market for municipal bonds typically has been less liquid than that for taxable debt/fixed income securities, and this may
affect the Fund&#146;s ability to sell particular municipal bonds at then-current market prices, especially in periods when other investors are attempting to sell the same securities. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Additionally, municipal bonds rated below investment grade (i.e., high yield municipal bonds) may not be as liquid as higher-rated municipal bonds. Reduced
liquidity in the secondary market may have an adverse impact on the market price of a municipal bond and on the Fund&#146;s ability to sell a municipal bond in response to changes or anticipated changes in economic conditions or to meet the
Fund&#146;s cash needs. Reduced liquidity may also make it more difficult to obtain market quotations based on actual trades for purposes of valuing the Fund&#146;s portfolio. For more information on high yield securities please see &#147;High Yield
Securities (&#147;Junk Bonds&#148;)&#148; above. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Prices and yields on municipal bonds are dependent on a variety of factors, including general
money-market conditions, the financial condition of the issuer, general conditions of the municipal bond market, the size of a particular offering, the maturity of the obligation and the rating of the issue. A number of these factors, including the
ratings of particular issues, are subject to change from time to time. Information about the financial condition of an issuer of municipal bonds may not be as extensive as that which is made available by corporations whose securities are publicly
traded. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The perceived increased likelihood of default among issuers of municipal bonds has resulted in constrained illiquidity, increased price
volatility and credit downgrades of issuers of municipal bonds. Local and national market forces&#151;such as declines in real estate prices and general business activity&#151;may result in decreasing tax bases, fluctuations in interest rates, and
increasing construction costs, all of which could reduce the ability of certain issuers of municipal bonds to repay their obligations. Certain issuers of municipal bonds have also been unable to obtain additional financing through, or must pay
higher interest rates on, new issues, which may reduce revenues available for issuers of municipal bonds to pay existing obligations. In addition, events have demonstrated that the lack of disclosure rules in this area can make it difficult for
investors to obtain reliable information on the obligations underlying municipal bonds. Adverse developments in the municipal bond market may negatively affect the value of all or a substantial portion of a portfolio&#146;s holdings in municipal
bonds. </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Obligations of issuers of municipal bonds are subject to the provisions of bankruptcy, insolvency and other laws
affecting the rights and remedies of creditors. Congress or state legislatures may seek to extend the time for payment of principal or interest, or both, or to impose other constraints upon enforcement of such obligations. There is also the
possibility that as a result of litigation or other conditions, the power or ability of issuers to meet their obligations for the payment of interest and principal on their municipal bonds may be materially affected or their obligations may be found
to be invalid or unenforceable. Such litigation or conditions may from time to time have the effect of introducing uncertainties in the market for municipal bonds or certain segments thereof, or of materially affecting the credit risk with respect
to particular bonds. Adverse economic, business, legal or political developments might affect all or a substantial portion of the Fund&#146;s municipal bonds in the same manner. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">From time to time, proposals have been introduced before Congress for the purpose of restricting or eliminating the federal income tax exemption for interest
on certain types of municipal bonds. Additionally, certain other proposals have been introduced that would have the effect of taxing a portion of exempt interest and/or reducing the tax benefits of receiving exempt interest. It can be expected that
similar proposals may be introduced in the future. As a result of any such future legislation, the availability of such municipal bonds for investment by the Fund and the value of such municipal bonds held by the Fund may be affected. In addition,
it is possible that events occurring after the date of a municipal bond&#146;s issuance, or after the Fund&#146;s acquisition of such obligation, may result in a determination that the interest paid on that obligation is taxable, in certain cases
retroactively. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Some longer-term municipal bonds give the investor the right to &#147;put&#148; or sell the security at par (face value) within a
specified number of days following the investor&#146;s request&#151;usually one to seven days. This demand feature enhances a security&#146;s liquidity by shortening its effective maturity and enables it to trade at a price equal to or very close to
par. If a demand feature terminates prior to being exercised, the Fund would hold the longer-term security, which could experience substantially more volatility. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund may invest in taxable municipal bonds, such as Build America Bonds. Build America Bonds are tax credit bonds created by the American Recovery and
Reinvestment Act of 2009, which authorized state and local governments to issue Build America Bonds as taxable bonds in 2009 and 2010, without volume limitations, to finance any capital expenditures for which such issuers could otherwise issue
traditional <FONT STYLE="white-space:nowrap">tax-exempt</FONT> bonds. The Fund&#146;s investments in Build America Bonds or similar taxable municipal bonds will result in taxable income and the Fund may elect to pass through to Common Shareholders
the corresponding tax credits. The tax credits can generally be used to offset federal income taxes and the alternative minimum tax, but such credits are generally not refundable. Taxable municipal bonds involve similar risks as <FONT
STYLE="white-space:nowrap">tax-exempt</FONT> municipal bonds, including credit and market risk. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">36 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Corporate Debt Securities </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund may invest in corporate debt securities of U.S. issuers and foreign issuers, and/or it may hold its assets in these securities for cash management
purposes. The investment return of corporate debt securities reflects interest earnings and changes in the market value of the security. The market value of a corporate debt obligation may be expected to rise and fall inversely with interest rates
generally. There also exists the risk that the issuers of the securities may not be able to meet their obligations on interest or principal payments at the time called for by an instrument. The Fund&#146;s investments in U.S. dollar or foreign
currency-denominated corporate debt securities of domestic or foreign issuers are limited to corporate debt securities (corporate bonds, debentures, notes and other similar corporate debt instruments, including convertible securities) which meet the
minimum ratings criteria set forth for the Fund, or, if unrated, are in PIMCO&#146;s opinion comparable in quality to corporate debt securities in which the Fund may invest. Corporate income-producing securities may include forms of preferred or
preference stock. The rate interest on a corporate debt security may be fixed, floating or variable, and may vary inversely with respect to a reference rate. The rate of return or return of principal on some debt obligations may be linked or indexed
to the level of exchange rates between the U.S. dollar and a foreign currency or currencies. Corporate debt securities may be acquired with warrants attached.&nbsp;&nbsp;&nbsp;&nbsp;Securities rated Baa by Moody&#146;s, BBB by S&amp;P and BBB by
Fitch are the lowest which are considered &#147;investment grade&#148; obligations. Moody&#146;s describes securities rated Baa as &#147;medium-grade&#148; obligations; they are subject to moderate credit risk and as such may possess certain
speculative characteristics. S&amp;P describes securities rated BBB as &#147;having adequate capacity to meet financial commitments, however, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the
obligor to meet its financial commitments.&#148; For securities rated BBB, Fitch states that &#147;.... expectations of default risk are currently low... capacity for payment of financial commitments is considered adequate, but adverse business or
economic conditions are more likely to impair this capacity.&#148; For a discussion of securities rated below investment grade, see &#147;High Yield Securities (&#147;Junk Bonds&#148;)&#148; above. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Commercial Paper </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Commercial paper represents short-term
unsecured promissory notes issued in bearer form by corporations such as banks or bank holding companies and finance companies. The Fund may invest in commercial paper of any credit quality consistent with the Fund&#146;s investment objectives and
policies, including unrated commercial paper for which PIMCO has made a credit quality assessment. See Appendix&nbsp;A to the Prospectus for a description of the ratings assigned by Moody&#146;s, S&amp;P and Fitch Ratings to commercial paper. The
rate of return on commercial paper may be linked or indexed to the level of exchange rates between the U.S. dollar and a foreign currency or currencies. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Convertible Securities </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund may invest in
convertible securities. A convertible debt security is a bond, debenture, note, or other security that entitles the holder to acquire common stock or other equity securities of the same or a different issuer. A convertible security generally
entitles the holder to receive interest paid or accrued until the convertible security matures or is redeemed, converted or exchanged. Before conversion, convertible securities have characteristics similar to
<FONT STYLE="white-space:nowrap">non-convertible</FONT> debt securities. Convertible securities rank senior to common stock in a corporation&#146;s capital structure and, therefore, generally entail less risk than the corporation&#146;s common
stock, </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">37 </P>


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although the extent to which such risk is reduced depends in large measure upon the degree to which the convertible security sells above its value as a fixed income security. Convertible
securities are subordinate in rank to any senior debt obligations of the issuer, and, therefore, an issuer&#146;s convertible securities entail more risk than its debt obligations. Convertible securities generally offer lower interest or dividend
yields than <FONT STYLE="white-space:nowrap">non-convertible</FONT> debt securities of similar credit quality because of the potential for capital appreciation. In addition, convertible securities are often lower-rated securities. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Because of the conversion feature, the price of the convertible security will normally fluctuate in some proportion to changes in the price of the underlying
asset, and as such is subject to risks relating to the activities of the issuer and/or general market and economic conditions. The income component of a convertible security may tend to cushion the security against declines in the price of the
underlying asset. However, the income component of convertible securities causes fluctuations based upon changes in interest rates and the credit quality of the issuer. If the convertible security&#146;s &#147;conversion value,&#148; which is the
market value of the underlying common stock that would be obtained upon the conversion of the convertible security, is substantially below the &#147;investment value,&#148; which is the value of a convertible security viewed without regard to its
conversion feature (i.e., strictly on the basis of its yield), the price of the convertible security is typically governed principally by its investment value. If the conversion value of a convertible security increases to a point that approximates
or exceeds its investment value, the value of the security will typically be principally influenced by its conversion value. A convertible security generally sells at a premium over its conversion value to the extent investors place value on the
right to acquire the underlying common stock while holding an income-producing security. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">A convertible security may be subject to redemption at the
option of the issuer at a predetermined price. If a convertible security held by the Fund is called for redemption, the Fund would be required to permit the issuer to redeem the security and convert it to underlying common stock, or would sell the
convertible security to a third party, which may have an adverse effect on the Fund&#146;s ability to achieve its investment objectives. The Fund generally would invest in convertible securities for their favorable price characteristics and total
return potential and would normally not exercise an option to convert unless the security is called or conversion is forced. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund may invest in <FONT
STYLE="white-space:nowrap">so-called</FONT> &#147;synthetic convertible securities,&#148; which are composed of two or more different securities whose investment characteristics, taken together, resemble those of convertible securities. For example,
the Fund may purchase a <FONT STYLE="white-space:nowrap">non-convertible</FONT> debt security and a warrant or option. The synthetic convertible differs from the true convertible security in several respects. Unlike a true convertible security,
which is a single security having a unitary market value, a synthetic convertible comprises two or more separate securities, each with its own market value. Therefore, the &#147;market value&#148; of a synthetic convertible is the sum of the values
of its fixed income component and its convertible component. For this reason, the values of a synthetic convertible and a true convertible security may respond differently to market fluctuations. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">38 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">More flexibility is possible in the assembly of a synthetic convertible security than in the purchase of a
convertible security. Although synthetic convertible securities may be selected where the two elements are issued by a single issuer, thus making the synthetic convertible security similar to the traditional convertible security, the character of a
synthetic convertible security allows the combination of components representing distinct issuers, when PIMCO believes that such a combination may better achieve the Fund&#146;s investment objectives. A synthetic convertible security also is a more
flexible investment in that its two components may be purchased separately. For example, the Fund may purchase a warrant for inclusion in a synthetic convertible security but temporarily hold short-term investments while postponing the purchase of a
corresponding bond pending development of more favorable market conditions. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">A holder of a synthetic convertible security faces the risk of a decline in
the price of the security or the level of the index or security involved in the convertible element, causing a decline in the value of the call option or warrant purchased to create the synthetic convertible security. Should the price of the stock
fall below the exercise price and remain there throughout the exercise period, the entire amount paid for the call option or warrant would be lost. Because a synthetic convertible security includes the income-producing element as well, the holder of
a synthetic convertible security also faces the risk that interest rates will rise, causing a decline in the value of the income-producing element. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The
Fund also may purchase synthetic convertible securities created by other parties, including convertible structured notes. Convertible structured notes are income-producing debentures linked to equity, and are typically issued by investment banks.
Convertible structured notes have the attributes of a convertible security; however, the investment bank that issues the convertible note, rather than the issuer of the underlying common stock into which the note is convertible, assumes credit risk
associated with the underlying investment, and the Fund in turn assumes credit risk associated with the convertible note. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:5%; font-size:12pt; font-family:Times New Roman"><B><I>Contingent Convertible Instruments.</I></B>&nbsp;Contingent convertible securities (&#147;CoCos&#148;) are a form of hybrid debt
security that are intended to either convert into equity or have their principal written down upon the occurrence of certain &#147;triggers.&#148; The triggers are generally linked to regulatory capital thresholds or regulatory actions calling into
question the issuing banking institution&#146;s continued viability as a going-concern. CoCos&#146; unique equity conversion or principal write-down features are tailored to the issuing banking institution and its regulatory requirements. Some
additional risks associated with CoCos include, but are not limited to: </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="3%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#9679;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"><I>Loss absorption risk.</I> CoCos have fully discretionary coupons. This means coupons can potentially be cancelled at the banking institution&#146;s discretion or at the request of the relevant regulatory authority in
order to help the bank absorb losses. </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:12pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="3%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#9679;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"><I>Subordinated instruments.</I> CoCos will, in the majority of circumstances, be issued in the form of subordinated debt instruments in order to provide the appropriate regulatory capital treatment prior to a
conversion. Accordingly, in the event of liquidation, dissolution or <FONT STYLE="white-space:nowrap">winding-up</FONT> of an issuer prior to a conversion having occurred, the rights and claims of the holders of the CoCos, such as the Fund, against
the issuer in respect of or arising under the terms of the CoCos shall generally rank junior to the claims of all holders of unsubordinated obligations of the issuer. In addition, if the CoCos are converted into the issuer&#146;s underlying equity
securities following a conversion event (i.e., a &#147;trigger&#148;), each holder will be subordinated due to their conversion from being the holder of a debt instrument to being the holder of an equity instrument. </TD></TR></TABLE>
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<TR>
<TD WIDTH="3%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#9679;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"><I>Market value will fluctuate based on unpredictable factors.</I> The value of CoCos is unpredictable and will be influenced by many factors including, without limitation: (i)&nbsp;the creditworthiness of the issuer
and/or fluctuations in such issuer&#146;s applicable capital ratios; (ii)&nbsp;supply and demand for the CoCos; (iii)&nbsp;general market conditions and available liquidity; and (iv)&nbsp;economic, financial and political events that affect the
issuer, its particular market or the financial markets in general. </TD></TR></TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Equity Securities </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund will not normally invest directly in common stocks of operating companies. However, the Fund may own and hold common stocks in its portfolio from
time to time in connection with a corporate action, the restructuring of a debt instrument, or through the conversion of a convertible security held by the Fund. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The market price of common stocks and other equity securities may go up or down, sometimes rapidly or unpredictably. Equity securities may decline in value
due to factors affecting equity securities markets generally, particular industries represented in those markets, or the issuer itself. The values of equity securities 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 or adverse investor sentiment generally. They 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. Equity securities generally have greater price volatility than fixed-income securities. These risks
are generally magnified in the case of equity investments in distressed companies. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Preferred Stock </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Preferred stock represents an equity interest in a company that generally entitles the holder to receive, in preference to the holders of other stocks such as
common stocks, dividends and a fixed share of the proceeds resulting from a liquidation of the company. Some preferred stocks also entitle their holders to receive additional liquidation proceeds on the same basis as holders of a company&#146;s
common stock, and thus also represent an ownership interest in that company. Preferred shares are subject to issuer-specific and market risks applicable generally to equity securities. The value of a company&#146;s preferred stock may fall as a
result of factors relating directly to that company&#146;s products or services. A preferred stock&#146;s value may also fall because of factors affecting not just the company, but companies in the same industry or in a number of different
industries, such as increases in production costs. The value of preferred stock may also be affected by changes in financial markets that are relatively unrelated to the company or its industry, such as changes in interest rates or currency exchange
rates. In addition, a company&#146;s preferred stock generally pays dividends only after the company makes required payments to holders of its bonds and other debt. For this reason, the value of preferred stocks will usually react more strongly than
bonds and other debt to actual or perceived changes in the company&#146;s financial condition or prospects. Preferred stocks of smaller companies may be more vulnerable to adverse developments than those of larger companies. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">40 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B><I>Adjustable Rate and Auction Preferred Stocks.</I></B> Typically, the dividend rate on an adjustable rate
preferred stock is determined prospectively each quarter by applying an adjustment formula established at the time of issuance of the stock. Although adjustment formulas vary among issues, they typically involve a fixed premium or discount relative
to rates on specified debt securities issued by the U.S. Treasury. Typically, an adjustment formula will provide for a fixed premium or discount adjustment relative to the highest base yield of three specified U.S. Treasury securities: the <FONT
STYLE="white-space:nowrap">90-day</FONT> Treasury bill, the <FONT STYLE="white-space:nowrap">10-year</FONT> Treasury note and the <FONT STYLE="white-space:nowrap">20-year</FONT> Treasury bond. The premium or discount adjustment to be added to or
subtracted from this highest U.S. Treasury base rate yield is fixed at the time of issue and cannot be changed without the approval of the holders of the stock. The dividend rate on another type of preferred stock in which the Fund may invest,
commonly known as auction preferred stocks, is adjusted at intervals that may be more frequent than quarterly, such as every 7 or 49 days, based on bids submitted by holders and prospective purchasers of such stocks and may be subject to stated
maximum and minimum dividend rates. The issues of most adjustable rate and auction preferred stocks currently outstanding are perpetual, but are redeemable after a specified date, or upon notice, at the option of the issuer. Certain issues supported
by the credit of a high-rated financial institution provide for mandatory redemption prior to expiration of the credit arrangement. No redemption can occur if full cumulative dividends are not paid. Although the dividend rates on adjustable and
auction preferred stocks are generally adjusted or reset frequently, the market values of these preferred stocks may still fluctuate in response to changes in interest rates. Market values of adjustable preferred stocks also may substantially
fluctuate if interest rates increase or decrease once the maximum or minimum dividend rate for a particular stock is approached. Auctions for U.S. auction preferred stocks have failed since early 2008, and the dividend rates payable on such
preferred shares since that time typically have been paid at their maximum applicable rate (typically a function of a reference rate of interest). PIMCO expects that auction preferred stocks will continue to pay dividends at their maximum applicable
rate for the foreseeable future and cannot predict whether or when the auction markets for auction preferred stocks may resume normal functioning. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B><I>Fixed Rate Preferred Stocks.</I></B> Some fixed rate preferred stocks in which the Fund may invest, known as perpetual preferred stocks, offer a fixed
return with no maturity date. Because they never mature, perpetual preferred stocks act like long-term bonds and can be more volatile than and more sensitive to changes in interest rates than other types of preferred stocks that have a maturity
date. The Fund may also invest in sinking fund preferred stocks. These preferred stocks also offer a fixed return, but have a maturity date and are retired or redeemed on a predetermined schedule. The shorter duration of sinking fund preferred
stocks makes them perform somewhat like intermediate-term bonds and they typically have lower yields than perpetual preferred stocks. </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Bank Obligations </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund may invest in bank capital securities of both <FONT STYLE="white-space:nowrap">non-U.S.</FONT> (foreign) and U.S. issuers. Bank capital securities
are issued by banks to help fulfill their regulatory capital requirements. There are three common types of bank capital: Lower Tier II, Upper Tier II and Tier I. Bank capital is generally, but not always, of investment grade quality. Upper Tier II
securities are commonly thought of as hybrids of debt and preferred stock. Upper Tier II securities are often perpetual (with no maturity date), callable and have a cumulative interest deferral feature. This means that under certain conditions, the
issuer bank can withhold payment of interest until a later date. However, such deferred interest payments generally earn interest. Tier I securities often take the form of trust preferred securities. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Bank obligations in which the Fund may invest include, without limitation, certificates of deposit, bankers&#146; acceptances and fixed time deposits.
Certificates of deposit are negotiable certificates that are issued against funds deposited in a commercial bank for a definite period of time and that earn a specified return. Bankers&#146; acceptances are negotiable drafts or bills of exchange,
normally drawn by an importer or exporter to pay for specific merchandise, which are &#147;accepted&#148; by a bank, meaning, in effect, that the bank unconditionally agrees to pay the face value of the instrument on maturity. Fixed time deposits
are bank obligations payable at a stated maturity date and bearing interest at a fixed rate. Fixed time deposits may be withdrawn on demand by the investor, but may be subject to early withdrawal penalties which vary depending upon market conditions
and the remaining maturity of the obligation. There are generally no contractual restrictions on the right to transfer a beneficial interest in a fixed time deposit to a third party, although there is generally no market for such deposits. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Obligations of foreign banks involve somewhat different investment risks than those affecting obligations of U.S. banks, including the possibilities that
their liquidity could be impaired because of future political and economic developments, that their obligations may be less marketable than comparable obligations of U.S. banks, that a foreign jurisdiction might impose withholding taxes on interest
income payable on those obligations, that foreign deposits may be seized or nationalized, that foreign governmental restrictions such as exchange controls may be adopted which might adversely affect the payment of principal and interest on those
obligations and that the selection of those obligations may be more difficult because there may be less publicly available information concerning foreign banks and the accounting, auditing and financial reporting standards, practices and
requirements applicable to foreign banks may differ from those applicable to U.S. banks. Foreign banks are not generally subject to examination by any U.S. Government agency or instrumentality. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Indebtedness, Loan Participations and Assignments </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The
Fund may purchase indebtedness and participations in commercial loans, as well as interests and/or servicing or similar rights in such loans. Such investments may be secured or unsecured and may be newly-originated (and may be specifically designed
for the Fund). Indebtedness is different from traditional debt securities in that debt securities are part of a large issue of securities to the public and indebtedness may not be a security, but may represent a specific commercial loan to a
borrower. Loan participations typically represent direct participation, together with other parties, in a loan to a corporate borrower, and generally are offered by banks or other financial institutions or lending syndicates. The Fund may
participate in such syndications, or can buy part of a loan, becoming a part lender. When purchasing indebtedness and loan participations, the Fund assumes the credit risk associated with the corporate borrower and may assume the credit risk
associated with an interposed bank or other financial intermediary. The indebtedness and loan participations in which the Fund may invest may not be rated by any nationally recognized rating service. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">42 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">A loan is often administered by an agent bank acting as agent for all holders. The agent bank administers the
terms of the loan, as specified in the loan agreement. In addition, the agent bank is normally responsible for the collection of principal and interest payments from the corporate borrower and the apportionment of these payments to the credit of all
institutions which are parties to the loan agreement. Unless, under the terms of the loan or other indebtedness, the Fund has direct recourse against the corporate borrower, the Fund may have to rely on the agent bank or other financial intermediary
to apply appropriate credit remedies against a corporate borrower. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">A financial institution&#146;s employment as agent bank might be terminated in the
event that it fails to observe a requisite standard of care or becomes insolvent. A successor agent bank would generally be appointed to replace the terminated agent bank, and assets held by the agent bank under the loan agreement should remain
available to holders of such indebtedness. However, if assets held by the agent bank for the benefit of the Fund were determined to be subject to the claims of the agent bank&#146;s general creditors, the Fund might incur certain costs and delays in
realizing payment on a loan or loan participation and could suffer a loss of principal and/or interest. In situations involving other interposed financial institutions (e.g., an insurance company or governmental agency) similar risks may arise. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Purchasers of loans and other forms of direct indebtedness depend primarily upon the creditworthiness of the corporate borrower for payment of principal and
interest. If the Fund does not receive scheduled interest or principal payments on such indebtedness, the Portfolio&#146;s share price and yield could be adversely affected. Loans that are fully secured offer the Fund more protection than an
unsecured loan in the event of <FONT STYLE="white-space:nowrap">non-payment</FONT> of scheduled interest or principal. However, there is no assurance that the liquidation of collateral from a secured loan would satisfy the corporate borrower&#146;s
obligation, or that the collateral can be liquidated. In the event of the bankruptcy of a borrower, the Fund could experience delays or limitations in its ability to realize the benefits of any collateral securing a loan. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund may invest in loan participations with credit quality comparable to that of issuers of its securities investments. Indebtedness of companies whose
creditworthiness is poor involves substantially greater risks, and may be highly speculative. Some companies may never pay off their indebtedness, or may pay only a small fraction of the amount owed. Consequently, when investing in indebtedness of
companies with poor credit, the Fund bears a substantial risk of losing the entire amount invested. The Fund may make investments in indebtedness and loan participations to achieve capital appreciation, rather than to seek income. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Loans and other types of direct indebtedness (which the Fund may originate, invest in or otherwise gain exposure to) may not be readily marketable and may be
subject to restrictions on resale. In some cases, negotiations involved in disposing of indebtedness may require weeks to complete. Consequently, some indebtedness may be difficult or impossible to dispose of readily at what the Investment Manager
believes to be a fair price. In addition, valuation of illiquid indebtedness involves a greater degree of judgment in determining the Fund&#146;s net asset value than if that value were based on available market quotations, and could result in
significant variations in the Fund&#146;s daily share price. At the same time, some loan interests are traded among certain financial institutions and accordingly may be deemed liquid. As the market for different types of indebtedness develops, the
liquidity of these instruments is expected to improve. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">43 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Investments in loans through a direct assignment of the financial institution&#146;s interests with respect to
the loan may involve additional risks to the Fund. The purchaser of an assignment typically succeeds to all the rights and obligations under the loan agreement with the same rights and obligations as the assigning lender. Assignments may, however,
be arranged through private negotiations between potential assignees and potential assignors, and the rights and obligations acquired by the purchaser of an assignment may differ from, and be more limited than, those held by the assigning lender. If
a loan is foreclosed, the Fund could become part owner of any collateral, and would bear the costs and liabilities associated with owning and disposing of the collateral. In addition, it is conceivable that under emerging legal theories of lender
liability, the Fund could be held liable as <FONT STYLE="white-space:nowrap">co-lender.</FONT> It is unclear whether loans and other forms of direct indebtedness offer securities law protections against fraud and misrepresentation. In the absence of
definitive regulatory guidance, the Fund relies on the Investment Manager&#146;s research in an attempt to avoid situations where fraud or misrepresentation could adversely affect the Fund. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">In determining whether to make a direct loan, the Fund will rely primarily upon the creditworthiness of the borrower and/or any collateral for payment of
interest and repayment of principal. In making a direct loan, the Fund is exposed to the risk that the borrower may default or become insolvent and, consequently, that the Fund will lose money on the loan. Furthermore, direct loans may subject the
Fund to liquidity and interest rate risk and certain direct loans may be deemed illiquid. Direct loans are not publicly traded and may not have a secondary market. The lack of a secondary market for direct loans may have an adverse impact on the
ability of the Fund to dispose of a direct loan and/or to value the direct loan. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">When engaging in direct lending, the Fund&#146;s performance may depend,
in part, on the ability of the Fund to originate loans on advantageous terms. In originating and purchasing loans, the Fund will compete with a broad spectrum of lenders. Increased competition for, or a diminishment in the available supply of,
qualifying loans could result in lower yields on such loans, which could reduce Fund performance. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">As part of its lending activities, the Fund may
originate loans to companies that are experiencing significant financial or business difficulties, including companies involved in bankruptcy or other reorganization and liquidation proceedings. Although the terms of such financing may result in
significant financial returns to the Fund, they involve a substantial degree of risk. The level of analytical sophistication, both financial and legal, necessary for successful financing to companies experiencing significant business and financial
difficulties is unusually high. Different types of assets may be used as collateral for the Fund&#146;s loans and, accordingly, the valuation of and risks associated with such collateral will vary by loan. There is no assurance that the Fund will
correctly evaluate the value of the assets collateralizing the Fund&#146;s loans or the prospects for a successful reorganization or similar action. In any reorganization or liquidation proceeding relating to a company that the Fund funds, the Fund
may lose all or part of the amounts advanced to the borrower or may be required to accept collateral with a value less than the amount of the loan advanced by the Fund or its affiliates to the borrower. Furthermore, in the event of a default by a
borrower, the Fund may have difficulty disposing of the assets used as collateral for a loan. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">44 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Various state licensing requirements could apply to the Fund with respect to investments in, or the origination
and servicing of, loans and similar assets. The licensing requirements could apply depending on the location of the borrower, the location of the collateral securing the loan, or the location where the Fund or PIMCO operates or has offices. In
states in which it is licensed, the Fund or PIMCO will be required to comply with applicable laws and regulations, including consumer protection and anti-fraud laws, which could impose restrictions on the Fund&#146;s or PIMCO&#146;s ability to take
certain actions to protect the value of its investments in such assets and impose compliance costs. Failure to comply with such laws and regulations could lead to, among other penalties, a loss of a Fund&#146;s or PIMCO&#146;s license, which in turn
could require the Fund to divest assets located in or secured by real property located in that state. These risks will also apply to issuers and entities in which the Fund invests that hold similar assets, as well as any origination company or
servicer in which the Fund owns an interest. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Loan origination and servicing companies are routinely involved in legal proceedings concerning matters that
arise in the ordinary course of their business. These legal proceedings range from actions involving a single plaintiff to class action lawsuits with potentially tens of thousands of class members. In addition, a number of participants in the loan
origination and servicing industry (including control persons of industry participants) have been the subject of regulatory actions by state regulators, including state Attorneys General, and by the federal government. Governmental investigations,
examinations or regulatory actions, or private lawsuits, including purported class action lawsuits, may adversely affect such companies&#146; financial results. To the extent the Fund seeks to engage in origination and/or servicing directly, or has
a financial interest in, or is otherwise affiliated with, an origination or servicing company, the Fund will be subject to enhanced risks of litigation, regulatory actions and other proceedings. As a result, the Fund may be required to pay legal
fees, settlement costs, damages, penalties or other charges, any or all of which could materially adversely affect the Fund and its investments. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Senior Loans </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">To the extent the Fund invests in senior
loans, the Fund may be subject to greater levels of credit risk, call risk, settlement risk and liquidity risk, than funds that do not invest in such securities. These instruments are considered predominantly speculative with respect to an
issuer&#146;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 instruments and
reduce the Fund&#146;s ability to sell these instruments at an advantageous time or price. An economic downturn would generally lead to a higher <FONT STYLE="white-space:nowrap">non-payment</FONT> rate and, a senior loan may lose significant market
value before a default occurs. The Fund may also be subject to greater levels of liquidity risk than funds that do not invest in senior loans. In addition, the senior loans in which the Fund invests may not be listed on any exchange and a secondary
market for such loans may be comparatively illiquid relative to markets for other more liquid fixed income securities. Consequently, transactions in senior loans may involve greater costs than transactions in more actively traded securities.
Restrictions on transfers in loan agreements, a lack of publicly-available information, irregular trading activity and wide bid/ask spreads among other factors, may, in certain circumstances, make senior loans difficult to sell at an advantageous
time or price than other types of securities or instruments. These factors may result in the Fund being unable to realize full value for the senior loans and/or may result in the Fund not receiving the proceeds from a sale of a senior loan for an
extended </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">45 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">
period after such sale, each of which could result in losses to the Fund. Senior loans may have extended trade settlement periods which may result in cash not being immediately available to the
Fund. If an issuer of a senior loan prepays or redeems the loan prior to maturity, the Fund will have to reinvest the proceeds in other senior loans or similar instruments that may pay lower interest rates. Because of the risks involved in investing
in senior loans, an investment in the Fund that invests in such instruments should be considered speculative. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Delayed Funding Loans and Revolving
Credit Facilities </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund may also enter into, or acquire participations in, delayed funding loans and revolving credit facilities. Delayed funding
loans and revolving credit facilities are borrowing arrangements in which the lender agrees to make loans up to a maximum amount upon demand by the borrower during a specified term. A revolving credit facility differs from a delayed funding loan in
that as the borrower repays the loan, an amount equal to the repayment may be borrowed again during the term of the revolving credit facility. Delayed funding loans and revolving credit facilities usually provide for floating or variable rates of
interest. These commitments may have the effect of requiring the Fund to increase its investment in a company at a time when it might not otherwise decide to do so (including a time when the company&#146;s financial condition makes it unlikely that
such amounts will be repaid). </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">To the extent that the Fund is committed to advance additional funds, it will at all times segregate assets, determined to
be liquid by PIMCO in accordance with procedures approved by the Board of Trustees, in an amount sufficient to meet such commitments. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund may invest
in delayed funding loans and revolving credit facilities with credit quality comparable to that of issuers of its securities investments. Delayed funding loans and revolving credit facilities may be subject to restrictions on transfer, and only
limited opportunities may exist to resell such instruments. As a result, the Fund may be unable to sell such investments at an opportune time or may have to resell them at less than fair market value. For a further discussion of the risks involved
in investing in loan participations and other forms of direct indebtedness see &#147;Indebtedness, Loan Participations and Assignments.&#148; Participation interests in revolving credit facilities will be subject to the limitations discussed in
&#147;Indebtedness, Loan Participations and Assignments.&#148; Delayed funding loans and revolving credit facilities are considered to be debt obligations for purposes of the Fund&#146;s investment restriction relating to the lending of funds or
assets by the Fund. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Zero-Coupon Bonds, <FONT STYLE="white-space:nowrap">Step-Ups</FONT> and <FONT STYLE="white-space:nowrap"><FONT
STYLE="white-space:nowrap">Payment-In-Kind</FONT></FONT> Securities </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund may invest directly or indirectly in
<FONT STYLE="white-space:nowrap">zero-coupon</FONT> securities, <FONT STYLE="white-space:nowrap">&#147;step-ups&#148;</FONT> and PIKs. Zero-coupon securities are debt obligations that do not entitle the holder to any periodic payments of interest
either for the entire life of the obligation or for an initial period after the issuance of the obligations. Like <FONT STYLE="white-space:nowrap">zero-coupon</FONT> bonds, <FONT STYLE="white-space:nowrap">&#147;step-up&#148;</FONT> bonds pay no
interest initially but eventually begin to pay a coupon rate prior to maturity, which rate may increase at stated intervals during the life of the security. PIKs are debt obligations that pay &#147;interest&#148; in the form of other debt
obligations instead of cash. Each of these instruments is normally issued and traded at a deep discount from face value. The amount of the discount varies depending on such factors as the </P>
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time remaining until maturity of the securities, prevailing interest rates, the liquidity of the security and the perceived credit quality of the issuer. The market prices of <FONT
STYLE="white-space:nowrap">zero-coupon</FONT> bonds, <FONT STYLE="white-space:nowrap">step-ups</FONT> and PIKs generally are more volatile than the market prices of debt instruments that pay interest currently and in cash and are likely to respond
to changes in interest rates to a greater degree than do other types of securities having similar maturities and credit quality. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">In order to satisfy a
requirement for qualification as a &#147;regulated investment company&#148; under the Code, an investment company, such as the Fund, must distribute each year at least 90% of its net investment income, including the original issue discount accrued
on <FONT STYLE="white-space:nowrap">zero-coupon</FONT> bonds, <FONT STYLE="white-space:nowrap">step-ups</FONT> and PIKs. Because the Fund will not, on a current basis, receive cash payments from the issuer of these securities in respect of any
accrued original issue discount, in some years, the Fund may have to sell other portfolio holdings in order to obtain cash to satisfy the distribution requirements under the Code even though investment considerations might otherwise make it
undesirable for the Fund to sell securities at such time. Under many market conditions, investments in <FONT STYLE="white-space:nowrap">zero-coupon</FONT> bonds, <FONT STYLE="white-space:nowrap">step-ups</FONT> and PIKs may be illiquid, making it
difficult for the Fund to dispose of them or determine their current value. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Variable and Floating Rate Debt Securities </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund may invest in floating rate debt instruments, including Senior Loans (described in more detail above). Variable and floating rate securities are
securities that pay interest at rates that adjust whenever a specified interest rate changes, float at a fixed margin above a generally recognized base lending rate and/or reset or are redetermined (e.g., pursuant to an auction) on specified dates
(such as the last day of a month or calendar quarter). These instruments may include, without limitation, variable-rate preferred stock, bank loans, money market instruments and certain types of mortgage-backed and other asset-backed instruments.
Due to their variable- or floating-rate features, these instruments will generally pay higher levels of income in a rising interest rate environment and lower levels of income as interest rates decline. For the same reason, the market value of a
variable- or floating-rate instrument is generally expected to have less sensitivity to fluctuations in market interest rates than a fixed-rate instrument, although the value of a floating-rate instrument may nonetheless decline as interest rates
rise and due to other factors, such as changes in credit quality. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund may invest in floating rate debt instruments (&#147;floaters&#148;) and engage
in credit spread trades. The interest rate on a floater is a variable rate which is tied to another interest rate, such as a money-market index or U.S. Treasury bill rate. The interest rate on a floater resets periodically, typically every six
months. While, because of the interest rate reset feature, floaters provide the Fund with a certain degree of protection against rises in interest rates, the Fund will participate in any declines in interest rates as well. A credit spread trade is
an investment position relating to a difference in the prices or interest rates of two securities or currencies where the value of the investment position is determined by movements in the difference between the prices or interest rates, as the case
may be, of the respective securities or currencies. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund may also invest without limit in inverse floating rate debt instruments (&#147;inverse
floaters&#148;). The interest rate on an inverse floater resets in the opposite direction from the market rate of interest to which the inverse floater is indexed. An inverse floater may exhibit greater
</P>
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price volatility than a fixed rate obligation of similar credit quality. See &#147;Mortgage-Related and Other Asset-Backed Instruments&#148; above. The Fund&#146;s investments in variable- and
floating-rate securities may require the Fund to accrue and distribute income not yet received. As a result, in order to generate cash to make the requisite distributions, the Fund may be required to sell securities in its portfolio that it would
otherwise have continued to hold. See &#147;Taxation.&#148; </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Inflation-Indexed Bonds </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund may invest in inflation-indexed bonds. Inflation-indexed bonds are fixed income securities whose principal value is periodically adjusted according
to the rate of inflation. Two structures are common. The U.S. Treasury and some other issuers utilize a structure that accrues inflation into the principal value of the bond. Many other issuers pay out the Consumer Price Index accruals as part of a
semiannual coupon. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Inflation-indexed bonds issued by the U.S. Treasury have maturities of approximately five, ten or thirty years, although it is
possible that securities with other maturities will be issued in the future. The U.S. Treasury securities pay interest on a semi-annual basis equal to a fixed percentage of the inflation-adjusted principal amount. For example, if the Fund purchased
an inflation-indexed bond with a par value of $1,000 and a 3% real rate of return coupon (payable 1.5% semi-annually), and the rate of inflation over the first six months was 1%, the <FONT STYLE="white-space:nowrap">mid-year</FONT> par value of the
bond would be $1,010 and the first semi-annual interest payment would be $15.15 ($1,010 times 1.5%). If inflation during the second half of the year resulted in the whole year&#146;s inflation equaling 3%, the <FONT STYLE="white-space:nowrap"><FONT
STYLE="white-space:nowrap">end-of-year</FONT></FONT> par value of the bond would be $1,030 and the second semi-annual interest payment would be $15.45 ($1,030 times 1.5%). </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">If the periodic adjustment rate measuring inflation falls, the principal value of 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 a U.S. Treasury
inflation-indexed bond, even during a period of deflation, although the inflation-adjusted principal received could be less than the inflation-adjusted principal that had accrued to the bond at the time of purchase. However, the current market value
of the bonds is not guaranteed and will fluctuate. The Fund may also invest in other inflation-related bonds that may or may not provide a similar guarantee. If a guarantee of principal is not provided, the adjusted principal value of the bond
repaid at maturity may be less than the original principal amount. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The value of inflation-indexed bonds is expected to change in response to changes in
real interest rates. Real interest rates in turn are tied to the relationship between nominal interest rates and the rate of inflation. Therefore, if the rate of inflation rises at a faster rate than nominal interest rates, real interest rates might
decline, leading to an increase in value of inflation-indexed bonds. In contrast, if nominal interest rates increase at a faster rate than inflation, real interest rates might rise, leading to a decrease in value of inflation-indexed bonds. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">While these securities are expected to provide protection from long-term inflationary trends, short-term increases in inflation may lead to a decline in
value. If interest rates rise due to reasons other than inflation (for example, due to changes in currency exchange rates), investors in these securities may not be protected to the extent that the increase is not reflected in the bond&#146;s
inflation measure. </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The periodic adjustment of U.S. inflation-indexed bonds is tied to the Consumer Price Index for All Urban
Consumers <FONT STYLE="white-space:nowrap">(&#147;CPI-U&#148;),</FONT> which is not seasonably adjusted and which is calculated monthly by the U.S. Bureau of Labor Statistics. The <FONT STYLE="white-space:nowrap">CPI-U</FONT> is a measurement of
changes in the cost of living, made up of components such as housing, food, transportation and energy. Inflation-indexed bonds issued by a <FONT STYLE="white-space:nowrap">non-U.S.</FONT> government are generally adjusted to reflect a comparable
inflation index calculated by that government. There can be no assurance that the <FONT STYLE="white-space:nowrap">CPI-U</FONT> or any <FONT STYLE="white-space:nowrap">non-U.S.</FONT> inflation index will accurately measure the real rate of
inflation in the prices of goods and services. Moreover, there can be no assurance that the rate of inflation in a <FONT STYLE="white-space:nowrap">non-U.S.</FONT> country will be correlated to the rate of inflation in the United States. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">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, the Fund may be required to sell securities in its portfolio that it would otherwise have continued to hold. See &#147;Taxation.&#148; </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Event-Linked Bonds </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund may obtain event-linked
exposure by investing in &#147;event-linked bonds,&#148; or &#147;event-linked swaps,&#148; or by implementing &#147;event-linked strategies.&#148; Event-linked exposure results in gains that typically are contingent on the <FONT
STYLE="white-space:nowrap">non-occurrence</FONT> of a specific &#147;trigger&#148; event, such as a hurricane, earthquake or other physical or weather-related phenomena. Some event-linked bonds are commonly referred to as &#147;catastrophe
bonds.&#148; They may be issued by government agencies, insurance companies, reinsurers, special purpose corporations or other <FONT STYLE="white-space:nowrap">on-shore</FONT> or <FONT STYLE="white-space:nowrap">off-shore</FONT> entities (such
special purpose entities are created to accomplish a narrow and well-defined objective, such as the issuance of a note in connection with a reinsurance transaction). If a trigger event causes losses exceeding a specific amount in the geographic
region and time period specified in a bond, the Fund may lose a portion or all of its principal invested in the bond. If no trigger event occurs, the Fund will recover its principal plus interest. For some event-linked bonds, the trigger event or
losses may be based on company-wide losses, index-portfolio losses, industry indices or readings of scientific instruments rather than specified actual losses. Often the event-linked bonds provide for extensions of maturity that are mandatory, or
optional at the discretion of the issuer, in order to process and audit loss claims in those cases where a trigger event has, or possibly has, occurred. An extension of maturity may increase volatility. In addition to the specified trigger events,
event-linked bonds also may expose the Fund to certain unanticipated risks including but not limited to issuer risk, credit risk, counterparty risk, adverse regulatory or jurisdictional interpretations and adverse tax consequences. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Event-linked bonds are a relatively new type of financial instrument. As such, there is no significant trading history for many of these securities, and there
can be no assurance that a liquid market in these instruments will develop. Lack of a liquid market may impose the risk of higher transaction costs and the possibility that the Fund may be forced to liquidate positions when it would not be
advantageous to do so. Event-linked bonds are typically rated, and the Fund will only invest in event-linked bonds that meet the credit quality requirements for the Fund. </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Derivative Instruments </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund may (but is not required to) use a variety of other derivative instruments (including both long and short positions) in an attempt to enhance the
Fund&#146;s investment returns, to hedge against market and other risks in the Fund, and/or market exposure with reduced transaction costs. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Generally,
derivatives are financial contracts whose value depends on, or is derived from, the value of an underlying asset, reference rate or index and may relate to, among other things, stocks, bonds, interest rates, currencies or currency exchange rates,
commodities, related indexes and other assets. The following describes certain derivative instruments and products in which the Fund may invest and risks associated therewith. The derivatives market is always changing and the Fund may invest in
derivatives other than those shown below. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">In pursuing their individual investment objectives, the Fund may purchase and sell (write) both put options and
call options on securities, swap agreements, securities indexes, commodity indexes and foreign currencies, and enter into interest rate, foreign currency, index and commodity futures contracts and purchase and sell options on such futures contracts
(&#147;futures options&#148;) for hedging purposes or as part of their overall investment strategies. The Fund also may purchase and sell foreign currency options for purposes of increasing exposure to a foreign currency or to shift exposure to
foreign currency fluctuations from one country to another. The Fund also may enter into swap agreements with respect to interest rates, commodities, indexes of securities or commodities, and to the extent it may invest in foreign currency
denominated securities, may enter into swap agreements with respect to foreign currencies. The Fund may invest in structured notes. If other types of financial instruments, including other types of options, futures contracts, or futures options are
traded in the future, the Fund may also use those instruments, provided that their use is consistent with the Fund&#146;s investment objectives. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The
value of some derivative instruments in which the Fund invest may be particularly sensitive to changes in prevailing interest rates, and, like the other investments of the Fund, the ability of the Fund to successfully utilize these instruments may
depend in part upon the ability of PIMCO to forecast interest rates and other economic factors correctly. If PIMCO incorrectly forecasts such factors and has taken positions in derivative instruments contrary to prevailing market trends, the Fund
could be exposed to the risk of loss. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund might not employ any of the strategies described below, and no assurance can be given that any strategy
used will succeed. If PIMCO incorrectly forecasts interest rates, market values or other economic factors in using a derivatives strategy for the Fund, the Fund might have been in a better position if it had not entered into the transaction at all.
The use of these strategies involves certain special risks, including a possible imperfect correlation, or even no correlation, between price movements of derivative instruments and price movements of related investments. 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 related investments or otherwise, due to the possible inability of the
Fund to purchase or sell a portfolio security at a time that otherwise would be favorable or the possible need to sell a portfolio security at a disadvantageous time because the Fund is required to maintain asset
</P>
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coverage or offsetting positions in connection with transactions in derivative instruments, and the possible inability of the Fund to close out or to liquidate its derivatives positions. In
addition, the Fund&#146;s use of such instruments may cause the Fund to realize higher amounts of short-term capital gains (generally taxed at ordinary income tax rates) than if it had not used such instruments. If the Fund gains exposure to an
asset class using derivative instruments backed by a collateral portfolio of fixed income instruments, changes in the value of the fixed income instruments may result in greater or lesser exposure to that asset class than would have resulted from a
direct investment in securities comprising that asset class. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Participation in the markets for derivative instruments involves investment risks and
transaction costs to which the Fund 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 the Fund incorrectly
forecasts the value and/or creditworthiness of securities, currencies, interest rates, counterparties or other economic factors involved in a derivative transaction, the Fund might have been in a better position if the Fund 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
the Fund and its counterparty and certain derivative transactions may be terminated by the counterparty or the Fund, as the case may be, upon the occurrence of certain Fund-related or counterparty-related events, which may result in losses or gains
to the Fund based on the market value of the derivative transactions entered into between the Fund and the counterparty. In addition, such early terminations may result in taxable events and accelerate gain or loss recognition for tax purposes. It
may not be possible for the Fund to modify, terminate, or offset the Fund&#146;s obligations or the Fund&#146;s exposure to the risks associated with a derivative transaction prior to its termination or maturity date, which may create a possibility
of increased volatility and/or decreased liquidity to the Fund. Upon the expiration or termination of a particular contract, the Fund may wish to retain the Fund&#146;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, which could cause the Fund not to be able to maintain certain desired investment
exposures or not to be able to hedge other investment positions or risks, which could cause losses to the Fund. Furthermore, after such an expiration or termination of a particular contract, the Fund may have fewer counterparties with which to
engage in additional derivative transactions, which could lead to potentially greater counterparty risk exposure to one or more counterparties and which could increase the cost of entering into certain derivatives. In such cases, the Fund may lose
money. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund may engage in investment strategies, including the use of derivatives, to, among other things, generate current, distributable income
without regard to possible declines in the Fund&#146;s net asset value. The Fund&#146;s income and gain-generating strategies, including certain derivatives strategies, may generate current income and gains for distributions, which will generally be
taxable, even in situations when the Fund has experienced a decline in net assets, including losses due to adverse changes in securities markets or the Fund&#146;s portfolio of investments, including derivatives. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Also, suitable derivative and/or hedging transactions may not be available in all circumstances, and there can be no assurance that the Fund will be able to
identify or employ a desirable derivative and/or hedging transaction at any time or from time to time or, if a strategy is used, that it will be successful. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">51 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">As further described below under &#147;Additional Risk Factors in Cleared Derivatives Transactions,&#148; federal
legislation has been recently enacted in the U.S. that provides for new clearing, margin, reporting and registration requirements for participants in the derivatives market. While the ultimate impact is not yet clear, these changes could restrict
and/or impose significant costs or other burdens upon the Fund&#146;s ability to participate in derivatives transactions. Similarly, these changes could impose limits or restrictions on the counterparties with which the Fund engages in derivatives
transactions. As a result, the Fund may be unable to use certain derivative instruments or otherwise execute its investment strategy. These risks may be particularly acute to the extent the Fund use commodity-related derivative instruments. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">For purposes of the Fund&#146;s investment policies and restrictions, the Fund may value derivative instruments at market value, notional value or full
exposure value (<I>i.e.</I>, the sum of the notional amount for the contract plus the market value). For example, the Fund may value credit default swaps at full exposure value for purposes of the Fund&#146;s credit quality guidelines because such
value reflects the Fund&#146;s actual economic exposure during the term of the credit default swap agreement. In this context, both the notional amount and the market value may be positive or negative depending on whether the Fund is selling or
buying protection through the credit default swap. The manner in which certain securities or other instruments are valued by the Fund for purposes of applying investment policies and restrictions may differ from the manner in which those investments
are valued by other types of investors. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B><I>Options on Securities and Indexes. </I></B>The Fund may purchase and sell both put and call options on
equity, fixed income or other securities or indexes in standardized contracts traded on foreign or domestic securities exchanges, boards of trade, or similar entities, or quoted on the National Association of Securities Dealers Automated Quotations
(&#147;NASDAQ&#148;) System or on a regulated foreign <FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">over-the-counter</FONT></FONT> (&#147;OTC&#148;) market, and agreements, sometimes called cash puts, which may accompany the
purchase of a new issue of bonds from a dealer. Among other reasons, the Fund may purchase put options to protect holdings in an underlying or related security against a decline in market value, and may purchase call options to protect against
increases in the prices of securities it intends to purchase pending its ability to invest in such securities in an orderly manner. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">An option on a
security (or index) is a contract that gives the holder of the option, in return for a premium, the right to buy from (in the case of a call) or sell to (in the case of a put) the writer of the option the security underlying the option (or the cash
value of the index) at a specified exercise price, often at any time during the term of the option. The writer of an option on a security has the obligation upon exercise of the option to deliver the underlying security upon payment of the exercise
price or to pay the exercise price upon delivery of the underlying security. Some put options written by the Fund may be primarily for the purpose of providing liquidity to the counterparty and may be structured to have an exercise price that is
less than the market value of the underlying securities that would be received by the Fund. Upon exercise, the writer of an option on an index is obligated to pay the difference between the cash value of the index and the exercise price multiplied
by the specified multiplier for the index option. An index is designed to reflect features of a particular financial or securities market, a specific group of financial instruments or securities, or certain economic indicators. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund will write call options and put options only if they are &#147;covered.&#148; In the case of a call option on a security, the option is
&#147;covered&#148; if the Fund owns the security underlying the call or has an absolute and immediate right to acquire that security without additional cash consideration (or, if additional cash consideration is required, cash or other assets
determined to be liquid by PIMCO in accordance with procedures approved by the Board of Trustees in such amount are segregated or &#147;earmarked&#148;) upon conversion or exchange of other securities held by the Fund. For a call option on an index,
the option is covered if the Fund maintains with its custodian assets determined to be liquid by PIMCO in accordance with procedures approved by the Board of Trustees in an amount equal to the Fund&#146;s net obligation under the option. A call
option is also covered if the Fund holds a call on the same security or index as the call written </P>
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where the exercise price of the call held is (i)&nbsp;equal to or less than the exercise price of the call written, or (ii)&nbsp;greater than the exercise price of the call written, provided the
difference is maintained by the Fund in segregated or &#147;earmarked&#148; assets determined to be liquid by PIMCO in accordance with procedures approved by the Board of Trustees. A put option on a security or an index is &#147;covered&#148; if the
Fund segregates or &#147;earmarks&#148; assets determined to be liquid by PIMCO in accordance with procedures approved by the Board of Trustees equal to the exercise price. A put option is also covered if the Fund holds a put on the same security or
index as the put written where the exercise price of the put held is (i)&nbsp;equal to or greater than the exercise price of the put written, or (ii)&nbsp;less than the exercise price of the put written, provided the difference is maintained by the
Fund in segregated or &#147;earmarked&#148; assets determined to be liquid by PIMCO in accordance with procedures approved by the Board of Trustees. Obligations under written call and put options so covered will not be construed to be &#147;senior
securities&#148; for purposes of the Fund&#146;s investment restrictions concerning senior securities and borrowings. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">If an option written by the Fund
expires unexercised, the Fund realizes a capital gain equal to the premium received at the time the option was written. If an option purchased by the Fund expires unexercised, the Fund realizes a capital loss equal to the premium paid. Prior to the
earlier of exercise or expiration, an exchange-traded option may be closed out by an offsetting purchase or sale of an option of the same series (type, exchange, underlying security or index, exercise price, and expiration). There can be no
assurance, however, that a closing purchase or sale transaction can be effected when the Fund desires. In addition, the Fund may sell put or call options it has previously purchased, which could result in a net gain or loss depending on whether the
amount realized on the sale is more or less than the premium and other transaction costs paid on the put or call option which is sold. Prior to the exercise or expiration, an option may be closed out by an offsetting purchase or sale of an option of
the same series. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund will realize a capital gain from a closing purchase transaction if the cost of the closing option is less than the premium
received from writing the option, or, if it is more, the Fund will realize a capital loss. If the premium received from a closing sale transaction is more than the premium paid to purchase the option, the Fund will realize a capital gain or, if it
is less, the Fund will realize a capital loss. The principal factors affecting the market value of a put or a call option include supply and demand, interest rates, the current market price of the underlying security or index in relation to the
exercise price of the option, the volatility of the underlying security or index, and the time remaining until the expiration date. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The premium paid for
a put or call option purchased by the Fund is an asset of the Fund. The premium received for an option written by the Fund is recorded as a deferred credit. The value of an option purchased or written is marked to market daily and is valued in
accordance with the Fund&#146;s valuation policies and procedures. See &#147;Net Asset Value&#148; below. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B><I>OTC Options</I></B><B>. </B>The staff of
the SEC has taken the position that purchased OTC options and the assets used as cover for written OTC options should generally be treated as illiquid. However, the staff of the SEC has also taken the position that the determination of whether a
particular instrument is liquid should be made under guidelines and standards established by a fund&#146;s board of trustees. The SEC staff has provided examples of factors that may be taken into account in determining whether a particular
instrument should be treated as liquid. Pursuant to policies adopted by the Fund&#146;s Board of Trustees, purchased OTC options and the assets used as cover for OTC options written by the Fund may be treated as liquid under certain circumstances,
such as when PIMCO has the contractual right to terminate or close out the OTC option on behalf of the Fund within seven days. These policies are not fundamental policies of the Fund and may be changed or modified by the Board of Trustees without
the approval of shareholders, provided that any such change or modification will be consistent with applicable positions of the SEC staff. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">53 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B><I>Risks Associated with Options on Securities and Indexes. </I></B>There are several risks associated with
transactions in options on securities and on indexes. For example, there are significant differences between the securities and options markets that could result in an imperfect correlation between these markets, causing a given transaction not to
achieve its objectives. A decision as to whether, when and how to use options involves the exercise of skill and judgment, and even a well-conceived transaction may be unsuccessful to some degree because of market behavior or unexpected events. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">During the option period, the covered call writer has, in return for the premium on the option, given up the opportunity to profit from a price increase in
the underlying security above the exercise price, but, as long as its obligation as a writer continues, has retained the risk of loss should the price of the underlying security decline. The writer of an option often has no control over the time
when it may be required to fulfill its obligation as a writer of the option. Once an option writer has received an exercise notice, it cannot effect a closing purchase transaction in order to terminate its obligation under the option and must
deliver the underlying security at the exercise price. To the extent the Fund writes a put option, the Fund has assumed the obligation during the option period to purchase the underlying investment from the put buyer at the option&#146;s exercise
price if the put buyer exercises its option, regardless of whether the value of the underlying investment falls below the exercise price. This means that the Fund that writes a put option may be required to take delivery of the underlying investment
and make payment for such investment at the exercise price. This may result in losses to the Fund and may result in the Fund holding the underlying investment for some period of time when it is disadvantageous to do so. If a put or call option
purchased by the Fund is not sold when it has remaining value, and if the market price of the underlying security remains equal to or greater than the exercise price (in the case of a put), or remains less than or equal to the exercise price (in the
case of a call), the Fund will lose its entire investment in the option. Also, where a put or call option on a particular security is purchased to hedge against price movements in a related security, the price of the put or call option may move more
or less than the price of the related security. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">There can be no assurance that a liquid market will exist when the Fund seeks to close out an option
position. If the Fund were unable to close out an option that it had purchased on a security, it would have to exercise the option in order to realize any profit or the option may expire worthless. If the Fund were unable to close out a covered call
option that it had written on a security, it would not be able to sell the underlying security unless the option expired without exercise. As the writer of a covered call option, the Fund forgoes, during the option&#146;s life, the opportunity to
profit from increases in the market value of the security covering the call option above the sum of the premium and the exercise price of the call. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">If
trading were suspended in an option purchased by the Fund, the Fund would not be able to close out the option. If restrictions on exercise were imposed, the Fund might be unable to exercise an option it has purchased. Except to the extent that a
call option on an index written by the Fund is covered by an option on the same index purchased by the Fund, movements in the index may result in a loss to the Fund; however, such losses may be mitigated by changes in the value of the Fund&#146;s
securities during the period the option was outstanding. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">54 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">To the extent that the Fund writes a call option on a security it holds in its portfolio and intends to use such
security as the sole means of &#147;covering&#148; its obligation under the call option, the Fund has, in return for the premium on the option, given up the opportunity to profit from a price increase in the underlying security above the exercise
price during the option period, but, as long as its obligation under such call option continues, has retained the risk of loss should the price of the underlying security decline. If the Fund were unable to close out such a call option, the Fund
would not be able to sell the underlying security unless the option expired without exercise. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">In the case of a written call option on a securities index,
the Fund will own corresponding securities whose historic volatility correlates with that of the index. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B><I>Foreign Currency Options</I></B>. To the
extent the Fund invests in foreign currency-denominated securities, it may buy or sell put and call options on foreign currencies as a hedge against changes in the value of the U.S. dollar (or another currency) in relation to a foreign currency in
which the Fund&#146;s securities may be denominated. In addition, each of the Fund may buy or sell put and call options on foreign currencies either on exchanges or in the OTC market. A put option on a foreign currency gives the purchaser of the
option the right to sell a foreign currency at the exercise price until the option expires. A call option on a foreign currency gives the purchaser of the option the right to purchase the currency at the exercise price until the option expires.
Currency options traded on U.S. or other exchanges may be subject to position limits which may limit the ability of the Fund to reduce foreign currency risk using such options. OTC options differ from traded options in that they are <FONT
STYLE="white-space:nowrap">two-party</FONT> contracts with price and other terms negotiated between buyer and seller, and generally do not have as much market liquidity as exchange-traded options. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B><I>Futures Contracts and Options on Futures Contracts</I></B>. A futures contract is an agreement to buy or sell a security or commodity for a set price on
a future date. These contracts are traded on exchanges, so that, in most cases, a party can close out its position on the exchange for cash, without delivering the security or commodity. An option on a futures contract gives the holder of the option
the right to buy (or sell) a position in a futures contract to the writer of the option, at a specified price and on or before a specified expiration date. The Fund may invest in futures or options on futures with respect to interest rates, foreign
currencies, securities or commodity indexes. The Fund may invest in foreign exchange futures contracts and options thereon (&#147;futures options&#148;) that are traded on a U.S. or foreign exchange or board of trade, or similar entity, or quoted on
an automated quotation system as an adjunct to their securities activities. In addition, the Fund may purchase and sell futures contracts on various securities indexes (&#147;Index Futures&#148;) and related options for hedging purposes and for
investment purposes. The Fund purchase and sale of Index Futures is limited to contracts and exchanges which have been approved by the CFTC. Through the use of Index Futures and related options, the Fund may diversify risk in its portfolio without
incurring the substantial brokerage costs which may be associated with investment in the securities of multiple issuers. The Fund may also avoid potential market and liquidity problems which may result from increases in positions already held by the
Fund. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">An interest rate, commodity, foreign currency or index futures contract provides for the future sale or purchase of a specified quantity of a
financial instrument, commodity, foreign currency or the cash value of an index at a specified price and time. An Index Future is an agreement pursuant to which a party agrees to take or make delivery of an amount of cash equal to the
</P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">55 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">
difference between the value of a securities index (&#147;Index&#148;) at the close of the last trading day of the contract and the price at which the index contract was originally written.
Although the value of an Index might be a function of the value of certain specified securities, no physical delivery of these securities is made. A unit is the value of the relevant Index from time to time. Entering into a contract to buy units is
commonly referred to as buying or purchasing a contract or holding a long position in an Index. Index Futures contracts can be traded through all major commodity brokers. The Fund will ordinarily be able to close open positions on the futures
exchange on which Index Futures are then traded at any time up to and including the expiration day. As described below, the Fund will be required to segregate initial margin in the name of the futures broker upon entering into an Index Future.
Variation margin will be paid to and received from the broker on a daily basis as the contracts are marked to market. For example, when the Fund has purchased an Index Future and the price of the relevant Index has risen, that position will have
increased in value and the Fund will receive from the broker a variation margin payment equal to that increase in value. Conversely, when the Fund has purchased an Index Future and the price of the relevant Index has declined, the position would be
less valuable and the Fund would be required to make a variation margin payment to the broker. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund may close open positions on the futures exchanges
on which Index Futures are traded at any time up to and including the expiration day. All positions which remain open at the close of the last business day of the contract&#146;s life are required to settle on the next business day (based upon the
value of the relevant index on the expiration day), with settlement made with the appropriate clearing house. Positions in Index Futures may be closed out by the Fund only on the futures exchanges upon which the Index Futures are then traded. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">A public market exists in futures contracts covering a number of indexes as well as financial instruments and foreign currencies, including, but not limited
to: the S&amp;P 500; the S&amp;P Midcap 400; the Nikkei 225; the Markit CDX credit index; the iTraxx credit index; U.S. Treasury bonds; U.S. Treasury notes; U.S. Treasury bills; <FONT STYLE="white-space:nowrap">90-day</FONT> commercial paper; bank
certificates of deposit; Eurodollar certificates of deposit; the Australian dollar; the Canadian dollar; the British pound; the Japanese yen; the Swiss franc; the Mexican peso; and certain multinational currencies, such as the euro. It is expected
that other futures contracts will be developed and traded in the future. Certain futures contracts on indexes, financial instruments or foreign currencies may represent new investment products that lack track records. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund might use financial futures contracts to hedge against anticipated changes in interest rates that might adversely affect either the value of the
Fund&#146;s securities or the price of the securities which the Fund intends to purchase. The Fund&#146;s hedging activities may include sales of futures contracts as an offset against the effect of expected increases in interest rates, and
purchases of futures contracts as an offset against the effect of expected declines in interest rates. Although other techniques could be used to reduce the Fund&#146;s exposure to interest rate fluctuations, the Fund may be able to hedge its
exposure more effectively and perhaps at a lower cost by using futures contracts and futures options. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund may also invest in commodity futures
contracts and options thereon. A commodity futures contract is an agreement to buy or sell a commodity, such as an energy, agricultural or metal commodity at a later date at a price and quantity agreed-upon when the contract is bought or sold. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">56 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund may purchase and write call and put futures options. Futures options possess many of the same
characteristics as options on securities and indexes (discussed above). A futures option gives the holder the right, in return for the premium paid, to assume a long position (call) or short position (put) in a futures contract at a specified
exercise price at any time during the period of the option. Upon exercise of a call option, the holder acquires a long position in the futures contract and the writer is assigned the opposite short position. In the case of a put option, the opposite
is true. A call option is &#147;in the money&#148; if the value of the futures contract that is the subject of the option exceeds the exercise price. A put option is &#147;in the money&#148; if the exercise price exceeds the value of the futures
contract that is the subject of the option. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">When a purchase or sale of a futures contract is made by the Fund, the Fund is required to segregate a
specified amount of assets determined to be liquid by PIMCO in accordance with procedures approved by the Board of Trustees (&#147;initial margin&#148;). The margin required for a futures contract is set by the exchange on which the contract is
traded and may be modified during the term of the contract. Margin requirements on foreign exchanges may be different than U.S. exchanges. The initial margin is in the nature of a performance bond or good faith deposit on the futures contract which
is returned to the Fund upon termination of the contract, assuming all contractual obligations have been satisfied. The Fund expects to earn interest income on its initial margin deposits. A futures contract held by the Fund is valued daily at the
official settlement price of the exchange on which it is traded. Each day the Fund pays or receives cash, called &#147;variation margin,&#148; equal to the daily change in value of the futures contract. This process is known as &#147;marking to
market.&#148; Variation margin does not represent a borrowing or loan by the Fund but is instead a settlement between the Fund and the broker of the amount one would owe the other if the futures contract expired. In computing daily net asset value,
the Fund will mark to market its open futures positions. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund is also required to deposit and maintain margin with respect to put and call options on
futures contracts written by it. Such margin deposits will vary depending on the nature of the underlying futures contract (and the related initial margin requirements), the current market value of the option, and other futures positions held by the
Fund. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Although some futures contracts call for making or taking delivery of the underlying securities or commodities, generally these obligations are
closed out prior to delivery by offsetting purchases or sales of matching futures contracts (i.e., with the same exchange, underlying security or index, and delivery month). Closing out a futures contract sale is effected by purchasing a futures
contract for the same aggregate amount of the specific type of financial instrument or commodity with the same delivery date. If an offsetting purchase price is less than the original sale price, the Fund realizes a capital gain, or if it is more,
the Fund realizes a capital loss. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Conversely, if an offsetting sale price is more than the original purchase price, the Fund realizes a capital gain, or
if it is less, the Fund realizes a capital loss. Any transaction costs must also be included in these calculations. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund may write covered straddles
consisting of a call and a put written on the same underlying futures contract. A straddle will be covered when sufficient assets are deposited to meet the Fund&#146;s immediate obligations. The Fund may use the same liquid assets to cover both the
call and put options where the exercise price of the call and put are the same, or the exercise price of the call is higher than that of the put. In such cases, the Fund will also segregate liquid assets equivalent to the amount, if any, by which
the put is &#147;in the money.&#148; </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">57 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B><I>Limitations on Use of Futures and Futures Options. </I></B>When purchasing a futures contract, the Fund
[may but is not required to] &#147;earmark&#148; or maintain with its custodian (and <FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">mark-to-market</FONT></FONT> on a daily basis) assets determined to be liquid by PIMCO in
accordance with procedures approved by the Board of Trustees that, when added to the amounts deposited with a futures commission merchant as margin, are equal to the market value of the futures contract. Alternatively, the Fund may &#147;cover&#148;
its position by purchasing a put option on the same futures contract with a strike price as high or higher than the price of the contract held by the Fund. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">When selling a futures contract, the Fund [may but is not required to] maintain with its custodian (and <FONT STYLE="white-space:nowrap"><FONT
STYLE="white-space:nowrap">mark-to-market</FONT></FONT> on a daily basis) assets determined to be liquid by PIMCO in accordance with procedures approved by the Board of Trustees that are equal to the market value of the instruments underlying the
contract. Alternatively, the Fund may &#147;cover&#148; its position by owning the instruments underlying the contract (or, in the case of an Index Future, a portfolio with a volatility substantially similar to that of the Index on which the futures
contract is based), or by holding a call option permitting the Fund to purchase the same futures contract at a price no higher than the price of the contract written by the Fund (or at a higher price if the difference is maintained in liquid assets
with the Fund&#146;s custodian). </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">When selling a call option on a futures contract, the Fund [may but is not required to] &#147;earmark&#148; or maintain
with its custodian (and <FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">mark-to-market</FONT></FONT> on a daily basis) assets determined to be liquid by PIMCO in accordance with procedures approved by the Board of Trustees that,
when added to the amounts deposited with a futures commission merchant as margin, equal the total market value of the futures contract underlying the call option. Alternatively, the Fund may cover its position by entering into a long position in the
same futures contract at a price no higher than the strike price of the call option, by owning the instruments underlying the futures contract, or by holding a separate call option permitting the Fund to purchase the same futures contract at a price
not higher than the strike price of the call option sold by the Fund. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">When selling a put option on a futures contract, the Fund [may but is not required
to] &#147;earmark&#148; or maintain with its custodian (and <FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">mark-to-market</FONT></FONT> on a daily basis) assets determined to be liquid by PIMCO in accordance with procedures
approved by the Board of Trustees that equal the purchase price of the futures contract, less any margin on deposit. Alternatively, the Fund may cover the position either by entering into a short position in the same futures contract, or by owning a
separate put option permitting it to sell the same futures contract so long as the strike price of the purchased put option is the same or higher than the strike price of the put option sold by the Fund. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">[With respect to futures contracts that are not legally required or permitted to &#147;cash settle,&#148; the Fund may cover the open position by setting
aside or earmarking liquid assets in an amount equal to the market value of the futures contact. With respect to futures that are required or permitted to &#147;cash settle,&#148; however, the Fund is permitted to set aside or earmark liquid assets
in an amount equal to the Fund&#146;s daily marked to market (net) obligation, if any, (in other words, the Fund&#146;s daily net liability, if any) rather than the market value of the futures contract. By setting aside assets equal to only its net
obligation under cash-settled futures, the Fund will have the ability to employ leverage to a greater extent than if the Fund were required to segregate assets equal to the full market value of the futures contract.] </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">58 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">To the extent that securities with maturities greater than one year are used to segregate liquid assets to cover
the Fund&#146;s obligations under futures contracts and related options, such use will not eliminate the leverage risk arising from such use, which may tend to exaggerate the effect on net asset value of any increase or decrease in the market value
of the Fund&#146;s portfolio, and may require liquidation of portfolio positions when it is not advantageous to do so. However, any potential risk of leverage resulting from the use of securities with maturities greater than one year may be
mitigated by the overall duration limit on the Fund&#146;s portfolio securities. Thus, the use of a longer term security may require the Fund to hold offsetting short-term securities to balance the Fund&#146;s portfolio such that the Fund&#146;s
duration does not exceed the maximum permitted for the Fund in the Prospectus. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund will only enter into futures contracts and futures options which
are standardized and traded on a U.S. or foreign exchange, board of trade, or similar entity, or quoted on an automated quotation system, or in the case of futures options, for which an established <FONT STYLE="white-space:nowrap"><FONT
STYLE="white-space:nowrap">over-the-counter</FONT></FONT> market exists. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The requirements for qualification as a regulated investment company also may
limit the extent to which the Fund may enter into futures, futures options or forward contracts. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B><I>Commodity Pool Operators and Commodity Trading
Advisors</I></B>. The CFTC has adopted regulations that subject registered investment companies and their investment advisers to regulation by the CFTC if the registered investment company invests more than a prescribed level of its liquidation
value in commodity futures, options on commodities or commodity futures, swaps, or other financial instruments regulated under the Commodity Exchange Act (&#147;commodity interests&#148;), or if the fund markets itself as providing investment
exposure to such instruments. As of the date of this Statement of Additional Information, the Fund and/or PIMCO has claimed an exclusion from commodity pool operator (&#147;CPO&#148;) registration pursuant to CFTC Rule 4.5 with respect to the Fund.
To remain eligible for this exclusion the Fund must comply with certain limitations, including limits on its ability to use any commodity interests and limits on the manner in which the Fund holds out its use of such commodity interests. These
limitations may restrict the Fund&#146;s ability to pursue its investment strategy, increase the costs of implementing its strategy, increase expenses of the Fund, and/or adversely affect the Fund&#146;s total return. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B><I>Risks Associated with Futures and Futures Options</I></B>. There are several risks associated with the use of futures contracts and futures options as
hedging techniques. A purchase or sale of a futures contract may result in losses in excess of the amount invested in the futures contract. Some of the risk may be caused by an imperfect correlation between movements in the price of the futures
contract and the price of the security or other investment being hedged. The hedge will not be fully effective where there is such imperfect correlation. Also, an incorrect correlation could result in a loss on both the hedged securities in the Fund
and the hedging vehicle, so that the portfolio return might have been greater had hedging not been attempted. For example, if the price of the futures contract moves more than the price of the hedged security, the Fund would experience either a loss
or gain on the future which is not completely offset by movements in the price of the hedged securities. In addition, there are significant differences between the securities and futures markets that could result in an imperfect correlation between
the markets, causing a given hedge not to achieve its objective. The degree of imperfection of correlation depends on circumstances such as variations in speculative market demand for futures and futures options on securities, including technical
influences in futures trading and futures options, and differences </P>
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between the financial instruments being hedged and the instruments underlying the standard contracts available for trading in such respects as interest rate levels, maturities, and
creditworthiness of issuers. To compensate for imperfect correlations, the Fund may purchase or sell futures contracts in a greater dollar amount than the hedged securities if the volatility of the hedged securities is historically greater than the
volatility of the futures contracts. Conversely, the Fund may purchase or sell fewer contracts if the volatility of the price of the hedged securities is historically less than that of the futures contracts. The risk of imperfect correlation
generally tends to diminish as the maturity date of the futures contract approaches. A decision as to whether, when and how to hedge involves the exercise of skill and judgment, and even a well-conceived hedge may be unsuccessful to some degree
because of market behavior or unexpected interest rate trends. Also, suitable hedging transactions may not be available in all circumstances. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Additionally, the price of Index Futures may not correlate perfectly with movement in the relevant index due to certain market distortions. First, all
participants in the futures market are subject to margin deposit and maintenance requirements. Rather than meeting additional margin deposit requirements, investors may close futures contracts through offsetting transactions which could distort the
normal relationship between the index and futures markets. Second, the deposit requirements in the futures market are less onerous than margin requirements in the securities market, and as a result, the futures market may attract more speculators
than does the securities market. Increased participation by speculators in the futures market may also cause temporary price distortions. In addition, trading hours for foreign stock Index Futures may not correspond perfectly to hours of trading on
the foreign exchange to which a particular foreign stock Index Future relates. This may result in a disparity between the price of Index Futures and the value of the relevant index due to the lack of continuous arbitrage between the Index Futures
price and the value of the underlying index. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Futures exchanges may limit the amount of fluctuation permitted in certain futures contract prices during a
single trading day. The daily limit establishes the maximum amount that the price of a futures contract may vary either up or down from the previous day&#146;s settlement price at the end of the current trading session. Once the daily limit has been
reached in a futures contract subject to the limit, no more trades may be made on that day at a price beyond that limit. The daily limit governs only price movements during a particular trading day and therefore does not limit potential losses
because the limit may work to prevent the liquidation of unfavorable positions. For example, futures prices have occasionally moved to the daily limit for several consecutive trading days with little or no trading, thereby preventing prompt
liquidation of positions and subjecting some holders of futures contracts to substantial losses. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">There can be no assurance that a liquid market will
exist at a time when the Fund seeks to close out a futures or a futures option position, and that the Fund would remain obligated to meet margin requirements until the position is closed. In addition, many of the contracts discussed above are
relatively new instruments without a significant trading history. As a result, there can be no assurance that an active secondary market will develop or continue to exist. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B><I>Risks Associated with Commodity Futures Contracts. </I></B>There are several additional risks associated with transactions in commodity futures
contracts. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:5%; font-size:12pt; font-family:Times New Roman"><I>Storage</I>. Unlike the financial futures markets, in the commodity futures markets there are costs of physical storage
associated with purchasing the underlying commodity. The price of the commodity futures contract will reflect the storage costs of purchasing the physical commodity, including the time value of money invested in the physical commodity. To the extent
that the storage costs for an underlying commodity change while the Fund is invested in futures contracts on that commodity, the value of the futures contract may change proportionately. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">60 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:5%; font-size:12pt; font-family:Times New Roman"><I>Reinvestment</I>. In the commodity futures markets, producers of the underlying commodity may
decide to hedge the price risk of selling the commodity by selling futures contracts today to lock in the price of the commodity at delivery tomorrow. In order to induce speculators to purchase the other side of the same futures contract, the
commodity producer generally must sell the futures contract at a lower price than the expected future spot price. Conversely, if most hedgers in the futures market are purchasing futures contracts to hedge against a rise in prices, then speculators
will only sell the other side of the futures contract at a higher futures price than the expected future spot price of the commodity. The changing nature of the hedgers and speculators in the commodity markets will influence whether futures prices
are above or below the expected future spot price, which can have significant implications for the Fund. If the nature of hedgers and speculators in futures markets has shifted when it is time for the Fund to reinvest the proceeds of a maturing
contract in a new futures contract, the Fund might reinvest at higher or lower futures prices, or choose to pursue other investments. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:5%; font-size:12pt; font-family:Times New Roman"><I>Other Economic Factors. </I>The commodities which underlie commodity futures contracts may be subject to additional economic and <FONT
STYLE="white-space:nowrap">non-economic</FONT> variables, such as drought, floods, weather, livestock disease, embargoes, tariffs, and international economic, political and regulatory developments. These factors may have a larger impact on commodity
prices and commodity-linked instruments, including futures contracts, than on traditional securities. Certain commodities are also subject to limited pricing flexibility because of supply and demand factors. Others are subject to broad price
fluctuations as a result of the volatility of the prices for certain raw materials and the instability of supplies of other materials. These additional variables may create additional investment risks which subject the Fund&#146;s investments to
greater volatility than investments in traditional securities. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B><I>Additional Risks of Options on Securities, Futures Contracts, Options on Futures
Contracts and Forward Currency Exchange Contracts and Options Thereon.</I></B> Options on securities, futures contracts, options on futures contracts, and options on currencies may be traded on <FONT STYLE="white-space:nowrap">non-U.S.</FONT>
exchanges. Such transactions may not be regulated as effectively as similar transactions in the United States; may not involve a clearing mechanism and related guarantees; and are subject to the risk of governmental actions affecting trading in, or
the prices of, <FONT STYLE="white-space:nowrap">non-U.S.</FONT> securities. Some <FONT STYLE="white-space:nowrap">non-U.S.</FONT> exchanges may be principal markets so that no common clearing facility exists and a trader may look only to the broker
for performance of the contract. The value of such positions also could be adversely affected by (i)&nbsp;other complex <FONT STYLE="white-space:nowrap">non-U.S.</FONT> political, legal and economic factors, (ii)&nbsp;lesser availability than in the
United States of data on which to make trading decisions, (iii)&nbsp;delays in the Fund&#146;s ability to act upon economic events occurring in <FONT STYLE="white-space:nowrap">non-U.S.</FONT> markets during
<FONT STYLE="white-space:nowrap">non-business</FONT> hours in the United States, (iv)&nbsp;the imposition of different exercise and settlement terms and procedures and margin requirements than in the United States and (v)&nbsp;lesser trading volume.
In addition, to the extent that the Fund does not hedge against fluctuations in the exchange rate between the U.S. dollar and the currencies in which trading is done on <FONT STYLE="white-space:nowrap">non-U.S.</FONT> exchanges, any profits that the
Fund might realize in trading could be eliminated by adverse changes in the exchange rate, or the Fund could incur losses as a result of those changes. The value of some derivative instruments in which the Fund may invest may be particularly
sensitive to changes in prevailing interest rates, and, like the other investments of the </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">61 </P>


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Fund, the ability of the Fund to successfully utilize these instruments may depend in part upon the ability of PIMCO to forecast interest rates and other economic factors correctly. If PIMCO
incorrectly forecasts such factors and has taken positions in derivative instruments contrary to prevailing market trends, the Fund could suffer losses. In addition, the Fund&#146;s use of such instruments may cause the Fund to realize higher
amounts of short-term capital gains (generally taxed to shareholders at ordinary income tax rates) than if the Fund had not used such instruments. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B><I>Swap Agreements and Options on Swap Agreements</I></B>. The Fund may engage in swap transactions, including, but not limited to, swap agreements on
interest rates, security or commodity indexes, specific securities and commodities, and credit and event-linked swaps. To the extent the Fund may invest in foreign currency denominated securities, it may also invest in currency exchange rate swap
agreements. The Fund may also enter into options on swap agreements (&#147;swaptions&#148;). </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund may enter into swap transactions for any legal
purpose consistent with its investment objectives and policies, such as attempting to obtain or preserve a particular return or spread at a lower cost than obtaining a return or spread through purchases and/or sales of instruments in other markets,
to protect against currency fluctuations, as a duration management technique, to protect against any increase in the price of securities the Fund anticipates purchasing at a later date, or to gain exposure to certain markets in a more cost-efficient
manner. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Swap agreements are two party contracts entered into primarily by institutional investors for periods ranging from a few weeks to a number of
years. Swap agreements are individually negotiated and structured to include exposure to a variety of types of investments or market factors. In a standard &#147;swap&#148; transaction, two parties agree to exchange the returns (or differentials in
rates of return) earned or realized on particular predetermined investments or instruments, which may be adjusted for an interest factor. The gross returns to be exchanged or &#147;swapped&#148; between the parties are generally calculated with
respect to a &#147;notional amount,&#148; such as the return on or increase in value of a particular dollar amount invested at a particular interest rate, in a particular foreign currency, or in a &#147;basket&#148; of securities or commodities
representing a particular index. Forms of swap agreements include interest rate caps, under which, in return for a premium, one party agrees to make payments to the other to the extent that interest rates exceed a specified rate, or &#147;cap&#148;;
interest rate floors, under which, in return for a premium, one party agrees to make payments to the other to the extent that interest rates fall below a specified rate, or &#147;floor&#148;; and interest rate collars, under which a party sells a
cap and purchases a floor or vice versa in an attempt to protect itself against interest rate movements exceeding given minimum or maximum levels. Consistent with the Fund&#146;s investment objectives and general investment policies, certain of the
Fund may invest in commodity swap agreements. For example, an investment in a commodity swap agreement may involve the exchange of floating-rate interest payments for the total return on a commodity index. In a total return commodity swap, the Fund
will receive the price appreciation of a commodity index, a portion of the index, or a single commodity in exchange for paying an agreed-upon fee. If the commodity swap is for one period, the Fund may pay a fixed fee, established at the outset of
the swap. However, if the term of the commodity swap is more than one period, with interim swap payments, the Fund may pay an adjustable or floating fee. With a &#147;floating&#148; rate, the fee may be pegged to a base rate, such as the London
Interbank Offered Rate, and is adjusted each period. Therefore, if interest rates increase over the term of the swap contract, the Fund may be required to pay a higher fee at each swap reset date. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">62 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">A swaption is a contract that gives a counterparty the right (but not the obligation) in return for payment of a
premium, to enter into a new swap agreement or to shorten, extend, cancel or otherwise modify an existing swap agreement, at some designated future time on specified terms. The Fund may write (sell) and purchase put and call swaptions. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Most swap agreements entered into by the Fund would calculate the obligations of the parties to the agreement on a &#147;net basis.&#148; Consequently, the
Fund&#146;s current obligations (or rights) under a swap agreement will generally be equal only to the net amount to be paid or received under the agreement based on the relative values of the positions held by each party to the agreement (the
&#147;net amount&#148;). The Fund&#146;s current obligations under a swap agreement will be accrued daily (offset against any amounts owed to the Fund) and any accrued but unpaid net amounts owed to a swap counterparty will be covered by the
segregation of assets determined to be liquid by PIMCO in accordance with procedures approved by the Board of Trustees, to avoid any potential leveraging of the Fund&#146;s portfolio. Obligations under swap agreements so covered will not be
construed to be &#147;senior securities&#148; for purposes of the Fund&#146;s investment restriction concerning senior securities. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund also may
enter into OTC and cleared credit default swap agreements. The credit default swap agreement may reference one or more debt securities or obligations that are not currently held by the Fund. The protection &#147;buyer&#148; in an OTC credit default
contract is generally obligated to pay the protection &#147;seller&#148; an upfront or a periodic stream of payments over the term of the contract until a credit event, such as a default, on a reference obligation has occurred. If a credit event
occurs, the seller generally must pay the buyer the &#147;par value&#148; (full notional value) of the swap in exchange for an equal face amount of deliverable obligations of the reference entity described in the swap, or the seller may be required
to deliver the related net cash amount if the swap is cash settled. The Fund may be either the buyer or seller in the transaction. If the Fund is a buyer and no credit event occurs, the Fund may recover nothing if the swap is held through its
termination date. However, if a credit event occurs, the buyer may receive the full notional value of the swap in exchange for an equal face amount of deliverable obligations of the reference entity whose value may have significantly decreased. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">As a seller, the Fund generally receives an upfront payment or a fixed rate of income throughout the term of the swap provided that there is no credit event.
As the seller, the Fund would effectively add leverage to its portfolio because, in addition to its total net assets, the Fund would be subject to investment exposure on the notional amount of the swap. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The spread of a credit default swap is the annual amount the protection buyer must pay the protection seller over the length of the contract, expressed as a
percentage of the notional amount. When spreads rise, market perceived credit risk rises and when spreads fall, market perceived credit risk falls. Wider credit spreads and decreasing market values, when compared to the notional amount of the swap,
represent a deterioration of the credit soundness of the issuer of the reference obligation and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the agreement. For credit default swap agreements
on asset-backed securities and credit indices, the quoted market prices and resulting values, as well as the annual payment rate, serve as an indication of the current status of the payment/performance risk. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">63 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Credit default swap agreements sold by the Fund may involve greater risks than if the Fund had invested in the
reference obligation directly since, in addition to general market risks, credit default swaps are subject to illiquidity risk, and with respect to OTC credit default swaps, counterparty risk and credit risk. The Fund will enter into uncleared
credit default swap agreements only with counterparties that meet certain standards of creditworthiness. A buyer generally also will lose its investment and recover nothing should no credit event occur and the swap is held to its termination date.
If a credit event were to occur, the value of any deliverable obligation received by the seller, coupled with the upfront or periodic payments previously received, may be less than the full notional value it pays to the buyer, resulting in a loss of
value to the seller. The Fund&#146;s obligations under a credit default swap agreement will be accrued daily (offset against any amounts owing to the Fund). In connection with credit default swaps in which the Fund is the buyer or the seller, if the
Fund covers its position through asset segregation, the Fund will segregate or &#147;earmark&#148; cash or liquid assets with a value at least equal to the Fund&#146;s exposure (any accrued but unpaid net amounts owed by the Fund to any
counterparty), on a <FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">marked-to-market</FONT></FONT> basis (when the Fund is the buyer), or the full notional amount of the swap (minus any amounts owed to the Fund) (when the Fund is
the seller). Such segregation or &#147;earmarking&#148; seeks to ensure that the Fund has assets available to satisfy its obligations with respect to the transaction and could have the effect of limiting any potential leveraging of the Fund&#146;s
portfolio. Such segregation or &#147;earmarking&#148; will not limit the Fund&#146;s exposure to loss. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Recent legislative and regulatory reforms,
including the Dodd-Frank Wall Street Reform and Consumer Protection Act (the &#147;Dodd-Frank Act&#148;), have resulted in new regulation of swap agreements, including clearing, margin, reporting, recordkeeping and registration requirements for
certain types of swaps contracts and other derivatives, including among others interest rate swaps and credit default swaps. Because these requirements are new and evolving, and certain of the rules are not yet final, its ultimate impact remains
unclear. New regulations could, among other things, restrict the Fund&#146;s ability to engage in swap transactions (for example, by making certain types of swap transactions no longer available to the Fund) and/or increase the costs of such swap
transactions (for example, by increasing margin or capital requirements), and the Fund may as a result be unable to execute its investment strategies in a manner PIMCO might otherwise choose. New rules under the Dodd-Frank Act require certain <FONT
STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">over-the-counter</FONT></FONT> derivatives, including certain interest rate swaps and certain credit default swaps, to be executed on a regulated market and cleared through a central
counterparty, which may result in increased margin requirements and costs for the Fund. It is also unclear how the regulatory changes will affect counterparty risk. See &#147;Risk of Potential Government Regulation of Derivatives&#148; and
&#147;Additional Risk Factors in Cleared Derivatives Transactions&#148; below for further detail. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Additionally, U.S. regulators recently issued final
rules under the Dodd-Frank Act that establish minimum margin and capital requirements for uncleared OTC derivatives transactions that will have a material impact on the Fund&#146;s use of uncleared derivatives. These rules will impose minimum margin
requirements on derivatives transactions between the Fund and their swap counterparties and may increase the amount of margin the Fund is required to provide. They will impose regulatory requirements on the timing of transferring margin, which may
accelerate the Fund&#146;s current margin process. They will also effectively require changes to typical derivatives margin documentation. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">64 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Whether the Fund&#146;s use of swap agreements or swaptions will be successful in furthering its investment
objective will depend on PIMCO&#146;s ability to predict correctly whether certain types of investments are likely to produce greater returns than other investments. Moreover, the Fund bears the risk of loss of the amount expected to be received
under a swap agreement in the event of the default or bankruptcy of a swap agreement counterparty. The Fund will enter into OTC swap agreements only with counterparties that meet certain standards of creditworthiness. Certain restrictions imposed on
the Fund by the Code may limit the Fund&#146;s ability to use swap agreements. It is possible that developments in the swaps market, including additional government regulation, could adversely affect the Fund&#146;s ability to terminate existing
swap agreements or to realize amounts to be received under such agreements. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Like most other investments, swap agreements are subject to the risk that the
market value of the instrument will change in a way detrimental to the Fund&#146;s interest. The Fund bears the risk of future market trends or the values of assets, reference rates, indexes, or other economic factors. If the Fund uses a swap as a
hedge against, or as a substitute for, a portfolio investment, the Fund will be exposed to the risk that the swap will have or will develop imperfect or no correlation with the portfolio investment. This could cause substantial losses for the Fund.
While hedging strategies involving swap 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 Fund investments. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Many swaps are complex and often valued subjectively. Many <FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">over-the-counter</FONT></FONT>
derivatives are complex and their valuation often requires modeling and judgment, which increases the risk of mispricing or incorrect valuation. The pricing models used may not produce valuations that are consistent with the values the Fund realizes
when it closes or sells an <FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">over-the-counter</FONT></FONT> derivative. Valuation risk is more pronounced when the Fund enters into <FONT STYLE="white-space:nowrap"><FONT
STYLE="white-space:nowrap">over-the-counter</FONT></FONT> derivatives with specialized terms because the market value of those derivatives in some cases is determined in part by reference to similar derivatives with more standardized terms.
Incorrect valuations may result in increased cash payment requirements to counterparties, undercollateralization and/or errors in calculation of the Fund&#146;s net asset value. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Swaps are highly specialized instruments that require investment techniques, risk analyses, and tax planning different from those associated with traditional
investments. The use of a swap requires an understanding not only of the referenced asset, reference rate, or index but also of the swap itself, without the benefit of observing the performance of the swap under all possible market conditions. Swap
agreements may be subject to liquidity risk, which exists when a particular swap is difficult to purchase or sell. If a swap transaction is particularly large or if the relevant market is illiquid (as is the case with many OTC swaps), it may not be
possible to initiate a transaction or liquidate a position at an advantageous time or price, which may result in significant losses. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Because OTC swap
agreements are two party contracts that may be subject to contractual restrictions on transferability and because they may have terms of greater than seven days, swap agreements may be considered to be illiquid. To the extent that a swap is not
liquid, it may not be possible to initiate a transaction or liquidate a position at an advantageous time or price, which may result in significant losses. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Moreover, the Fund bears the risk of loss of the amount expected to be received under a swap agreement in the event of the default or bankruptcy of a swap
agreement counterparty. The Fund will enter into swap agreements only with counterparties that meet certain standards of creditworthiness. When a counterparty&#146;s obligations are not fully secured by collateral, then the
</P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">65 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">
Fund is essentially an unsecured creditor of the counterparty. If the counterparty defaults, the Fund will have contractual remedies, but there is no assurance that a counterparty will be able to
meet its obligations pursuant to such contracts or that, in the event of default, the Fund will succeed in enforcing contractual remedies. Counterparty risk still exists even if a counterparty&#146;s obligations are secured by collateral because the
Fund&#146;s interest in collateral may not be perfected or additional collateral may not be promptly posted as required. Counterparty risk also may be more pronounced if a counterparty&#146;s obligations exceed the amount of collateral held by the
Fund (if any), the Fund is unable to exercise its interest in collateral upon default by the counterparty, or the termination value of the instrument varies significantly from the
<FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">marked-to-market</FONT></FONT> value of the instrument. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Depending on the terms of the
particular option agreement, the Fund will generally incur a greater degree of risk when it writes a swap option than it will incur when it purchases a swap option. When the Fund purchases a swap option, it risks losing only the amount of the
premium it has paid should it decide to let the option expire unexercised. However, when the Fund writes a swap option, upon exercise of the option the Fund will become obligated according to the terms of the underlying agreement. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Title VII of the Dodd-Frank Act establishes a framework for the regulation of the OTC swap markets outlining the joint responsibility of the CFTC and the SEC
in regulating swaps. The CFTC is responsible for the regulation of swaps, the SEC is responsible for the regulation of security-based swaps and jointly they are both responsible for the regulation of mixed swaps. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B><I>Structured Notes</I></B>. The Fund may invest in &#147;structured&#148; notes, which are privately negotiated debt obligations where the principal
and/or interest is determined by reference to the performance of a benchmark asset, market or interest rate, such as selected securities, an index of securities or specified interest rates, or the differential performance of two assets or markets,
such as indexes reflecting bonds. Depending on the terms of the note, the Fund may forgo all or part of the interest and principal that would be payable on a comparable conventional note. The rate of return on structured notes may be determined by
applying a multiplier to the performance or differential performance of the referenced index(es) or other asset(s). Application of a multiplier involves leverage which will serve to magnify the potential for gain and the risk of loss. The Fund may
use structured notes to add leverage to the portfolio and for investment as well as risk management purposes. Like other sophisticated strategies, the Fund&#146;s use of structured notes may not work as intended. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B><I>Risk of Potential Government Regulation of Derivatives. </I></B>It is possible that government regulation of various types of derivative instruments,
including futures and swap agreements, may limit or prevent the Fund from using such instruments as a part of its investment strategy, and could ultimately prevent the Fund from being able to achieve its investment objectives. It is impossible to
fully predict the effects of past, present or future legislation and regulation in this area, but the effects could be substantial and adverse. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The
futures markets are subject to comprehensive statutes, regulations, and margin requirements. In addition, the SEC, CFTC and the exchanges are authorized to take extraordinary actions in the event of a market emergency, including, for example, the
implementation or reduction of speculative position limits, the implementation of higher margin requirements, the establishment of daily price limits and the suspension of trading. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">66 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The regulation of swaps and futures transactions in the U.S. is a rapidly changing area of law and is subject to
modification by government and judicial action. There is a possibility of future regulatory changes altering, perhaps to a material extent, the nature of an investment in the Fund or the ability of the Fund to continue to implement its investment
strategies. In particular, the Dodd-Frank Act sets forth a legislative framework for OTC derivatives, such as swaps, in which the Fund may invest. Title VII of the Dodd-Frank Act makes broad changes to the OTC derivatives market, grants significant
new authority to the SEC and the CFTC to regulate OTC derivatives and market participants, and, among other things, requires clearing of many OTC derivatives transactions and imposes minimum margin and capital requirements on uncleared OTC
derivatives transactions. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">In addition, in December 2015, the SEC proposed new regulations applicable to registered investment companies&#146; use of
derivatives and related instruments. If adopted as proposed, these regulations could significantly limit or impact the Fund&#146;s ability to invest in derivatives and other instruments, limit the Fund&#146;s ability to employ certain strategies
that use derivatives and adversely affect the Fund&#146;s performance, efficiency in implementing its strategy, liquidity and ability to pursue its investment objectives. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B><I>Additional Risk Factors in Cleared Derivatives Transactions.</I></B> Under recently adopted rules and regulations, transactions in some types of swaps
(including interest rate swaps and credit default index swaps on North American and European indices) are required to be centrally cleared, and additional types of swaps may be required to be centrally cleared in the future. In a cleared derivatives
transaction, the Fund&#146;s counterparty is a clearing house, rather than a bank or broker. Since the Fund is not a member of clearing houses and only members of a clearing house can participate directly in the clearing house, the Fund will hold
cleared derivatives through accounts at clearing members. In cleared derivatives transactions, the Fund will make payments (including margin payments) to and receive payments from a clearing house through their accounts at clearing members. Clearing
members guarantee performance of their clients&#146; obligations to the clearing house. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">In many ways, centrally cleared derivative arrangements are less
favorable to registered investment companies than bilateral arrangements. For example, the Fund may be required to provide greater amounts of margin for cleared derivatives transactions than for bilateral derivatives transactions. Also, in contrast
to bilateral derivatives transactions, following a period of notice to the Fund, a clearing member generally can require termination of existing cleared derivatives transactions at any time or increases in margin requirements above the margin that
the clearing member required at the beginning of a transaction. Clearing houses also have broad rights to increase margin requirements for existing transactions or to terminate transactions at any time. Any increase in margin requirements or
termination by the clearing member or the clearing house could interfere with the ability of the Fund to pursue its investment strategy. Further, any increase in margin requirements by a clearing member could also expose the Fund to greater credit
risk to its clearing member, because margin for cleared derivatives transactions in excess of clearing house margin requirements typically is held by the clearing member. Also, the Fund is subject to risk if it enters into a derivatives transaction
that is required to be cleared (or that PIMCO expects to be cleared), and no clearing member is willing or able to clear the transaction on the Fund&#146;s behalf. While the documentation in place between the Fund and its clearing members generally
provides that the clearing members will accept for clearing all transactions submitted for clearing that are within credit limits (specified in advance) for the </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">67 </P>


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Fund, the Fund is still subject to the risk that no clearing member will be willing or able to clear a transaction. In those cases, the transaction might have to be terminated, and the Fund could
lose some or all of the benefit of the transaction, including loss of an increase in the value of the transaction and/or loss of hedging protection offered by the transaction. In addition, the documentation governing the relationship between the
Fund and the clearing members is developed by the clearing members and generally is less favorable to the Fund than typical bilateral derivatives documentation. For example, this documentation generally includes a
<FONT STYLE="white-space:nowrap">one-way</FONT> indemnity by the Fund in favor of the clearing member, indemnifying the clearing member against losses it incurs in connection with acting as the Fund&#146;s clearing member, and the documentation
typically does not give the Fund any rights to exercise remedies if the clearing member defaults or becomes insolvent. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Some types of cleared derivatives
are required to be executed on an exchange or on a swap execution facility (a &#147;SEF&#148;). A SEF is a trading platform where multiple market participants can execute derivatives by accepting bids and offers made by multiple other participants
in the platform. This execution requirement may make it more difficult and costly for funds, such as the Fund, to enter into highly tailored or customized transactions. Trading swaps on a SEF may offer certain advantages over traditional bilateral <FONT
STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">over-the-counter</FONT></FONT> trading, such as ease of execution, price transparency, increased liquidity and/or favorable pricing. Execution through a SEF is not, however, without
additional costs and risks, as parties are required to comply with SEF and CFTC rules and regulations, including disclosure and recordkeeping obligations, and SEF rights of inspection, among others. SEFs typically charge fees, and if the Fund
executes derivatives on a swap execution facility through a broker intermediary, the intermediary may impose fees as well. The Fund also may be required to indemnify a SEF, or a broker intermediary who executes swaps on a SEF on the Fund&#146;s
behalf, against any losses or costs that may be incurred as a result of the Fund&#146;s transactions on the SEF. In addition, the Fund may be subject to execution risk if it enters into a derivatives transaction that is required to be cleared, and
no clearing member is willing to clear the transaction on the Fund&#146;s behalf. In that case, the transaction might have to be terminated, and the Fund could lose some or all of the benefit of any increase in the value of the transaction after the
time of the trade. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">These and other new rules and regulations could, among other things, further restrict the Fund&#146;s ability to engage in, or
increase the cost to the Fund of, derivatives transactions, for example, by making some types of derivatives no longer available to the Fund, increasing margin or capital requirements, or otherwise limiting liquidity or increasing transaction costs.
These regulations are new and evolving, so their potential impact on the Fund and the financial system are not yet known. While the new regulations and the central clearing of some derivatives transactions are designed to reduce systemic risk (i.e.,
the risk that the interdependence of large derivatives dealers could cause a number of those dealers to suffer liquidity, solvency or other challenges simultaneously), there is no assurance that the new clearing mechanisms will achieve that result,
and in the meantime, as noted above, central clearing will expose the Fund to new kinds of risks and costs. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B><I>A Note on Commodity-Linked Derivatives.
</I></B>The Fund may seek to gain exposure to the commodity markets by investing in commodity-linked derivative instruments, swap transactions, or index-linked or commodity linked structured notes. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">68 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The value of a commodity-linked derivative investment generally is based upon the price movements of a physical
commodity (such as energy, mineral, or agricultural products), a commodity futures contract or commodity index, or other economic variable based upon changes in the value of commodities or the commodities markets. Swap transactions are privately
negotiated agreements between the Fund and a counterparty to exchange or swap investment cash flows or assets at specified intervals in the future. The obligations may extend beyond one year. There is no central exchange or market for swap
transactions and therefore they are less liquid investments than exchange-traded instruments. The Fund bears the risk that the counterparty could default under a swap agreement. See &#147;Swap Agreements and Options on Swap Agreements&#148; above
for further detail about swap transactions. Further, the Fund may invest in derivative debt instruments with principal and/or coupon payments linked to the value of commodities, commodity futures contracts or the performance of commodity indices.
These are &#147;commodity-linked&#148; or &#147;index-linked&#148; notes, and are sometimes referred to as &#147;structured notes&#148; because the terms of the debt instrument may be structured by the issuer of the note and the purchaser of the
note. See &#147;Structured Notes&#148; above for further discussion of these notes. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The value of these notes will rise or fall in response to changes in
the underlying commodity or related index of investment. These notes expose the Fund economically to movements in commodity prices. These notes also are subject to risks, such as credit, market and interest rate risks, that in general affect the
values of debt securities. Therefore, at the maturity of the note, the Fund may receive more or less principal that it originally invested. The Fund might receive interest payments on the note that are more or less than the stated coupon interest
payments. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund&#146;s investments in commodity-linked instruments may bear on or be limited by the Fund&#146;s intention to qualify as a regulated
investment company under the Code. See &#147;Taxation.&#148; </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B><I>Asset Segregation.</I></B> Certain of the transactions described above can be viewed
as constituting a form of borrowing or financing transaction by the Fund. In such event, the Fund will cover its commitment under such transactions by segregating or &#147;earmarking&#148; assets in accordance with procedures adopted by the Board of
Trustees, in which case such transactions will not be considered &#147;senior securities&#148; by the Fund. With respect to forwards, futures contracts, options and swaps that are contractually permitted or required to cash settle (i.e., where
physical delivery of the underlying reference asset is not required), the Fund is permitted to segregate or earmark liquid assets equal to the Fund&#146;s daily
<FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">marked-to-market</FONT></FONT> net obligation under the derivative instrument, if any, rather than the derivative&#146;s full notional value. By segregating or earmarking liquid
assets equal to only its net <FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">marked-to-market</FONT></FONT> obligation under derivatives that are required to cash settle, the Fund will have the ability to employ leverage to a
greater extent than if the Fund were to segregate or earmark liquid assets equal to the full notional value of the derivative. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Hybrid Instruments
</B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund may invest in &#147;hybrid&#148; or indexed securities, which is a type of potentially high-risk derivative that combines a traditional
stock, bond, or commodity with an option or forward contract. Generally, the principal amount, amount payable upon maturity or redemption, or interest rate of a hybrid is tied (positively or negatively) to the price of some commodity, currency or
securities index or another interest rate or some other economic factor (each a &#147;benchmark&#148;). The interest rate or (unlike most fixed income securities) the principal amount payable at maturity of a hybrid security may be increased or
decreased, depending on changes in </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">69 </P>


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the value of the benchmark. An example of a hybrid could be a bond issued by an oil company that pays a small base level of interest with additional interest that accrues in correlation to the
extent to which oil prices exceed a certain predetermined level. Such a hybrid instrument would be a combination of a bond and a call option on oil. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Hybrids can be used as an efficient means of pursuing a variety of investment goals, including currency hedging, duration management and increased total
return. Hybrids may not bear interest or pay dividends. The value of a hybrid or its interest rate may be a multiple of a benchmark and, as a result, may be leveraged and move (up or down) more steeply and rapidly than the benchmark. These
benchmarks may be sensitive to economic and political events, such as commodity shortages and currency devaluations, which cannot be readily foreseen by the purchaser of a hybrid. Under certain conditions, the redemption value of a hybrid could be
zero. Thus, an investment in a hybrid may entail significant market risks that are not associated with a similar investment in a traditional, U.S. dollar-denominated bond that has a fixed principal amount and pays a fixed rate or floating rate of
interest. The purchase of hybrids also exposes the Fund to the credit risk of the issuer of the hybrids. These risks may cause significant fluctuations in the net asset value of the Fund. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Certain hybrid instruments may provide exposure to the commodities markets. These are derivative securities with one or more commodity-linked components that
have payment features similar to commodity futures contracts, commodity options, or similar instruments. Commodity-linked hybrid instruments may be either equity or fixed income securities and are considered hybrid instruments because they have both
security and commodity-like characteristics. A portion of the value of these instruments may be derived from the value of a commodity, futures contract, index or other economic variable. The Fund will only invest in commodity-linked hybrid
instruments that qualify under applicable rules of the CFTC for an exemption from the provisions of the CEA. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Certain issuers of structured products such
as hybrid instruments may be deemed to be investment companies, as defined in the 1940 Act. As a result, the Fund&#146;s investments in these products may be subject to limits applicable to investments in investment companies and may be subject to
other restrictions imposed by the 1940 Act. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Leverage and Borrowing </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund currently utilizes leverage through the use of reverse repurchase agreements and credit default swaps. As of [ ], 2016, the Fund&#146;s total
effective leverage represented approximately [ ]% of the Fund&#146;s total assets (including assets attributable to such leverage). </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund may also
obtain leverage through dollar rolls or borrowings, such as through bank loans or commercial paper or other credit facilities. The Fund may also enter into transactions other than those noted above that may give rise to a form of leverage including,
among others, futures and forward contracts (including foreign currency exchange contracts), total return swaps and other derivative transactions, loans of portfolio securities, short sales and when-issued, delayed delivery and forward commitment
transactions. Although it has no current intention to do so, the Fund may also determine to issue preferred shares or other types of senior securities to add leverage to its portfolio. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">70 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Under normal market conditions, the Fund will limit its use of leverage from any combination of (i)&nbsp;reverse
repurchase agreements or dollar roll transactions (whether or not these instruments are covered as discussed below), (ii), borrowings (i.e., loans or lines of credit from banks or other credit facilities), (iii) any future issuance of preferred
shares, and (iv)&nbsp;to the extent described below, credit default swaps, other swap agreements and futures contracts (whether or not these instruments are covered with segregated assets as discussed below) such that the assets attributable to the
use of such leverage will not exceed 50% of the Fund&#146;s total assets (including, for purposes of the 50% limit, the amounts of leverage obtained through the use of such instruments) (the &#147;50% policy&#148;). For these purposes, assets
attributable to the use of leverage from credit default swaps, other swap agreements and futures contracts will be determined based on the current market value of the instrument if it is cash settled or based on the notional value of the instrument
if it is not cash settled. In addition, assets attributable to credit default swaps, other swap agreements or futures contracts will not be counted towards the 50% policy to the extent that the Fund owns offsetting positions or enters into
offsetting transactions. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Depending upon market conditions and other factors, the Fund may or may not determine to add leverage following an offering to
maintain or increase the total amount of leverage (as a percentage of the Fund&#146;s total assets) that the Fund currently maintains, taking into account the additional assets raised through the issuance of Common Shares in such offering. The Fund
utilizes certain kinds of leverage, such as reverse repurchase agreements and credit default swaps, opportunistically and may choose to increase or decrease, or eliminate entirely, its use of such leverage over time and from time to time based on
PIMCO&#146;s assessment of the yield curve environment, interest rate trends, market conditions and other factors. If the Fund determines to add leverage following an offering, it is not possible to predict with accuracy the precise amount of
leverage that would be added, in part because it is not possible to predict the number of Common Shares that ultimately will be sold in an offering or series of offerings. To the extent that the Fund does not add additional leverage following an
offering, the Fund&#146;s total amount of leverage as a percentage of its total assets will decrease, which could result in a reduction of investment income available for distribution to holders of the Fund&#146;s Common Shares (&#147;Common
Shareholders&#148;). </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The net proceeds the Fund obtains from reverse repurchase agreements, credit default swaps or other forms of leverage utilized, if
any, will be invested in accordance with the Fund&#146;s investment objectives and policies as described in this prospectus and any prospectus supplement. So long as the rate of return, net of applicable Fund expenses, on the debt obligations and
other investments purchased by the Fund exceeds the costs to the Fund of the leverage it utilizes, the investment of the Fund&#146;s net assets attributable to leverage will generate more income than will be needed to pay the costs of the leverage.
If so, and all other things being equal, the excess may be used to pay higher dividends to Common Shareholders than if the Fund were not so leveraged. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The 1940 Act, generally prohibits the Fund from engaging in most forms of leverage representing indebtedness other than preferred shares (including the use of
reverse repurchase agreements, dollar rolls, bank loans, commercial paper or other credit facilities, credit default swaps, total return swaps and other derivative transactions, loans of portfolio securities, short sales and when-issued, delayed
delivery and forward commitment transactions, to the extent that these instruments are not covered as described below) unless immediately after the issuance of </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">71 </P>


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the leverage the Fund has satisfied the asset coverage test with respect to senior securities representing indebtedness prescribed by the 1940 Act; that is, the value of the Fund&#146;s total
assets less all liabilities and indebtedness not represented by senior securities (for these purposes, &#147;total net assets&#148;) is at least 300% of the senior securities representing indebtedness (effectively limiting the use of leverage
through senior securities representing indebtedness to 33&nbsp;1/3% of the Fund&#146;s total net assets, including assets attributable to such leverage). In addition, the Fund is not permitted to declare any cash dividend or other distribution on
its Common Shares unless, at the time of such declaration, this asset coverage test is satisfied. The Fund may (but is not required to) cover its commitments under reverse repurchase agreements, dollar rolls, derivatives and certain other
instruments by the segregation of liquid assets, or by entering into offsetting transactions or owning positions covering its obligations. To the extent that certain of these instruments are so covered, they will not be considered &#147;senior
securities&#148; under the 1940 Act and therefore will not be subject to the 1940 Act 300% asset coverage requirement otherwise applicable to forms of leverage used by the Fund. However, reverse repurchase agreements and other such instruments, even
if covered, represent a form of economic leverage and create special risks. The use of these forms of leverage increases the volatility of the Fund&#146;s investment portfolio and could result in larger losses to Common Shareholders than if these
strategies were not used. See &#147;Principal Risks of the Fund&#151;Leverage Risk.&#148; To the extent that the Fund engages in borrowings, it may prepay a portion of the principal amount of the borrowing to the extent necessary in order to
maintain the required asset coverage. Failure to maintain certain asset coverage requirements could result in an event of default. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Leveraging is a
speculative technique and there are special risks and costs involved. There is no assurance that the Fund will utilize reverse repurchase agreements, credit default swaps, dollar rolls or borrowings, issue preferred shares or utilize any other forms
of leverage (such as the use of derivatives strategies). If used, there can be no assurance that the Fund&#146;s leveraging strategies will result in a higher yield on your Common Shares. When leverage is used, the NAV and market price of the Common
Shares and the yield to Common Shareholders will be more volatile. See &#147;Principal Risks of the Fund&#151;Leverage Risk.&#148; In addition, dividend interest and other expenses borne by the Fund with respect to its use of reverse repurchase
agreements, credit default swaps, dollar rolls, borrowings or any other forms of leverage are borne by the Common Shareholders and result in a reduction of the NAV of the Common Shares. In addition, because the fees received by the Investment
Manager are based on the Fund&#146;s average daily &#147;total managed assets&#148; (including any assets attributable to any reverse repurchase agreements, dollar rolls, borrowings and preferred shares that may be outstanding) minus accrued
liabilities (other than liabilities representing reverse repurchase agreements, dollar rolls and borrowings), the Investment Manager has a financial incentive for the Fund to use certain forms of leverage (e.g., reverse repurchase agreements, dollar
rolls, borrowings and preferred shares), which may create a conflict of interest between the Investment Manager, on the one hand, and the Common Shareholders, on the other hand. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund also may borrow money in order to repurchase its shares or as a temporary measure for extraordinary or emergency purposes, including for the payment
of dividends or the settlement of securities transactions which otherwise might require untimely dispositions of portfolio securities held by the Fund. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">72 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Reverse Repurchase Agreements </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund may enter into reverse repurchase agreements and economically similar transactions for hedging or cash management purposes or to add leverage to its
portfolio. See the sections &#147;Use of Leverage&#148; in the Prospectus and &#147;Leverage and Borrowing&#148; above. A reverse repurchase agreement involves the sale of a portfolio-eligible security by the Fund, coupled with its agreement to
repurchase the instrument at a specified time and price. Under a reverse repurchase agreement, the Fund continues to be entitled to receive any principal and interest payments on the underlying security during the term of the agreement. Reverse
repurchase agreements involve leverage risk and the risk that the market value of securities retained by the Fund may decline below the repurchase price of the securities sold by the Fund which it is obligated to repurchase. The Fund may (but is not
required to) segregate liquid assets equal (on a daily <FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">mark-to-market</FONT></FONT> basis) to its obligations under reverse repurchase agreements. To the extent that positions in
reverse repurchase agreements are not so covered, they would be deemed senior securities representing indebtedness for purposes of the 1940 Act. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund
also may effect simultaneous purchase and sale transactions that are known as &#147;sale-buybacks.&#148; A sale-buyback is similar to a reverse repurchase agreement, except that in a sale-buyback, the counterparty who purchases the security is
entitled to receive any principal or interest payments made on the underlying security pending settlement of the Fund&#146;s repurchase of the underlying security. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Mortgage Dollar Rolls </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">A mortgage dollar roll is similar
to a reverse repurchase agreement in certain respects. In a &#147;dollar roll&#148; transaction, the Fund sells a mortgage-related security, such as a security issued by GNMA, to a dealer and simultaneously agrees to repurchase a similar security
(but not the same security) in the future at a <FONT STYLE="white-space:nowrap">pre-determined</FONT> price. A &#147;dollar roll&#148; can be viewed, like a reverse repurchase agreement, as a collateralized borrowing in which the Fund pledges a
mortgage-related security to a dealer to obtain cash. However, unlike reverse repurchase agreements, the dealer with which the Fund enters into a dollar roll transaction is not obligated to return the same securities as those originally sold by the
Fund, but only securities which are &#147;substantially identical.&#148; To be considered &#147;substantially identical,&#148; the securities returned to the Fund generally must: (1)&nbsp;be collateralized by the same types of underlying mortgages;
(2)&nbsp;be issued by the same agency and be part of the same program; (3)&nbsp;have a similar original stated maturity; (4)&nbsp;have identical net coupon rates; (5)&nbsp;have similar market yields (and therefore price); and (6)&nbsp;satisfy
&#147;good delivery&#148; requirements, meaning that the aggregate principal amounts of the securities delivered and received back must be within 2.5% of the initial amount delivered. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">As with reverse repurchase agreements, to the extent that positions in dollar roll agreements are not covered by segregated liquid assets at least equal to
the amount of any forward purchase commitment, such transactions would be deemed senior securities representing indebtedness for purposes of the 1940 Act. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Repurchase Agreements </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">For the purposes of maintaining
liquidity and achieving income, the Fund may enter into repurchase agreements with domestic commercial banks or registered broker-dealers. A repurchase agreement is a contract under which the Fund would acquire a security for a relatively short
period (usually not more than one week) subject to the obligation of the seller to repurchase and the Fund to resell such security at a fixed time and price (representing the Fund&#146;s </P>
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cost plus interest). In the case of repurchase agreements with broker-dealers, the value of the underlying securities (or collateral) will be at least equal at all times to the total amount of
the repurchase obligation, including the interest factor. The Fund bears a risk of loss in the event that the other party to a repurchase agreement defaults on its obligations and the Fund is delayed or prevented from exercising its rights to
dispose of the collateral securities. This risk includes the risk of procedural costs or delays in addition to a loss on the securities if their value should fall below their repurchase price. PIMCO will monitor the creditworthiness of the
counterparties. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Credit-Linked Trust Certificates </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund may invest in credit-linked trust certificates, which are investments in a limited purpose trust or other vehicle which, in turn, invests in a basket
of derivative instruments, such as credit default swaps, total return swaps, basis swaps, interest rate swaps and other derivative transactions or securities, in order to provide exposure to the high yield or another debt securities market. For
instance, the Fund may invest in credit-linked trust certificates as a cash management tool in order to gain exposure to the high yield markets and/or to remain fully invested when more traditional income-producing securities are not available,
including during the period when the net proceeds of this offering and any future offering are being invested. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Like an investment in a bond, investments
in these credit-linked trust certificates represent the right to receive periodic income payments (in the form of distributions) and payment of principal at the end of the term of the certificate. However, these payments are conditioned on the
Fund&#146;s receipt of payments from, and the Fund&#146;s potential obligations to, the counterparties to the derivative instruments and other securities in which the trust invests. For instance, the trust may sell one or more credit default swaps,
under which the trust would receive a stream of payments over the term of the swap agreements provided that no event of default has occurred with respect to the referenced debt obligation upon which the swap is based. If a default occurs, the stream
of payments may stop and the trust would be obligated to pay to the counterparty the par (or other agreed upon value) of the referenced debt obligation. This, in turn, would reduce the amount of income and principal that the Fund would receive as an
investor in the trust. Please see &#147;Derivatives Instruments&#150;Swap Agreements and Options on Swap Agreements&#148; in this Statement of Additional Information for additional information about credit default swaps. The Fund&#146;s investments
in these instruments are indirectly subject to the risks associated with derivative instruments, including, among others, credit risk, default or similar event risk, counterparty risk, interest rate risk, leverage risk and management risk. It is
expected that the trusts which issue credit-linked trust certificates will constitute &#147;private&#148; investment companies, exempt from registration under the 1940 Act. Therefore, the certificates will be subject to the risks described under
&#147;Other Investment Companies,&#148; and will not be subject to applicable investment limitations and other regulation imposed by the 1940 Act (although the Fund will remain subject to such limitations and regulation, including with respect to
its investments in the certificates). Although the trusts are typically private investment companies, they generally are not actively managed such as a &#147;hedge fund&#148; might be. It is also expected that the certificates will be exempt from
registration under the Securities Act. Accordingly, there may be no established trading market for the certificates and they may constitute illiquid investments. See &#147;Principal Risks of the Fund&#150;Liquidity Risk&#148; in the Prospectus. If
market quotations are not readily available for the certificates, they will be valued by the Fund at fair value as determined by the Board of Trustees or persons acting at its direction. See &#147;Net Asset Value&#148; in the Prospectus. </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>When-Issued, Delayed Delivery and Forward Commitment Transactions </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund may purchase or sell securities on a when-issued, delayed delivery or forward commitment basis. [When such purchases are outstanding, the Fund will
segregate until the settlement date assets determined to be liquid by PIMCO in accordance with the procedures approved by the Board of Trustees in an amount sufficient to meet the purchase price.] Typically, no income accrues on securities the Fund
has committed to purchase prior to the time delivery of the securities is made, although the Fund may earn income on securities it has segregated. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">When
purchasing a security on a when-issued, delayed delivery or forward commitment basis, the Fund assumes the rights and risks of ownership of the security, including the risk of price and yield fluctuations, and takes such fluctuations into account
when determining its net asset value. Because the Fund is not required to pay for the security until the delivery date, these risks are in addition to the risks associated with the Fund&#146;s other investments. If the Fund remains substantially
fully invested at a time when when-issued, delayed delivery or forward commitment purchases are outstanding, the purchases may result in a form of leverage. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">When the Fund has sold a security on a when-issued, delayed delivery or forward commitment basis, the Fund does not participate in future gains or losses with
respect to the security. If the other party to a transaction fails to deliver or pay for the securities, the Fund could miss a favorable price or yield opportunity or could suffer a loss. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund may dispose of or renegotiate a transaction after it is entered into, and may sell when-issued, delayed delivery or forward commitment securities
before they are delivered, which may result in a capital gain or loss. There is no percentage limitation on the extent to which the Fund may purchase or sell securities on a when-issued, delayed delivery or forward commitment basis. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Common Stocks </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Common stock generally takes the form of
shares in a corporation. The value of a company&#146;s stock may fall as a result of factors directly relating to that company, such as decisions made by its management or lower demand for the company&#146;s products or services. A stock&#146;s
value also may fall because of factors affecting not just the company, but also companies in the same industry or in a number of different industries, such as increases in production costs. The value of a company&#146;s stock also may be affected by
changes in financial markets that are relatively unrelated to the company or its industry, such as changes in interest rates or currency exchange rates. In addition, a company&#146;s stock generally pays dividends only after the company invests in
its own business and makes required payments to holders of its bonds, other debt and preferred stock. For this reason, the value of a company&#146;s stock will usually react more strongly than its bonds, other debt and preferred stock to actual or
perceived changes in the company&#146;s financial condition or prospects. Stocks of smaller companies may be more vulnerable to adverse developments than those of larger companies. Stocks of companies that the portfolio managers believe are
fast-growing may trade at a higher multiple of current earnings than other stocks. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">75 </P>


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The value of such stocks may be more sensitive to changes in current or expected earnings than the values of other stocks. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Short Sales </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund may make short sales of securities
as part of its overall portfolio management strategies involving the use of derivative instruments and to offset potential declines in long positions in similar securities. A short sale is a transaction in which the Fund sells a security it does not
own in anticipation that the market price of that security will decline or will underperform relative to other securities held in the Fund&#146;s portfolio. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">When the Fund makes a short sale, it must borrow the security sold short and deliver it to the broker-dealer through which it made the short sale as
collateral for its obligation to deliver the security upon conclusion of the sale. The Fund may have to pay a fee to borrow particular securities and would often be obligated to pay over any accrued interest and dividends on such borrowed
securities. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">If the price of the security sold short increases between the time of the short sale and the time that the Fund replaces the borrowed
security, the Fund will incur a loss; conversely, if the price declines, the Fund will realize a capital gain. Any gain will be decreased, and any loss increased, by the transaction costs described above. The successful use of short selling may be
adversely affected by imperfect correlation between movements in the price of the security sold short and the securities being hedged. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">To the extent the
Fund engages in short sales, it will provide collateral to the broker-dealer and (except in the case of short sales &#147;against the box&#148;) will maintain additional asset coverage in the form of segregated or &#147;earmarked&#148; assets
determined to be liquid by PIMCO in accordance with procedures approved by the Board. A short sale is &#147;against the box&#148; to the extent that the Fund contemporaneously owns, or has the right to obtain at no added cost, securities identical
to those sold short. The Fund will engage in short selling to the extent permitted by the federal securities laws and rules and interpretations thereunder. To the extent the Fund engages in short selling in foreign
<FONT STYLE="white-space:nowrap">(non-U.S.)</FONT> jurisdictions, the Fund will do so to the extent permitted by the laws and regulations of such jurisdiction. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Illiquid Securities </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund may invest without limit
in securities which are illiquid at the time of investment (i.e., securities that the Fund 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 security). PIMCO may be subject to significant delays in disposing of illiquid securities, and other transaction costs that are higher than those for transactions in liquid securities may entail registration expenses
and other transaction costs that are higher than those for transactions in liquid securities. The term &#147;illiquid securities&#148; for this purpose means any investment that the Fund 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. Depending on the circumstances, illiquid securities may be </P>

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considered to include, among other things, written <FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">over-the-counter</FONT></FONT> options, securities or other liquid assets
being used as cover for such options, repurchase agreements with maturities in excess of seven days, certain loan participation interests, fixed time deposits which are not subject to prepayment or provide for withdrawal penalties upon prepayment
(other than overnight deposits), securities that are subject to legal or contractual restrictions on resale (such as privately placed debt securities), and other securities which legally or in PIMCO&#146;s opinion may be deemed illiquid (not
including securities issued pursuant to Rule 144A under the Securities Act), and certain commercial paper that PIMCO has determined to be liquid under procedures approved by the Board of Trustees). </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Other Investment Companies </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">To the extent constituent
with its objectives and strategy, the Fund may invest in securities of open- or <FONT STYLE="white-space:nowrap">closed-end</FONT> investment companies, including exchange-traded funds (&#147;ETFs&#148;), to the extent that such investments are
consistent with the Fund&#146;s investment objectives and policies and permissible under the 1940 Act. The Fund treats its investments in other investment companies that invest primarily in types of securities in which the Fund may invest directly
as investments in such types of securities for purposes of the Fund&#146;s investment policies (e.g., the Fund&#146;s investment in an investment company that invests primarily in debt securities will be treated by the Fund as an investment in a
debt security). </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">In general, under the 1940 Act, an investment company such as the Fund may not (i)&nbsp;own more than 3% of the outstanding voting
securities of any one registered investment company, (ii)&nbsp;invest more than 5% of its total assets in the securities of any single registered investment company or (iii)&nbsp;invest more than 10% of its total assets in securities of other
registered investment companies. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund may invest in other investment companies to gain broad market or sector exposure, including during periods when
it has large amounts of uninvested cash (such as the period shortly after the Fund receives the proceeds of the offering of its Common Shares) or when PIMCO believes share prices of other investment companies offer attractive values. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">As a shareholder in an investment company, the Fund will bear its ratable share of that investment company&#146;s expenses and would remain subject to payment
of the Fund&#146;s management fees and other expenses with respect to assets so invested. Common Shareholders would therefore be subject to duplicative expenses to the extent the Fund invests in other investment companies. In addition, the
securities of other investment companies may also be leveraged and will therefore be subject to the same leverage risks described in the Prospectus and herein. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Portfolio Turnover </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The selling of the securities held
by the Fund and reinvestment of the proceeds is known as &#147;portfolio turnover.&#148; PIMCO manages the Fund without regard generally to restrictions on portfolio turnover. High portfolio turnover (e.g., greater than 100%) involves
correspondingly greater expenses to the Fund, including brokerage commissions or dealer <FONT STYLE="white-space:nowrap">mark-ups</FONT> and other </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">77 </P>


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transaction costs on the sale of securities and reinvestments in other securities. The higher the rate of portfolio turnover of the Fund, the higher these transaction costs borne by the Fund
generally will be. Such sales may result in realization of taxable capital gains (including short-term capital gains which are taxed when distributed to shareholders who are individuals at ordinary income tax rates). See &#147;Taxation.&#148; </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The portfolio turnover rate of the Fund is calculated by dividing (a)&nbsp;the lesser of purchases or sales of portfolio securities for the particular fiscal
year by (b)&nbsp;the monthly average of the value of the portfolio securities owned by the Fund during the particular fiscal year. In calculating the rate of portfolio turnover, there is excluded from both (a)&nbsp;and (b) all derivatives and all
securities, including options, whose maturities or expiration dates at the time of acquisition were one year or less. Proceeds from short sales and assets used to cover short positions undertaken are also excluded from both (a)&nbsp;and (b). </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Warrants to Purchase Securities </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund may invest in
or acquire warrants to purchase equity or fixed income securities. Bonds with warrants attached to purchase equity securities have many characteristics of convertible bonds and their prices may, to some degree, reflect the performance of the
underlying stock. Bonds also may be issued with warrants attached to purchase additional fixed income securities at the same coupon rate. A decline in interest rates would permit the Fund to buy additional bonds at the favorable rate or to sell the
warrants at a profit. If interest rates rise, the warrants would generally expire with no value. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Loans of Portfolio Securities </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Subject to certain conditions described in the Prospectus and below, the Fund may make secured loans of its portfolio securities to brokers, dealers and other
financial institutions amounting to no more than <FONT STYLE="white-space:nowrap">one-third</FONT> of its total assets. The risks in lending portfolio securities, as with other extensions of credit, include possible delay in recovery of the
securities or possible loss of rights in the collateral should the borrowers (which typically include broker-dealers and other financial services companies) fail financially. However, such loans will be made only to borrowers that are believed by
PIMCO to be of satisfactory credit standing. Securities loans are made to broker-dealers pursuant to agreements requiring that loans be continuously secured by collateral consisting of U.S. Government securities, cash or cash equivalents (negotiable
certificates of deposit, bankers&#146; acceptances or letters of credit) maintained on a daily <FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">mark-to-market</FONT></FONT> basis in an amount at least equal at all times to the
market value of the securities lent. The borrower pays to the Fund, as the lender, an amount equal to any dividends or interest received on the securities lent. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund may invest only the cash collateral received in interest-bearing, short-term securities or receive a fee from the borrower. In the case of cash
collateral, the Fund typically pays a rebate to the lender. Although voting rights or rights to consent with respect to the loaned securities pass to the borrower, the Fund, as the lender, retains the right to call the loans and obtain the return of
the securities loaned at any time on reasonable notice, and it will do so in order that the securities may be voted by the Fund if the holders of such securities are asked to vote upon or consent to </P>

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matters materially affecting the investment. The Fund may also call such loans in order to sell the securities involved. The Fund&#146;s performance will continue to reflect changes in the value
of the securities loaned and will also reflect the receipt of either interest, through investment of cash collateral by the Fund in permissible investments, or a fee, if the collateral is U.S. Government securities. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Participation on Creditors Committees </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Generally, when
the Fund holds bonds or other similar fixed income securities of an issuer, the Fund becomes a creditor of the issuer. As a creditor of an issuer, the Fund may be subject to challenges related to the securities that it holds, either in connection
with the bankruptcy of the issuer or in connection with another action brought by other creditors of the issuer, shareholders of the issuer or the issuer itself (collectively, &#147;restructuring transactions&#148;). Although under no obligation to
do so, PIMCO, as adviser to the Fund, may from time to time have an opportunity to consider, on behalf of the Fund and other similarly situated clients, negotiating or otherwise participating in the restructuring of the Fund&#146;s portfolio
investment or the issuer of such investment. PIMCO, in its judgment and discretion and based on the considerations deemed by PIMCO to be relevant, may believe that it is in the best interests of the Fund to negotiate or otherwise participate in a
restructuring transaction. Accordingly, and subject to applicable procedures approved by the Board of Trustees, the Fund may from time to time participate on committees formed by creditors to negotiate with the management of financially troubled
issuers of securities held by the Fund. Such participation may subject the Fund to expenses such as legal fees and may make the Fund an &#147;insider&#148; of the issuer for purposes of the federal securities laws, and therefore may restrict the
Fund&#146;s ability to trade in or acquire additional positions in a particular security when it might otherwise desire to do so. Participation by the Fund on such committees also may expose the Fund to potential liabilities under the federal
bankruptcy laws or other laws governing the rights of creditors and debtors. Further, PIMCO has the general authority, subject to the above-mentioned procedures, to represent the Fund on creditors&#146; committees (or similar committees) or
otherwise in connection with a restructuring transaction. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Short-Term Investments / Temporary Defensive Strategies </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Upon PIMCO&#146;s recommendation, for temporary defensive purposes and in order to keep the Fund&#146;s cash fully invested, the Fund may invest up to 100% of
its net assets in investment grade debt securities, including high quality, short-term debt instruments, credit-linked trust certificates and/or index futures contracts or similar derivative instruments. Such investments may prevent the Fund from
achieving its investment objectives. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Tax Consequences </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The requirements for qualification as a regulated investment company limit the extent to which the Fund may invest in certain securities and transactions
described above. In addition, the Fund&#146;s utilization of certain investment instruments may alter the character and timing of income attributable to the Fund relative to other means of achieving similar investment exposure. In certain
circumstances, accelerated attribution of income may require the Fund to sell assets in order to meet regulated investment company distribution requirements even when investment considerations make such sales otherwise undesirable. For more
information concerning these requirements and the taxation of investments, see &#147;Tax Matters&#148; below. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">79 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B><A NAME="sai302337_3"></A>INVESTMENT RESTRICTIONS </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Except as described below, the Fund, as a fundamental policy, may not, without the approval of the holders of a majority of the outstanding Common Shares and
any outstanding preferred shares of beneficial interest voting together as a single class, and of the holders of a majority of any outstanding preferred shares of beneficial interest voting as a separate class: </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; margin-left:2%; text-indent:7%; font-size:12pt; font-family:Times New Roman">(1) Purchase any security if as a result 25% or more of the Fund&#146;s total assets (taken at current value at the time of
investment) would be invested in a single industry (for purposes of this restriction, investment companies are not considered to be part of any industry). As a fundamental policy, the Fund, under normal circumstances, will invest at least 25% of its
total assets in mortgage-related securities not issued or guaranteed as to principal or interest by the U.S. Government or its agencies or instrumentalities and other investments that the Fund&#146;s investment adviser or <FONT
STYLE="white-space:nowrap">sub-adviser</FONT> determines have the same primary economic characteristics. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; margin-left:2%; text-indent:7%; font-size:12pt; font-family:Times New Roman">(2) Purchase or
sell real estate, although it may purchase securities secured by real estate or interests therein, or securities issued by companies that invest in real estate, or interests therein. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; margin-left:2%; text-indent:7%; font-size:12pt; font-family:Times New Roman">(3) Purchase or sell commodities or commodities contracts or oil, gas or mineral programs. This restriction shall not prohibit
the Fund, subject to restrictions described in the Prospectus and elsewhere in this Statement of Additional Information, from purchasing, selling or entering into futures contracts, options on futures contracts, forward contracts, or any interest
rate, securities-related or other derivative instrument, including swap agreements and other derivative instruments, subject to compliance with any applicable provisions of the federal securities or commodities laws. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; margin-left:2%; text-indent:7%; font-size:12pt; font-family:Times New Roman">(4) Borrow money or issue any senior security, except to the extent permitted under the 1940 Act and as interpreted, modified,
or otherwise permitted from time to time by regulatory authority having jurisdiction. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; margin-left:2%; text-indent:7%; font-size:12pt; font-family:Times New Roman">(5) Make loans, except to the
extent permitted under the Investment Company Act of 1940, as amended, and as interpreted, modified, or otherwise permitted by regulatory authority having jurisdiction. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; margin-left:2%; text-indent:7%; font-size:12pt; font-family:Times New Roman">(6) Act as an underwriter of securities of other issuers, except to the extent that in connection with the disposition of
portfolio securities, it may be deemed to be an underwriter under the federal securities laws. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Subject to the Fund&#146;s self-imposed limitations, if
any, as they may be amended from time to time, the Fund interprets its policies with respect to leverage and borrowing, issuing senior securities and lending to permit such activities as may be lawful for the Fund, to the full extent permitted by
the 1940 Act or by exemption from the provisions therefrom pursuant to exemptive order of the SEC. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">80 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Currently, under the 1940 Act, the Fund may generally not lend money or property to any person, directly or
indirectly, if such person controls or is under common control with the Fund, except for a loan from the Fund to a company that owns all of the outstanding securities of the Fund, except directors&#146; and qualifying shares. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">For purposes of the foregoing, &#147;majority of the outstanding,&#148; when used with respect to particular shares of the Fund (whether voting together as a
single class or voting as separate classes), means (i)&nbsp;67% or more of such shares present at a meeting, if the holders of more than 50% of such shares are present or represented by proxy, or (ii)&nbsp;more than 50% of such shares, whichever is
less. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Unless otherwise indicated, all limitations applicable to the Fund&#146;s investments (as stated above and elsewhere in this Statement of
Additional Information) apply only at the time a transaction is entered into. Any subsequent change in a rating assigned by any rating service to a security (or, if unrated, deemed by PIMCO to be of comparable quality), or change in the percentage
of the Fund&#146;s total assets invested in certain securities or other instruments, or change in the average maturity or duration of the Fund&#146;s investment portfolio, resulting from market fluctuations or other changes in the Fund&#146;s total
assets will not require the Fund to dispose of an investment until PIMCO determines that it is practicable to sell or close out the investment without undue market or tax consequences to the Fund. In the event that rating agencies assign different
ratings to the same security, PIMCO will determine which rating it believes best reflects the security&#146;s quality and risk at that time, which may be the higher of the several assigned ratings. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Under the 1940 Act, a &#147;senior security&#148; does not include any promissory note or evidence of indebtedness where such loan is for temporary purposes
only and in an amount not exceeding 5% of the value of the total assets of the issuer at the time the loan is made. A loan is presumed to be for temporary purposes if it is repaid within sixty days and is not extended or renewed. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">For purposes of applying the terms of the Fund&#146;s policy in the first sentence of paragraph (1)&nbsp;above (the &#147;industry concentration
policy&#148;), PIMCO will, on behalf of the Fund, make reasonable determinations as to the appropriate industry classification to assign to each security or instrument in which the Fund invests. The definition of what constitutes a particular
&#147;industry&#148; is an evolving one, particularly for industries or sectors within industries that are new or are undergoing rapid development. Some securities could reasonably fall within more than one industry category. The Fund&#146;s
industry concentration policy does not preclude it from focusing investments in issuers in a group of related industrial sectors (such as different types of utilities). For purposes of the industry concentration policy, a foreign government is
considered to be an industry, although currency positions are not considered to be an investment in a foreign government for these purposes. Mortgage-related or asset-backed securities that are issued or guaranteed as to principal or interest by the
U.S. Government or its agencies or instrumentalities are not subject to the Fund&#146;s industry concentration policy, by virtue of the exclusion from that test available to all U.S. Government securities. Similarly, municipal bonds issued by
states, municipalities and other political subdivisions, agencies, authorities and instrumentalities of states and multi-state agencies and authorities are not subject to the Fund&#146;s industry concentration policy. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">81 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">For purposes of applying the terms of the policy in the second sentence of paragraph (1)&nbsp;above,
privately-issued mortgage-related securities include, but are not limited to, any mortgage-related security (other than those issued or guaranteed as to principal or interest by the U.S Government or its agencies or instrumentalities), securities
representing interests in, collateralized or backed by, or whose values are determined in whole or in part by reference to any number of mortgages or pools of mortgages or the payment experience of such mortgages or pools of mortgages, including
Real Estate Mortgage Investment Conduits (&#147;REMICs&#148;), which could include resecuritizations of REMICs <FONT STYLE="white-space:nowrap">(&#147;Re-REMICs&#148;),</FONT> mortgage pass-through securities, inverse floaters, collateralized
mortgage obligations, collateralized loan obligations, multiclass pass-through securities, private mortgage pass-through securities, and stripped mortgage securities (generally interest-only and principal-only securities). Exposures to
mortgage-related securities through derivatives or other financial instruments may be considered investments in mortgage-related securities. Privately-issued mortgage-related securities also may include, without limitation, interests in pools of
residential mortgages or commercial mortgages, and may relate to domestic or <FONT STYLE="white-space:nowrap">non-US</FONT> mortgages. It shall not be a violation of the policy in the second sentence of paragraph (1)&nbsp;above if the Fund has less
than 25% of its total assets invested in privately-issued mortgage-related securities and other investments that PIMCO determines have the same primary economic characteristics at a time when the market for privately-issued mortgage-related
securities is inactive or ceases to exist in sufficient volume, such that it is not reasonably practicable for the Fund to invest 25% or more of its total assets in privately-issued mortgage-related securities in the best interests of the Fund.
Because the market for mortgage-related securities continues to develop, it is possible that instruments that have not yet been created will be issued in the future by <FONT STYLE="white-space:nowrap">non-governmental</FONT> entities and will be
determined by PIMCO to have similar economic characteristics as the instruments named in this paragraph. Such new instruments would be applied towards satisfying the Fund&#146;s policy in the second sentence of paragraph (1)&nbsp;above. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">To the extent the Fund covers its commitment under a reverse repurchase agreement, credit default swap or other derivative instrument by the segregation of
assets determined by PIMCO to be liquid in accordance with procedures adopted by the Trustees, equal in value to the amount of the Fund&#146;s commitment, such instrument will not be considered a &#147;senior security&#148; for purposes of the 1940
Act asset coverage requirements otherwise applicable to borrowings by the Fund. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B><A NAME="sai302337_4"></A>MANAGEMENT OF THE FUND
</B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:5%; font-size:12pt; font-family:Times New Roman"><B>Trustees and Officers </B></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:5%; font-size:12pt; font-family:Times New Roman">The business of the Fund is managed under the direction of the Fund&#146;s Board of Trustees (the &#147;Board&#148;). Subject to the provisions
of the Fund&#146;s Amended and Restated Agreement and Declaration of Trust, as may be amended from time to time (the &#147;Declaration&#148;) its Bylaws, as may be amended from time to time (the &#147;Bylaws&#148;) and Massachusetts law, the
Trustees have all powers necessary and convenient to carry out their responsibilities, including the election and removal of the Fund&#146;s officers. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:5%; font-size:12pt; font-family:Times New Roman"><B>Board Leadership Structure</B>&nbsp;&#151; The Board consists of eight Trustees, six of whom are not &#147;interested persons&#148; (within
the meaning of Section 2(a)(19) of the 1940 Act) of the Fund or of the Investment Manager (the &#147;Independent Trustees&#148;), which represents 75% of the Trustees that are Independent Trustees. An Independent Trustee serves as Chairman of the
Board and is selected by a vote of the majority of the Independent Trustees. The Chairman of the Trustees presides at meetings of the Board and acts as a liaison with service providers, officers, attorneys and other Trustees generally between
meetings, and performs such other functions as may be requested by the Board from time to time. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">82 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:5%; font-size:12pt; font-family:Times New Roman">The Board meets regularly four times each year to discuss and consider matters concerning the
Fund, and also holds special meetings to address matters arising between regular meetings. The Independent Trustees regularly meet outside the presence of management and are advised by independent legal counsel. Regular meetings generally take place
<FONT STYLE="white-space:nowrap">in-person;</FONT> other meetings may take place <FONT STYLE="white-space:nowrap">in-person</FONT> or by telephone. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:5%; font-size:12pt; font-family:Times New Roman">The Board has established five standing Committees to facilitate the Trustees&#146; oversight of the management of the Fund: the Audit
Oversight Committee, the Nominating Committee, the Valuation Oversight Committee, the Compensation Committee and the Contracts Committee. The functions and role of each Committee are described below under &#147;Committees of the Board of
Trustees.&#148; The membership of each Committee consists of all of the Independent Trustees, which the Board believes allows them to participate in the full range of the Board&#146;s oversight duties. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:5%; font-size:12pt; font-family:Times New Roman">The Board reviews its leadership structure periodically and has determined that this leadership structure, including an Independent Chairman,
a supermajority of Independent Trustees and Committee membership limited to Independent Trustees, is appropriate in light of the characteristics and circumstances of the Fund. In reaching this conclusion, the Board considered, among other things,
the predominant role of the Investment Manager in the <FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">day-to-day</FONT></FONT> management of Fund affairs, the extent to which the work of the Board is conducted through the
Committees, the number of portfolios overseen by the Board that are advised by the Investment Manager or have an investment adviser that is an affiliated person of the Investment Manager (the &#147;Fund Complex&#148;), the variety of asset classes
those funds include, the assets of the Fund and the other funds overseen by the Board in the Fund Complex and the management and other service arrangements of the Fund and such other portfolios. The Board also believes that its structure, including
the presence of two Trustees who are executives with the Investment Manager or InvestmentManager-affiliated entities, facilitates an efficient flow of information concerning the management of the Fund to the Independent Trustees. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:5%; font-size:12pt; font-family:Times New Roman"><B>Risk Oversight</B>&nbsp;&#151; The Fund has retained the Investment Manager to provide investment advisory services and administrative
services. Accordingly, the Investment Manager is immediately responsible for the management of risks that may arise from Fund investments and operations. Some employees of the Investment Manager serve as the Fund&#146;s officers, including the
Fund&#146;s principal executive officer and principal financial and accounting officer, chief compliance officer and chief legal officer. The Investment Manager and the Fund&#146;s other service providers have adopted policies, processes, and
procedures to identify, assess and manage different types of risks associated with the Fund&#146;s activities. The Board oversees the performance of these functions by the Investment Manager and the Fund&#146;s other service providers, both directly
and through the Committee structure it has established. The Board receives from the Investment Manager a wide range of reports, both on a regular and <FONT STYLE="white-space:nowrap">as-needed</FONT> basis, relating to the Fund&#146;s activities and
to the actual and potential risks of the Fund. These include reports on investment and market risks, custody and valuation of Fund assets, compliance with applicable laws, and the Fund&#146;s financial accounting and reporting. In addition, the
Board meets periodically with the portfolio managers of the Fund or their delegates to receive reports regarding the portfolio management of the Fund and its performance, including its investment risks. In the course of these meetings and
discussions with the Investment Manager, the Board has emphasized to the Investment Manager the importance of maintaining vigorous risk-management programs and procedures. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">83 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:5%; font-size:12pt; font-family:Times New Roman">In addition, the Board has appointed a Chief Compliance Officer (&#147;CCO&#148;). The CCO
oversees the development of compliance policies and procedures that are reasonably designed to minimize the risk of violations of the federal securities laws (&#147;Compliance Policies&#148;). The CCO reports directly to the Independent Trustees,
interacts with individuals within the Investment Manager&#146;s organization and provides presentations to the Board at its quarterly meetings and an annual report on the application of the Compliance Policies. The Board periodically discusses
relevant risks affecting the Fund with the CCO at these meetings. The Board has approved the Compliance Policies and reviews the CCO&#146;s reports. Further, the Board annually reviews the sufficiency of the Compliance Policies, as well as the
appointment and compensation of the CCO. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:5%; font-size:12pt; font-family:Times New Roman">The Board recognizes that the reports it receives concerning risk management matters are, by
their nature, typically summaries of the relevant information. Moreover, the Board recognizes that not all risks that may affect the Fund can be identified in advance; that it may not be practical or cost-effective to eliminate or mitigate certain
risks; that it may be necessary to bear certain risks (such as investment-related risks) in seeking to achieve the Fund&#146;s investment objectives; and that the processes, procedures and controls employed to address certain risks may be limited in
their effectiveness. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Trustees and officers of the Fund, their years of birth, the position they hold with the Fund, their term of office and length
of time served, a description of their principal occupations during the past five years, the number of portfolios in the Fund Complex that the Trustee oversees and any other public company directorships held by the Trustee are listed in the two
tables immediately following. Except as shown, each Trustee&#146;s and officer&#146;s principal occupation and business experience for the last five years have been with the employer(s) indicated, although in some cases the Trustee may have held
different positions with such employer(s). Unless otherwise indicated, the business address of the persons listed below is c/o Pacific Investment Management Company LLC, 1633 Broadway, New York, New York 10019. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">84 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>Independent Trustees<SUP STYLE="font-size:85%; vertical-align:top">*</SUP> </B></P>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:12pt" ALIGN="center">


<TR>
<TD WIDTH="11%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD WIDTH="10%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="12%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="30%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="11%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="13%"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom" NOWRAP> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Name,</B></P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Address,</B></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; border-bottom:1.00pt solid #000000; width:61.60pt; font-size:12pt; font-family:Times New Roman"><B>Year of<BR>Birth<BR>and&nbsp;Class**</B></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1.00pt solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-BOTTOM:1.00pt solid #000000"><B>Position(s)<BR>Held<BR>with&nbsp;the<BR>Fund</B></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1.00pt solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-BOTTOM:1.00pt solid #000000"><B>Term of<BR>Office&nbsp;and<BR>Length of<BR>Time&nbsp;Served</B></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1.00pt solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-BOTTOM:1.00pt solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>Principal Occupation(s)</B></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>During the Past 5 Years</B></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1.00pt solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-BOTTOM:1.00pt solid #000000"><B>Number<BR>of<BR>Portfolios<BR>in Fund<BR>Complex<BR>Overseen<BR>by<BR>Trustee&nbsp;***</B></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1.00pt solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-BOTTOM:1.00pt solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>Other<BR>Directorships<BR>Held by<BR>Trustee <BR>During
the<BR>Past</B></P> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>5&nbsp;Years</B></P></TD></TR>


<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="top" COLSPAN="11"><B>Independent Trustees</B></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Hans W.</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Kertess</P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">1939</P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:12pt; font-family:Times New Roman">Class&nbsp;I</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Chairman<BR>of the</P> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:12pt; font-family:Times New Roman">Board, Trustee</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Since 2012</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">President, H. Kertess&nbsp;&amp; Co., a financial advisory company; and. Senior Adviser (formerly Managing Director), Royal Bank of Canada Capital Markets (since 2004).</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">90</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">None</TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Deborah A.</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">DeCotis</P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">1952</P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:12pt; font-family:Times New Roman">Class&nbsp;III</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Trustee</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Since 2012</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Advisory Director, Morgan Stanley&nbsp;&amp; Co., Inc. (since 1996); Member, Circle Financial Group (since 2009); and Member, Council on Foreign Relations (since 2013). Formerly, <FONT STYLE="white-space:nowrap">Co-Chair</FONT>
Special Projects Committee, Memorial Sloan Kettering (2005-2015); Trustee, Stanford University (2010-2015); Principal, LaLoop LLC, a retail accessories company (1999-2014); Director, Helena Rubenstein Foundation (1997-2010); and Director, Armor
Holdings (2002-2010).</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">90</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">None</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Bradford K.</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Gallagher</P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">1944</P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:12pt; font-family:Times New Roman">Class&nbsp;II</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Trustee</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Since 2012</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Retired. Founder, Spyglass Investments LLC, a private investment vehicle (since 2001). Formerly, Chairman and Trustee,</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">90</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Formerly, Chairman and Trustee, Grail Advisors</TD></TR></TABLE>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">85 </P>


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<TR>
<TD WIDTH="11%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD WIDTH="10%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="12%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="30%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="11%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="13%"></TD></TR>

<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom" NOWRAP> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Name,</B></P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Address,</B></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; border-bottom:1.00pt solid #000000; width:61.60pt; font-size:12pt; font-family:Times New Roman"><B>Year of<BR>Birth<BR>and&nbsp;Class**</B></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1.00pt solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-BOTTOM:1.00pt solid #000000"><B>Position(s)<BR>Held<BR>with&nbsp;the<BR>Fund</B></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1.00pt solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-BOTTOM:1.00pt solid #000000"><B>Term of<BR>Office&nbsp;and<BR>Length of<BR>Time&nbsp;Served</B></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1.00pt solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-BOTTOM:1.00pt solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>Principal Occupation(s)</B></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>During the Past 5 Years</B></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1.00pt solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-BOTTOM:1.00pt solid #000000"><B>Number<BR>of<BR>Portfolios<BR>in Fund<BR>Complex<BR>Overseen<BR>by<BR>Trustee&nbsp;***</B></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1.00pt solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-BOTTOM:1.00pt solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>Other<BR>Directorships<BR>Held by<BR>Trustee <BR>During
the<BR>Past</B></P> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>5&nbsp;Years</B></P></TD></TR>


<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">The Common Fund (2005-2014); Partner, New Technology Ventures Capital Management LLC, a venture capital fund (2011-2013); Chairman and Trustee, Atlantic Maritime Heritage Foundation (2007-2012); and Founder, President and CEO,
Cypress Holding Company and Cypress Tree Investment Management Company (1995-2001).</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">ETF Trust (2009-2010); and Trustee, Nicholas-Applegate Institutional Funds (2007-2010).</TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">James A.</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Jacobson</P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">1945</P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:12pt; font-family:Times New Roman">Class&nbsp;II</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Trustee</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Since 2012</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Retired. Trustee (since 2002) and Chairman of Investment Committee (since 2007), Ronald McDonald House of New York; and Trustee, New Jersey City University (since 2014). Formerly, Vice Chairman and Managing Director, Spear,
Leeds&nbsp;&amp; Kellogg Specialists, LLC, a specialist firm on the New York Stock Exchange (2003-2008).</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">90</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Formerly, Trustee, Alpine Mutual Funds Complex consisting of 18 funds (2009-2016).</TD></TR></TABLE>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">86 </P>


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<TD WIDTH="11%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD WIDTH="10%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="12%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="30%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="11%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="13%"></TD></TR>

<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom" NOWRAP> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Name,</B></P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Address,</B></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; border-bottom:1.00pt solid #000000; width:61.60pt; font-size:12pt; font-family:Times New Roman"><B>Year of<BR>Birth<BR>and&nbsp;Class**</B></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1.00pt solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-BOTTOM:1.00pt solid #000000"><B>Position(s)<BR>Held<BR>with&nbsp;the<BR>Fund</B></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1.00pt solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-BOTTOM:1.00pt solid #000000"><B>Term of<BR>Office&nbsp;and<BR>Length of<BR>Time&nbsp;Served</B></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1.00pt solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-BOTTOM:1.00pt solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>Principal Occupation(s)</B></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>During the Past 5 Years</B></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1.00pt solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-BOTTOM:1.00pt solid #000000"><B>Number<BR>of<BR>Portfolios<BR>in Fund<BR>Complex<BR>Overseen<BR>by<BR>Trustee&nbsp;***</B></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1.00pt solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-BOTTOM:1.00pt solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>Other<BR>Directorships<BR>Held by<BR>Trustee <BR>During
the<BR>Past</B></P> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>5&nbsp;Years</B></P></TD></TR>


<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">William B.</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Ogden, IV</P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">1945</P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:12pt; font-family:Times New Roman">Class&nbsp;I</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Trustee</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Since 2012</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Retired. Formerly, Asset Management Industry Consultant; and Managing Director, Investment Banking Division of Citigroup Global Markets Inc.</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">90</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">None</TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Alan</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Rappaport</P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">1953</P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:12pt; font-family:Times New Roman">Class I</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Trustee</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Since 2012</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Advisory Director (formerly Vice Chairman), Roundtable Investment Partners (since 2009); Adjunct Professor, New York University Stern School of Business (since 2011); Lecturer, Stanford University Graduate School of Business (since
2013); Director, Victory Capital Holdings, Inc., an asset management firm (since 2013); and Member of Board of Overseers, NYU Langone Medical Center (since 2015). Formerly, Trustee, American Museum of Natural History (2005-2015); Trustee, NYU
Langone Medical Center (2007-2015); Vice Chairman (formerly Chairman and President), U.S. Trust (formerly Private Bank of Bank of America, the predecessor entity of U.S. Trust) (2001-2008).</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">90</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">None</TD></TR></TABLE>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">87 </P>


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<TD WIDTH="11%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD WIDTH="10%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="12%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="30%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="11%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="13%"></TD></TR>

<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom" NOWRAP> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Name,</B></P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Address,</B></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; border-bottom:1.00pt solid #000000; width:61.60pt; font-size:12pt; font-family:Times New Roman"><B>Year of<BR>Birth<BR>and&nbsp;Class**</B></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1.00pt solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-BOTTOM:1.00pt solid #000000"><B>Position(s)<BR>Held<BR>with&nbsp;the<BR>Fund</B></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1.00pt solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-BOTTOM:1.00pt solid #000000"><B>Term of<BR>Office&nbsp;and<BR>Length of<BR>Time&nbsp;Served</B></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1.00pt solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-BOTTOM:1.00pt solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>Principal Occupation(s)</B></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>During the Past 5 Years</B></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1.00pt solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-BOTTOM:1.00pt solid #000000"><B>Number<BR>of<BR>Portfolios<BR>in Fund<BR>Complex<BR>Overseen<BR>by<BR>Trustee&nbsp;***</B></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1.00pt solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-BOTTOM:1.00pt solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>Other<BR>Directorships<BR>Held by<BR>Trustee <BR>During
the<BR>Past</B></P> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>5&nbsp;Years</B></P></TD></TR>


<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="top" COLSPAN="11"><B>Interested Trustees</B></TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Craig A. Dawson****</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">1968</P>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">650 Newport Center Drive, Newport Beach, CA 92660</P>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:12pt; font-family:Times New Roman">Class&nbsp;II</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Trustee</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Since 2014</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Managing Director and Head of PIMCO Europe, Middle East and Africa (since 2016). Director of a number of PIMCO&#146;s Europeans investment vehicles and affiliates (since 2008). Formerly, Head of Strategic Business Management, PIMCO
(2014-2016), head of PIMCO&#146;s Munich office and head of European product management for&nbsp;PIMCO.</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">26</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">None</TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">John C.</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Maney*****</P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">1959</P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">650 Newport Center Drive, Newport Beach, CA 92660</P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:12pt; font-family:Times New Roman">Class&nbsp;III</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Trustee</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Since 2012</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Managing Director of Allianz Asset Management of America L.P. (since January 2005) and a member of the Management Board and Chief Operating Officer of Allianz Asset Management of America L.P. (since November 2006). Formerly, Member
of the Management Board</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">26</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">None</TD></TR></TABLE>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">88 </P>


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<TR>
<TD WIDTH="11%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD WIDTH="10%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="12%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="30%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="11%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="13%"></TD></TR>

<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom" NOWRAP> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Name,</B></P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Address,</B></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; border-bottom:1.00pt solid #000000; width:61.60pt; font-size:12pt; font-family:Times New Roman"><B>Year of<BR>Birth<BR>and&nbsp;Class**</B></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1.00pt solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-BOTTOM:1.00pt solid #000000"><B>Position(s)<BR>Held<BR>with&nbsp;the<BR>Fund</B></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1.00pt solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-BOTTOM:1.00pt solid #000000"><B>Term of<BR>Office&nbsp;and<BR>Length of<BR>Time&nbsp;Served</B></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1.00pt solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-BOTTOM:1.00pt solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>Principal Occupation(s)</B></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>During the Past 5 Years</B></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1.00pt solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-BOTTOM:1.00pt solid #000000"><B>Number<BR>of<BR>Portfolios<BR>in Fund<BR>Complex<BR>Overseen<BR>by<BR>Trustee&nbsp;***</B></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1.00pt solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-BOTTOM:1.00pt solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>Other<BR>Directorships<BR>Held by<BR>Trustee <BR>During
the<BR>Past</B></P> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>5&nbsp;Years</B></P></TD></TR>


<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">of Allianz Global Investors Fund Management LLC (2007-2014) and Managing Director of Allianz Global Investors Fund Management LLC (2011-2014).</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"></TD></TR>
</TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P> <P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="6%" VALIGN="top" ALIGN="left">*</TD>
<TD ALIGN="left" VALIGN="top">&#147;Independent Trustees&#148; are those Trustees who are not &#147;interested persons&#148; (as defined in Section 2(a)(19) of the 1940 Act). </TD></TR></TABLE>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="6%" VALIGN="top" ALIGN="left">**</TD>
<TD ALIGN="left" VALIGN="top">The term &#147;Fund Complex&#148; as used herein includes the Fund and the following registered investment companies: PIMCO Municipal Income Fund, PIMCO California Municipal Income Fund, PIMCO New York Municipal Income
Fund, PIMCO Municipal Income Fund II, PIMCO California Municipal Income Fund II, PIMCO New York Municipal Income Fund II, PIMCO Municipal Income Fund III, PIMCO California Municipal Income Fund III, PIMCO New York Municipal Income Fund III, PIMCO
Corporate&nbsp;&amp; Income Strategy Fund, PIMCO Income Opportunity Fund, PCM Fund, Inc., PIMCO Dynamic Credit and Mortgage Income Fund, PIMCO Dynamic Income Fund, PIMCO High Income Fund, PIMCO Income Strategy Fund, PIMCO Income Strategy Fund II,
PIMCO Global StocksPLUS<SUP STYLE="font-size:85%; vertical-align:top">&reg;</SUP>&amp; Income Fund and PIMCO Strategic Income Fund, Inc., each series of PIMCO Managed Accounts Trust, AllianzGI Diversified Income&nbsp;&amp; Convertible Fund,
AllianzGI Convertible&nbsp;&amp; Income Fund, AllianzGI Convertible&nbsp;&amp; Income Fund II, AllianzGI NFJ Dividend, Interest&nbsp;&amp; Premium Strategy Fund, AllianzGI Equity&nbsp;&amp; Convertible Income Fund, each series of Allianz Funds,
Allianz Funds Multi-Strategy Trust, AllianzGI Institutional Multi-Series Trust and Premier Multi-Series VIT. </TD></TR></TABLE>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="6%" VALIGN="top" ALIGN="left">***</TD>
<TD ALIGN="left" VALIGN="top">Unless otherwise indicated, the business address of the persons listed above is c/o Pacific Investment Management Company LLC, 1633 Broadway, New York, New York 10019. </TD></TR></TABLE>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="6%" VALIGN="top" ALIGN="left">****</TD>
<TD ALIGN="left" VALIGN="top">&#147;Interested Trustees&#148; are those Trustees treated as &#147;interested persons&#148; (as defined in Section&nbsp;2(a)(19) of the 1940 Act) of the Fund. Mr.&nbsp;Dawson is an Interested Trustee of the Fund due to
his affiliation with PIMCO and its affiliates. </TD></TR></TABLE>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="6%" VALIGN="top" ALIGN="left">*****</TD>
<TD ALIGN="left" VALIGN="top">Mr.&nbsp;Maney is an Interested Trustee of the Fund due to his affiliation with Allianz Asset Management of America L.P. and its affiliates. </TD></TR></TABLE>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:7%; font-size:12pt; font-family:Times New Roman">In accordance with the Fund&#146;s staggered board (see &#147;Anti-Takeover and Other Provisions in the Declaration of Trust&#148;), the
Common Shareholders of the Fund elect Trustees to fill the vacancies of Trustees whose terms expire at each annual meeting of Common Shareholders. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">89 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>Officers </B></P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:12pt" ALIGN="center">


<TR>
<TD WIDTH="16%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD WIDTH="13%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD WIDTH="12%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD WIDTH="53%"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom" NOWRAP> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Name,<BR>Address</B></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; border-bottom:1.00pt solid #000000; width:91.00pt; font-size:12pt; font-family:Times New Roman"><B>and&nbsp;Year&nbsp;of&nbsp;Birth</B></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>Position(s)<BR>Held<BR>with&nbsp;Fund</B></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>Term of</B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>Office and</B></P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>Length
of</B></P> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>Time Served</B></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>Principal Occupation(s)</B></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>During the Past 5 Years</B></P></TD></TR>


<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Peter G. Strelow<SUP STYLE="font-size:85%; vertical-align:top">1</SUP></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:12pt; font-family:Times New Roman">1970</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">President</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Since 2014</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Managing Director, PIMCO. President, PIMCO-Managed Funds, PIMCO Funds, PIMCO Variable</P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:12pt; font-family:Times New Roman">Insurance Trust, PIMCO ETF Trust, PIMCO Equity Series and PIMCO Equity Series VIT.</P></TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Youse Guia<SUP STYLE="font-size:85%; vertical-align:top">1</SUP></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:12pt; font-family:Times New Roman">1972</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Chief Compliance Officer</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Since 2014</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Senior Vice President and Deputy Chief Compliance Officer, PIMCO. Chief Compliance Officer, PIMCO-Managed Funds. Formerly, Head of Compliance, Allianz Global Investors U.S. Holdings LLC and Chief Compliance Officer of the Allianz
Funds, Allianz Multi-Strategy Trust, Allianz Global Investors Sponsored <FONT STYLE="white-space:nowrap">Closed-End</FONT> Funds, Premier Multi-Series VIT and The Korea Fund, Inc.</TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Joshua D. Ratner<SUP STYLE="font-size:85%; vertical-align:top">2</SUP></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:12pt; font-family:Times New Roman">1976</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Vice President, Secretary and Chief Legal Officer</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Since 2014</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Executive Vice President and Senior Counsel, PIMCO. Chief Legal Officer, PIMCO Investments LLC. Vice President, Secretary and Chief Legal Officer, PIMCO-Managed Funds. Vice President&#151;Senior Counsel, Secretary, PIMCO Funds,
PIMCO Variable Insurance Trust, PIMCO ETF Trust, PIMCO Equity Series and PIMCO Equity Series VIT.</TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Ryan Leshaw<SUP STYLE="font-size:85%; vertical-align:top">1</SUP></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:12pt; font-family:Times New Roman">1980</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Assistant Secretary</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Since 2014</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Senior Vice President and Senior Counsel, PIMCO. Assistant Secretary, PIMCO-Managed Funds, PIMCO Funds, PIMCO Variable Insurance Trust, PIMCO ETF Trust, PIMCO Equity Series and PIMCO Equity Series VIT. Formerly, Associate, Willkie
Farr&nbsp;&amp; Gallagher LLP.</TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Stacie D. Anctil<SUP STYLE="font-size:85%; vertical-align:top">1</SUP></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:12pt; font-family:Times New Roman">1969</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Vice President</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Since 2015</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Senior Vice President, PIMCO. Vice President, PIMCO-Managed Funds, PIMCO Funds, PIMCO Variable Insurance Trust, PIMCO ETF Trust, PIMCO Equity Series and PIMCO Equity Series
VIT.</TD></TR></TABLE>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">90 </P>


<p Style='page-break-before:always'>
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<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:12pt" ALIGN="center">


<TR>
<TD WIDTH="16%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD WIDTH="13%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD WIDTH="12%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD WIDTH="53%"></TD></TR>

<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom" NOWRAP> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Name,<BR>Address</B></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; border-bottom:1.00pt solid #000000; width:91.00pt; font-size:12pt; font-family:Times New Roman"><B>and&nbsp;Year&nbsp;of&nbsp;Birth</B></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>Position(s)<BR>Held<BR>with&nbsp;Fund</B></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>Term of</B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>Office and</B></P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>Length
of</B></P> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>Time Served</B></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>Principal Occupation(s)</B></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>During the Past 5 Years</B></P></TD></TR>


<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Eric D. Johnson<SUP STYLE="font-size:85%; vertical-align:top">2</SUP></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:12pt; font-family:Times New Roman">1970</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Vice President</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Since 2014</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Executive Vice President, PIMCO. Vice President, PIMCO-Managed Funds, PIMCO Funds, PIMCO Variable Insurance Trust, PIMCO ETF Trust, PIMCO Equity Series and PIMCO Equity Series VIT.</TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">William G. Galipeau<SUP STYLE="font-size:85%; vertical-align:top">1</SUP></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:12pt; font-family:Times New Roman">1974</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Treasurer</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Since 2014</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Executive Vice President, PIMCO. Treasurer, PIMCO-Managed Funds. Vice President, PIMCO Funds, PIMCO Variable Insurance Trust, PIMCO ETF Trust, PIMCO Equity Series and PIMCO Equity Series VIT.</TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Erik C. Brown<SUP STYLE="font-size:85%; vertical-align:top">1</SUP></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:12pt; font-family:Times New Roman">1967</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Assistant Treasurer</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Since 2015</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Executive Vice President, PIMCO. Assistant Treasurer, PIMCO-Managed Funds, PIMCO Funds, PIMCO Variable Insurance Trust, PIMCO ETF Trust,
PIMCO Equity Series and PIMCO Equity Series</P> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:12pt; font-family:Times New Roman">VIT.</P></TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Christoper M. Morin<SUP STYLE="font-size:85%; vertical-align:top">1</SUP></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:12pt; font-family:Times New Roman">1980</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Assistant Treasurer</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Since 2016</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Vice President, PIMCO. Assistant Treasurer, PIMCO-Managed Funds, PIMCO Funds, PIMCO Funds, PIMCO Variable Insurance Trust, PIMCO ETF Trust, PIMCO Equity Series and PIMCO Equity Series VIT. Formerly, Vice President of Operations,
Standard Life Investments USA; Assistant Vice President, Brown Brothers Harrisman.</TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Jason J. Nagler<SUP STYLE="font-size:85%; vertical-align:top">2</SUP></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:12pt; font-family:Times New Roman">1982</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Assistant Treasurer</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Since 2015</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Vice President, PIMCO. Assistant Treasurer, PIMCO-Managed Funds, PIMCO Funds, PIMCO Variable Insurance Trust, PIMCO ETF Trust, PIMCO Equity Series and PIMCO Equity Series VIT. Formerly, Head of Mutual Fund Reporting, GMO, and
Assistant Treasurer, GMO Trust and GMO Series Trust Funds.</TD></TR></TABLE>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">91 </P>


<p Style='page-break-before:always'>
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<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:12pt" ALIGN="center">


<TR>
<TD WIDTH="16%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD WIDTH="13%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD WIDTH="12%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD WIDTH="53%"></TD></TR>

<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom" NOWRAP> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Name,<BR>Address</B></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; border-bottom:1.00pt solid #000000; width:91.00pt; font-size:12pt; font-family:Times New Roman"><B>and&nbsp;Year&nbsp;of&nbsp;Birth</B></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>Position(s)<BR>Held<BR>with&nbsp;Fund</B></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>Term of</B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>Office and</B></P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>Length
of</B></P> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>Time Served</B></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>Principal Occupation(s)</B></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>During the Past 5 Years</B></P></TD></TR>


<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Trent W. Walker<SUP STYLE="font-size:85%; vertical-align:top">1</SUP></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:12pt; font-family:Times New Roman">1974</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Assistant Treasurer</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Since 2014</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Executive Vice President, PIMCO. Assistant Treasurer, PIMCO-Managed Funds. Treasurer, PIMCO Funds, PIMCO Variable Insurance Trust, PIMCO ETF
Trust, PIMCO Equity Series and PIMCO Equity</P> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:12pt; font-family:Times New Roman">Series VIT.</P></TD></TR>
</TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:12pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">1</TD>
<TD ALIGN="left" VALIGN="top">The address of these officers is Pacific Investment Management Company LLC, 650 Newport Center Drive, Newport Beach, California 92660. </TD></TR></TABLE>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TR>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">2</TD>
<TD ALIGN="left" VALIGN="top">The address of these officers is Pacific Investment Management Company LLC, 1633 Broadway, New York, New York 10019. </TD></TR></TABLE>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Each of the Fund&#146;s executive officers is an &#147;interested person&#148; of the Fund (as defined in Section 2(a)(19) of the 1940 Act) as a result of his
or her position(s) set forth in the table above. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Trustee</B> <B>Qualifications</B>&nbsp;&#151; The Board has determined that each Trustee is qualified
to serve as such based on several factors (none of which alone is decisive). Each Trustee, with the exception of Mr.&nbsp;Dawson, has served in such role for several years. Mr.&nbsp;Dawson, who is also a Managing Director at PIMCO and Head of PIMCO
Europe, Middle East and Africa, has served as a Trustee of the Fund since PIMCO assumed the role of the Fund&#146;s investment manager in September 2014. Accordingly, each Trustee is knowledgeable about the Fund&#146;s business and service provider
arrangements, in part because, with the exception of Mr.&nbsp;Dawson, he or she has also served for several years as trustee or director to a number of other investment companies advised by the Investment Manager and its affiliates with similar
arrangemnts to that of the Fund. Mr.&nbsp;Dawson has served for several years as trustee or director to a number of European investment vehicles and affiliates. Among the factors the Board considered when concluding that an individual is qualified
to serve on the Board were the following: (i)&nbsp;the individual&#146;s business and professional experience and accomplishments; (ii)&nbsp;the individual&#146;s ability to work effectively with other members of the Board; (iii)&nbsp;the
individual&#146;s prior experience, if any, serving on the boards of public companies (including, where relevant, other investment companies) and other complex enterprises and organizations; and (iv)&nbsp;how the individual&#146;s skills,
experiences and attributes would contribute to an appropriate mix of relevant skills and experience on the Board. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">92 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:5%; font-size:12pt; font-family:Times New Roman">In respect of each Trustee, the individual&#146;s substantial professional accomplishments and
prior experience, including, in some cases, in fields related to the operations of the Fund, were a significant factor in the determination by the Board that the individual is qualified to serve as a Trustee of the Fund. The following is a summary
of various qualifications, experiences and skills of each Trustee (in addition to business experience during the past five years set forth in the table above) that contributed to the Board&#146;s conclusion that an individual is qualified to serve
on the Board. References to qualifications, experiences and skills are not intended to hold out the Board or individual Trustees as having any special expertise or experience, and shall not impose any greater responsibility or liability on any such
person or on the Board by reason thereof. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:5%; font-size:12pt; font-family:Times New Roman"><B>Hans W. Kertess</B>&nbsp;&#151; Mr.&nbsp;Kertess has substantial executive experience in the
investment management industry. He is the president of a financial advisory company, H. Kertess&nbsp;&amp; Co. and a Senior Adviser of Royal Bank of Canada Capital Markets, and formerly served as a Managing Director of Royal Bank of Canada Capital
Markets. He has significant expertise in the investment banking industry. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:5%; font-size:12pt; font-family:Times New Roman"><B>Craig A. Dawson &#151; </B>Mr.&nbsp;Dawson has substantial
executive experience in the investment management industry. Mr.&nbsp;Dawson is a Managing Director and Head of PIMCO Europe, Middle East and Africa. In that role he is in charge of guiding PIMCO&#146;s business initiatives in Europe, the Middle East
and Africa. Prior to taking on this position, Mr.&nbsp;Dawson was PIMCO&#146;s Head of Strategic Business Management. Mr.&nbsp;Dawson also serves as a Director of a number of PIMCO&#146;s European investment vehicles and affiliates. Because of his
familiarity with PIMCO and its affiliates, Mr.&nbsp;Dawson serves as an important information resource for the Independent Trustees and as a facilitator of communication with PIMCO. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:5%; font-size:12pt; font-family:Times New Roman"><B>Deborah A. DeCotis</B>&nbsp;&#151; Ms.&nbsp;DeCotis has substantial senior executive experience in the investment banking industry, having
served as a Managing Director for Morgan Stanley. She has extensive board experience and experience in oversight of investment management functions through her experience as a former Director of the Helena Rubenstein Foundation, Stanford Graduate
School of Business and Armor Holdings. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:5%; font-size:12pt; font-family:Times New Roman"><B>Bradford K. Gallagher</B>&nbsp;&#151; Mr.&nbsp;Gallagher has substantial executive and board
experience in the financial services and investment management industries. He has served as director to several other investment companies. Having served on the Operating Committee of Fidelity Investments and as a Managing Director and President of
Fidelity Investments Institutional Services Company, he provides the Fund with significant asset management industry expertise. He also brings significant securities industry experience, having served as a developer and founder of several
enterprises and private investment vehicles. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:5%; font-size:12pt; font-family:Times New Roman"><B>James A. Jacobson</B>&nbsp;&#151; Mr.&nbsp;Jacobson has substantial executive and board
experience in the financial services industry. He served for more than 15&nbsp;years as a senior executive at a New York Stock Exchange (the &#147;NYSE&#148;) specialist firm. He has also served on the NYSE Board of Directors, including terms as
Vice Chair. As such, he provides significant expertise on matters relating to portfolio brokerage and trade execution. He also provides the Fund with significant financial expertise, serves as the Audit Oversight Committee&#146;s Chair and has been
determined by the Board to be an &#147;audit committee financial expert.&#148; </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">93 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:5%; font-size:12pt; font-family:Times New Roman"><B>John C. Maney</B>&nbsp;&#151; Mr.&nbsp;Maney has substantial executive and board experience in
the investment management industry. He has served in a variety of senior-level positions with investment advisory firms affiliated with the Investment Manager. Because of his familiarity with the Investment Manager and affiliated entities, he serves
as an important information resource for the Independent Trustees and as a facilitator of communication with Allianz Asset Management of America L.P., PIMCO&#146;s U.S. parent company. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:5%; font-size:12pt; font-family:Times New Roman"><B>William B. Ogden, IV</B>&nbsp;&#151; Mr.&nbsp;Ogden has substantial senior executive experience in the investment banking industry. He
served as Managing Director at Citigroup, where he established and led the firm&#146;s efforts to raise capital for, and provide mergers and acquisition advisory services to, asset managers and investment advisers. He also has significant expertise
with fund products through his senior-level responsibility for originating and underwriting a broad variety of such products. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:5%; font-size:12pt; font-family:Times New Roman"><B>Alan
Rappaport</B>&nbsp;&#151; Mr.&nbsp;Rappaport has substantial senior executive experience in the financial services industry. He formerly served as Chairman and President of the Private Bank of Bank of America and as Vice Chairman of U.S.&nbsp;Trust.
He is currently an Advisory Director of an investment firm. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Committees of the Board of Trustees </B></P>
<P STYLE="margin-top:24pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Audit Oversight Committee.</B>&nbsp;The Board has established an Audit Oversight Committee, currently consisting of Messrs. Gallagher, Jacobson, Kertess,
Ogden, Rappaport and Ms.&nbsp;DeCotis, each of whom is an Independent Trustee. Mr.&nbsp;Jacobson is the current Chair of the Fund&#146;s Audit Oversight Committee. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Audit Oversight Committee provides oversight with respect to the internal and external accounting and auditing procedures of the Fund and, among other
things, determines the selection of an independent registered public accounting firm for the Fund and considers the scope of the audit, approves all audit and permitted <FONT STYLE="white-space:nowrap">non-audit</FONT> services proposed to be
performed by those auditors on behalf of the Fund and approves <FONT STYLE="white-space:nowrap">non-audit</FONT> services to be performed by the auditors for certain affiliates, including PIMCO and entities in a control relationship with PIMCO that
provide services to the Fund where the engagement relates directly to the operations and financial reporting of the Fund. The Audit Oversight Committee considers the possible effect of those services on the independence of the Fund&#146;s
independent registered public accounting firm. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">During the fiscal year ended June&nbsp;30, 2016 the Audit Oversight Committee met [ ] times. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Nominating Committee.</B>&nbsp;The Board has established a Nominating Committee composed solely of Independent Trustees, currently consisting of Messrs.
Gallagher, Jacobson, Kertess, Ogden, Rappaport and Ms.&nbsp;DeCotis. The Nominating Committee is responsible for reviewing and recommending qualified candidates to the Board in the event that a position is vacated or created or when Trustees are to
be <FONT STYLE="white-space:nowrap">re-elected.</FONT> During the fiscal year ended June&nbsp;30, 2016 the Nominating Committee met [ ] times. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">94 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><I>Qualifications, Evaluation and Identification of Trustee Nominees</I>. The Nominating Committee of the Fund
requires that Trustee candidates have a college degree or equivalent business experience. When evaluating candidates, the Nominating Committee may take into account a wide variety of factors including, but not limited to: (i)&nbsp;availability and
commitment of a candidate to attend meetings and perform his or her responsibilities on the Board, (ii)&nbsp;relevant industry and related experience, (iii)&nbsp;educational background, (iv)&nbsp;ability, judgment and expertise and (v)&nbsp;overall
diversity of the Board&#146;s composition. The process of identifying nominees involves the consideration of candidates recommended by one or more of the following sources: (i)&nbsp;the Fund&#146;s current Trustees, (ii)&nbsp;the Fund&#146;s
officers, (iii)&nbsp;the Fund&#146;s investment adviser, (iv)&nbsp;the Fund&#146;s shareholders and (v)&nbsp;any other source the Committee deems to be appropriate. The Nominating Committee may, but is not required to, retain a third-party search
firm at the Fund&#146;s expense to identify potential candidates. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:5%; font-size:12pt; font-family:Times New Roman"><I>Consideration of Candidates Recommended by Stockholders</I>. The
Nominating Committee will review and consider nominees recommended by shareholders to serve as Trustee, provided that the recommending shareholder follows the &#147;Procedures for Shareholders to Submit Nominee Candidates&#148;, which are set forth
as Appendix A to the Fund&#146;s Nominating Committee Charter and attached as Appendix A to this Statement of Additional Information. Among other requirements, these procedures provide that the recommending shareholder must submit any recommendation
in writing to the Fund, to the attention of the Fund&#146;s Secretary, at the address of the principal executive offices of the Fund. Once each quarter, if any shareholder recommendations have been received by the Secretary during the quarter, the
Secretary will inform the Committee of the new shareholder recommendations. Because the Fund does not hold annual or other regular meetings of shareholders for the purpose of electing Trustees, the Committee will accept shareholder recommendations
on a continuous basis. Any recommendation must include certain biographical and other information regarding the candidate and the recommending shareholder, and must include a written and signed consent of the candidate to be named as a nominee and
to serve as a Trustee if elected. The foregoing description of the requirements is only a summary. Please refer to Appendix A to the Nominating Committee Charter, which is attached as Appendix A to this Statement of Additional Information. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:5%; font-size:12pt; font-family:Times New Roman">The Nominating Committee has full discretion to reject nominees recommended by shareholders, and there is no assurance that any such person
properly recommended and considered by the Committee will be nominated for election to the Board of Trustees. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:5%; font-size:12pt; font-family:Times New Roman"><I>Diversity</I>. The
Nominating Committee takes diversity of a particular nominee and overall diversity of the Board into account when considering and evaluating nominees for Trustee. While the Committee has not adopted a particular definition of diversity, when
considering a nominee&#146;s and the Board&#146;s diversity, the Committee generally considers the manner in which each nominee&#146;s professional experience, education, expertise in matters that are relevant to the oversight of the Fund (e.g.,
investment management, distribution, accounting, trading, compliance, legal), general leadership experience, and life experience are complementary and, as a whole, contribute to the ability of the Board to oversee the Fund. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">95 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Valuation Oversight Committee.</B>&nbsp;The Board has established a Valuation Oversight Committee, which
currently consists of currently consisting of Messrs. Gallagher, Jacobson, Kertess, Ogden and Rappaport and Ms.&nbsp;DeCotis. Mr.&nbsp;Ogden is the Chair of the Valuation Oversight Committee. The Valuation Oversight Committee has been delegated
responsibility by the Board for overseeing determination of the fair value of the Fund&#146;s portfolio securities and other assets on behalf of the Board in accordance with the Fund&#146;s valuation procedures. The Valuation Oversight Committee
reviews and approves procedures for the fair valuation of the Fund&#146;s portfolio securities and periodically reviews information from PIMCO regarding fair value determinations made pursuant to Board-approved procedures, and makes related
recommendations to the full Board and assists the full Board in resolving particular fair valuation and other valuation matters. In certain circumstances as specified in the Fund&#146;s valuation policies, the Valuation Oversight Committee may also
determine the fair value of portfolio holdings after consideration of all relevant factors, which determinations shall be reported to the full Board. During the fiscal year ended June&nbsp;30, 2016 the Valuation Oversight Committee met [ ] times.
</P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Compensation Committee.</B>&nbsp;The Board has established a Compensation Committee, which currently consists of Messrs. Gallagher, Jacobson, Kertess,
Ogden, Rappaport and Ms.&nbsp;DeCotis. The Compensation Committee meets as the Board deems necessary to review and make recommendations regarding compensation payable to the Trustees who are not directors, officers, partners or employees of PIMCO or
any entity controlling, controlled by or under common control with PIMCO. During the fiscal year ended June&nbsp;30, 2016 the Compensation Committee met [ ] times. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Contracts Committee.</B>&nbsp;The Board of the Fund has established a Contracts Committee currently consisting of Messrs. Gallagher, Jacobson, Kertess,
Ogden, Rappaport and Ms.&nbsp;DeCotis. Ms.&nbsp;DeCotis is the Chair of the Fund&#146;s Contracts Committee. The Contracts Committee meets as the Board deems necessary to review the performance of, and the reasonableness of the fees paid to, as
applicable, the Fund&#146;s investment adviser(s) and any <FONT STYLE="white-space:nowrap">sub-adviser(s),</FONT> administrators(s) and principal underwriters(s) and to make recommendations to the Board regarding the approval and continuance of the
Fund&#146;s contractual arrangements for investment advisory, <FONT STYLE="white-space:nowrap">sub-advisory,</FONT> administrative and distribution services, as applicable. During the fiscal year ended June&nbsp;30, 2016 the Contracts Committee met
[ ] times. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Securities Ownership </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">For each Trustee,
the following table discloses the dollar range of equity securities beneficially owned by the Trustee in the Fund and, on an aggregate basis, in any registered investment companies overseen by the Trustee within the Fund&#146;s family of investment
companies as of December&nbsp;31, 2016: </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">


<TR>
<TD WIDTH="22%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="24%"></TD>
<TD VALIGN="bottom"></TD>
<TD WIDTH="52%"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="bottom"><B>Name of Trustee</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center"><B>Dollar&nbsp;Range&nbsp;of&nbsp;Equity<BR>Securities in the Fund&nbsp;&nbsp;</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>Aggregate Dollar Range of Equity Securities in&nbsp;&nbsp;&nbsp;</B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>All Registered Investment Companies Overseen&nbsp;&nbsp;</B></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>by Trustee in Family of Investment Companies*</B></P></TD></TR>


<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><B>Independent Trustees</B></P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Bradford K. Gallagher</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">$[ ]</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">$[ ]</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">James A. Jacobson</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">$[ ]</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">$[ ]</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Hans W. Kertess</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">$[ ]</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">$[ ]</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">William B. Ogden, IV</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">$[ ]</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">$[ ]</TD></TR></TABLE>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">96 </P>


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<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:12pt" ALIGN="center">


<TR>
<TD WIDTH="22%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="24%"></TD>
<TD VALIGN="bottom"></TD>
<TD WIDTH="52%"></TD></TR>

<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Alan Rappaport</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">$[ ]</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">$[ ]</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Deborah A. DeCotis</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">$[ ]</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">$[ ]</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><B>Interested Trustee</B></P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">John C. Maney</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">$[ ]</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">$[ ]</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Craig A. Dawson</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">$[ ]</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">$[ ]</TD></TR>
</TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">*</TD>
<TD ALIGN="left" VALIGN="top">The term &#147;Family of Investment Companies&#148; as used herein includes the Fund and the following registered investment companies: PIMCO Municipal Income Fund, PIMCO California Municipal Income Fund, PIMCO New York
Municipal Income Fund, PIMCO Municipal Income Fund II, PIMCO California Municipal Income Fund II, PIMCO New York Municipal Income Fund II, PIMCO Municipal Income Fund III, PIMCO California Municipal Income Fund III, PIMCO New York Municipal Income
Fund III, PIMCO Corporate&nbsp;&amp; Income Strategy Fund, PIMCO Income Opportunity Fund, PCM Fund, Inc., PIMCO Dynamic Credit and Mortgage Income Fund, PIMCO Dynamic Income Fund, PIMCO High Income Fund, PIMCO Income Strategy Fund, PIMCO Income
Strategy Fund II, PIMCO Global StocksPLUS<SUP STYLE="font-size:85%; vertical-align:top">&reg;</SUP>&amp; Income Fund and PIMCO Strategic Income Fund, Inc., and each series of PIMCO Managed Accounts Trust. </TD></TR></TABLE>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">For Independent Trustees and their immediate family members, the following table provides information regarding each class of securities owned beneficially in
an investment adviser or principal underwriter of the Fund, or a person (other than a registered investment company) directly or indirectly controlling, controlled by, or under common control with an investment adviser or principal underwriter of
the Fund as of December&nbsp;31, 2016: </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">


<TR>
<TD WIDTH="23%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="22%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="16%"></TD>
<TD VALIGN="bottom"></TD>
<TD WIDTH="14%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="12%"></TD>
<TD VALIGN="bottom"></TD>
<TD WIDTH="8%"></TD></TR>


<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="bottom"><B>Name of Trustee</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><B>Name of Owners and Relations to Trustee</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><B>Company</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><B>Title of Class</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Value of</B></P> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:10pt; font-family:Times New Roman"><B>Securities</B></P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Percent&nbsp;of</B></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:10pt; font-family:Times New Roman"><B>Class</B></P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Deborah A. DeCotis</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">None</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">N/A</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">N/A</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">N/A</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">N/A</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Bradford K. Gallagher</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">None</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">N/A</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">N/A</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">N/A</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">N/A</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">James A. Jacobson</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">None</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">N/A</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">N/A</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">N/A</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">N/A</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Hans W. Kertess</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">None</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">N/A</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">N/A</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">N/A</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">N/A</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">William B. Ogden, IV<SUP STYLE="font-size:85%; vertical-align:top">1</SUP></P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">None</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">N/A</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">N/A</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">N/A</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">N/A</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Alan Rappaport</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">None</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">N/A</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">N/A</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">N/A</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">N/A</P></TD></TR>
</TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><SUP STYLE="font-size:85%; vertical-align:top">1</SUP> Mr.&nbsp;Ogden owns a less than 1% limited liability
company interest in PIMCO Global Credit Opportunity Onshore Fund LLC, a PIMCO-sponsored private investment vehicle. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">As of [ ], the Fund&#146;s officers
and Trustees as a group owned less than 1% of the outstanding Common Shares. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">As of [ ] to the knowledge of the Fund, the following entities owned
beneficially or of record the number of shares of the noted class as set forth below, representing the indicated percentage of such class as of such date. To the knowledge of the Fund, no other person owned of record or beneficially 5% or more of
any class of the Fund&#146;s outstanding equity securities on such date. </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:12pt" ALIGN="center">


<TR>
<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="29%"></TD></TR>


<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-left:8pt">
<P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">Beneficial Owner</P> <P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:1pt">&nbsp;</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">Class</P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:1pt">&nbsp;</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-right:8pt">
<P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">Percentage of Class</P> <P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:1pt">&nbsp;</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-left:8pt"> <P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">[ ]</P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:1pt">&nbsp;</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">[ ]</P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:1pt">&nbsp;</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-right:8pt"> <P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">[
]</P> <P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:1pt">&nbsp;</P></TD></TR>
</TABLE>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">97 </P>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>

 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Compensation </B></P>
<P STYLE="margin-top:24pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Each of the Independent Trustees also serves as a trustee of PIMCO Municipal Income Fund, PIMCO California Municipal Income Fund, PIMCO New York Municipal
Income Fund, PIMCO Municipal Income Fund II, PIMCO California Municipal Income Fund II, PIMCO New York Municipal Income Fund II, PIMCO Municipal Income Fund III, PIMCO California Municipal Income Fund III, PIMCO New York Municipal Income Fund III,
PIMCO Corporate&nbsp;&amp; Income Strategy Fund, PIMCO Corporate&nbsp;&amp; Income Opportunity Fund, PIMCO High Income Fund, PIMCO Income Opportunity Fund, PIMCO Income Strategy Fund, PIMCO Income Strategy Fund II, PIMCO Global StocksPLUS<SUP
STYLE="font-size:85%; vertical-align:top">&reg;</SUP>&nbsp;&amp; Income Fund, PCM Fund, Inc., PIMCO Strategic Income Fund, Inc., and PIMCO Dynamic Credit and Mortgage Income Fund, each a <FONT STYLE="white-space:nowrap">closed-end</FONT> fund for
which the Investment Manager serves as investment manager (together, the &#147;PIMCO <FONT STYLE="white-space:nowrap">Closed-End</FONT> Funds&#148;) and PIMCO Managed Accounts Trust, an <FONT STYLE="white-space:nowrap">open-end</FONT> investment
management company with multiple series for which PIMCO serves as investment adviser and administrator (the &#147;Trust&#148; and, together with the Fund and the PIMCO <FONT STYLE="white-space:nowrap">Closed-End</FONT> Funds, the &#147;PIMCO-Managed
Funds&#148;). </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">In addition, each of the Independent Trustees also serves as a trustee of AllianzGI Convertible&nbsp;&amp; Income Fund, AllianzGI
Convertible&nbsp;&amp; Income Fund II, AllianzGI NFJ Dividend, Interest&nbsp;&amp; Premium Strategy Fund, AllianzGI Equity&nbsp;&amp; Convertible Income Fund, AllianzGI Diversified Income&nbsp;&amp; Convertible Fund, Allianz Funds, Allianz Funds
Multi-Strategy Trust, AllianzGI Institutional Multi-Series Trust and Premier Multi-Series VIT, (together, the &#147;Allianz-Managed Funds&#148;), for which Allianz Global Investors U.S. LLC, an affiliate of PIMCO, serves as investment adviser. The
Independent Trustees receive separate compensation from the Allianz Managed Funds in addition to amounts received for service on the Boards of the PIMCO-Managed Funds. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Each of the PIMCO-Managed Funds holds joint meetings of their Boards of Trustees whenever possible. Each Independent Trustee receives annual compensation of
$225,000 for his or her service on the Boards of the PIMCO-Managed Funds, payable quarterly. The Independent Chairman of the Boards receives an additional $75,000 per year, payable quarterly. The Audit Oversight Committee Chairman receives an
additional $50,000 annually, payable quarterly. Trustees are also reimbursed for meeting-related expenses. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Each Trustee&#146;s compensation for his or
her service as a Trustee on the Boards of the PIMCO-Managed Funds and other costs in connection with joint meetings of such Funds are allocated among the PIMCO-Managed Funds, as applicable, on the basis of fixed percentages as between the Fund and
the PIMCO <FONT STYLE="white-space:nowrap">Closed-End</FONT> Funds. Trustee compensation and other costs are then further allocated <I>pro rata</I> among the individual funds within each grouping based on each such fund&#146;s relative net assets.
</P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund has no employees. The Fund&#146;s officers, Mr.&nbsp;Dawson and Mr.&nbsp;Maney, are compensated by PIMCO or its affiliates, as applicable. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Trustees do not receive any pension or retirement benefits from the Fund or the Fund Complex (see below). </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">98 </P>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>

 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The following table provides information concerning the compensation paid to the Trustees for the fiscal year
ended June&nbsp;30, 2016 for the Fund and the compensation received by the Trustees for serving as Trustees of the Fund and other funds in the same &#147;Fund Complex&#148; as the Fund. Each officer and each Trustee who is a director, officer,
partner, member or employee of the Investment Manager, or of any entity controlling, controlled by or under common control with the Investment Manager, including any Interested Trustee, serves without any compensation from the Fund. </P>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="92%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">


<TR>
<TD WIDTH="50%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>


<TR STYLE="font-family:Times New Roman; font-size:8pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-left:8pt"><B>Name of Trustee</B></TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="top" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000"><B>&nbsp;<BR>&nbsp;<BR>&nbsp;<BR>&nbsp;<BR>&nbsp;<BR>&nbsp;</B></TD>
<TD VALIGN="top" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000"><B>Aggregate<BR>compensation<BR>from&nbsp;the&nbsp;Fund&nbsp;<BR>for the Fiscal<BR>Year Ended<BR>June&nbsp;30,&nbsp;2016**</B></TD>
<TD NOWRAP VALIGN="top" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000"><B>&nbsp;&nbsp;<BR>&nbsp;&nbsp;<BR>&nbsp;&nbsp;<BR>&nbsp;&nbsp;<BR>&nbsp;&nbsp;<BR>&nbsp;&nbsp;</B></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="top" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000"><B>&nbsp;<BR>&nbsp;<BR>&nbsp;<BR>&nbsp;<BR>&nbsp;</B></TD>
<TD VALIGN="top" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000"><B>Pension or<BR>Retirement<BR>Benefits&nbsp;Accrued&nbsp;<BR>as Part of Fund<BR>Expenses</B></TD>
<TD NOWRAP VALIGN="top" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000"><B>&nbsp;&nbsp;<BR>&nbsp;&nbsp;<BR>&nbsp;&nbsp;<BR>&nbsp;&nbsp;<BR>&nbsp;&nbsp;</B></TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="top" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000"><B>&nbsp;<BR>&nbsp;<BR>&nbsp;</B></TD>
<TD VALIGN="top" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000"><B>Estimated&nbsp;Annual&nbsp;<BR>Benefits Upon<BR>Retirement</B></TD>
<TD NOWRAP VALIGN="top" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000"><B>&nbsp;&nbsp;<BR>&nbsp;&nbsp;<BR>&nbsp;&nbsp;</B></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="top" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000"><B>&nbsp;<BR>&nbsp;<BR>&nbsp;<BR>&nbsp;<BR>&nbsp;<BR>&nbsp;</B></TD>
<TD VALIGN="top" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000"><B>Total&nbsp;Compensation<BR>from the Fund<BR>Complex Paid to the<BR>Trustees for
the<BR>Calendar&nbsp;Year&nbsp;Ending<BR>December&nbsp;31,&nbsp;2016*&nbsp;&nbsp;</B></TD>
<TD NOWRAP VALIGN="top" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-right:8pt"><B>&nbsp;&nbsp;<BR>&nbsp;&nbsp;<BR>&nbsp;&nbsp;<BR>&nbsp;&nbsp;<BR>&nbsp;&nbsp;<BR>&nbsp;&nbsp;
</B></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-left:8pt">
<P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><B>Trustees</B></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-right:8pt"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-left:8pt">
<P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Deborah A. DeCotis</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">[&nbsp;&nbsp;&nbsp;&nbsp;]</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">[N/A]</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">[N/A]</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">$[&nbsp;&nbsp;&nbsp;&nbsp;]</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-right:8pt">&nbsp;&nbsp;</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-left:8pt">
<P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Bradford K. Gallagher</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">[&nbsp;&nbsp;&nbsp;&nbsp;]</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">[N/A]</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">[N/A]</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">$[&nbsp;&nbsp;&nbsp;&nbsp;]</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-right:8pt">&nbsp;&nbsp;</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-left:8pt"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">James
A. Jacobson</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">[&nbsp;&nbsp;&nbsp;&nbsp;]</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">[N/A]</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">[N/A]</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">$[&nbsp;&nbsp;&nbsp;&nbsp;]</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-right:8pt">&nbsp;&nbsp;</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-left:8pt"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Hans
W. Kertess</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">[&nbsp;&nbsp;&nbsp;&nbsp;]</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">[N/A]</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">[N/A]</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">$[&nbsp;&nbsp;&nbsp;&nbsp;]</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-right:8pt">&nbsp;&nbsp;</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-left:8pt">
<P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">William B. Ogden, IV</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">[&nbsp;&nbsp;&nbsp;&nbsp;]</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">[N/A]</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">[N/A]</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">$[&nbsp;&nbsp;&nbsp;&nbsp;]</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-right:8pt">&nbsp;&nbsp;</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-left:8pt"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Alan
Rappaport</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">[&nbsp;&nbsp;&nbsp;&nbsp;]</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">[N/A]</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">[N/A]</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">$[&nbsp;&nbsp;&nbsp;&nbsp;]</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-right:8pt">&nbsp;&nbsp;</TD></TR>
</TABLE> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:7.5pt; font-family:Times New Roman">* In addition to the PIMCO-Managed Funds, which are advised by the Investment Manager, during the Fund&#146;s most recently
completed calendar year, all of the Trustees (other than Messrs. Dawson and Maney) served as trustees of the Allianz-Managed Funds, which were previously managed by AGIFM and are now managed by AGI U.S. The Allianz-Managed Funds and the
PIMCO-Managed Funds are considered to be in the same &#147;Fund Complex.&#148; Beginning September&nbsp;5, 2014, the Independent Trustees began receiving compensation separately from the PIMCO-Managed Funds and the Allianz-Managed Funds.
Ms.&nbsp;DeCotis and Messrs. Kertess, Gallagher, Jacobson, Ogden and Rappaport currently serve as trustee or director of 90 funds in the Fund Complex. Mr.&nbsp;Maney and Mr.&nbsp;Dawson currently serve as trustee or director of 25 funds in the Fund
Complex. For the calendar year ended December&nbsp;31, 2016, amounts received by the Trustees from PIMCO-Managed Funds were: for Mr.&nbsp;Kertess, [ ]; for Mr.&nbsp;Jacobson, [ ]; for each of Messrs. Gallagher, Ogden, Rappaport and Ms.&nbsp;DeCotis,
[ ]. These amounts are included in the Fund Complex totals in the table above. </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:7.5pt; font-family:Times New Roman">** Messrs. Dawson and Maney are interested Persons of the Fund and do not
receive compensation from the Fund for their services as Trustees. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Codes of Ethics </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund and PIMCO have each adopted a code of ethics under Rule <FONT STYLE="white-space:nowrap">17j-1</FONT> of the 1940 Act. These codes permit personnel
subject to the codes to invest in securities, including securities that may be purchased or held by the Fund. The codes of ethics can be reviewed and copied at the SEC&#146;s Public Reference Room in Washington, DC. Information on the operation of
the Public Reference Room may be obtained by calling the SEC at <FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">1-202-551-8090.</FONT></FONT></FONT> The codes are also available on the EDGAR
Database on the SEC&#146;s Internet site at http://www.sec.gov, and copies may be obtained, after paying a duplicating fee, by electronic request at the following email address: publicinfo@sec.gov, or by writing the SEC&#146;s Public Reference
Section, Washington, DC, 20549-0102. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B><A NAME="sai302337_5"></A>INVESTMENT MANAGER </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Investment Manager </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">PIMCO, a Delaware limited liability
company, serves as investment manager to the Fund pursuant to an investment management agreement (the &#147;Investment Management Agreement&#148;) between PIMCO and the Fund. PIMCO is located at 650 Newport Center Drive, Newport Beach, California
92660. PIMCO had approximately $1.54 trillion of assets under management as of September&nbsp;30, 2016. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">99 </P>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>

 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">PIMCO is a majority owned subsidiary of Allianz Asset Management of America L.P. with minority interests held by
certain of its current and former officers, by Allianz Asset Management of America LLC, and by PIMCO Partners, LLC, a California limited liability company. Prior to December&nbsp;31, 2011, Allianz Asset Management of America L.P. was named Allianz
Global Investors of America L.P. PIMCO Partners, LLC is owned by certain current and former officers of PIMCO. Through various holding company structures, Allianz Asset Management L.P. is majority owned by Allianz SE. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Allianz SE is a European based, multinational insurance and financial services holding company and a publicly traded German company. As of September&nbsp;30,
2016, Allianz SE had third-party assets under management of approximately &#128;&nbsp;1,005.51&nbsp;billion. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The general partner of Allianz Asset
Management of America L.P. has substantially delegated its management and control of Allianz Asset Management to a Management Board. The Management Board of Allianz Asset Management is comprised of John C. Maney. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">As of the date of this Statement of Additional Information, there are no significant institutional shareholders of Allianz SE. Absent an SEC exemption or
other regulatory relief, the Fund generally is precluded from effecting principal transactions with brokers that are deemed to be affiliated persons of the Fund or PIMCO, and the Fund&#146;s ability to purchase securities being underwritten by an
affiliated broker or a syndicate including an affiliated broker is subject to restrictions. Similarly, the Fund&#146;s ability to utilize the affiliated brokers for agency transactions is subject to the restrictions of Rule <FONT
STYLE="white-space:nowrap">17e-1</FONT> under the 1940 Act. PIMCO does not believe that the restrictions on transactions with the affiliated brokers described above will materially adversely affect its ability to provide services to the Fund, the
Fund&#146;s ability to take advantage of market opportunities, or the Fund&#146;s overall performance. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Legal Proceedings </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">PIMCO, the investment manager of the PIMCO Total Return Active Exchange-Traded Fund (&#147;BOND&#148;), has entered into a settlement agreement with the SEC
that relates to BOND. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The settlement relates to disclosures regarding BOND&#146;s performance attribution during the first four months of its existence
in 2012 and the valuation of 43 <FONT STYLE="white-space:nowrap">smaller-sized</FONT> positions of <FONT STYLE="white-space:nowrap">non-agency</FONT> mortgage-backed securities using third-party vendor prices, as well as PIMCO&#146;s policies and
procedures related to these matters. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The settlement resolves the SEC&#146;s investigation of BOND. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Investment Management Agreement </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Pursuant to an
investment management agreement between the Investment Manager and the Fund (the &#147;Investment Management Agreement&#148;), the Fund has agreed to pay the Investment Manager an annual fee, payable monthly, in an amount equal to 1.15% of the
Fund&#146;s average daily &#147;total managed assets,&#148; for the services rendered, for the facilities it provides and for certain expenses borne by the Investment Manager pursuant to the Investment Management Agreement. Total managed assets
includes total assets of the Fund (including assets attributable to any reverse repurchase agreements, dollar rolls, borrowings and preferred shares that may be outstanding) minus accrued liabilities (other than liabilities representing reverse
repurchase agreements, dollar rolls and borrowings ). </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">100 </P>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>

 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Pursuant to the Investment Management Agreement, PIMCO shall provide to the Fund investment guidance and policy
direction in connection with the management of the Fund, including oral and written research, analysis, advice and statistical and economic data and information. In addition, under the terms of the Investment Management Agreement, subject to the
general supervision of the Board of Trustees, PIMCO shall provide or cause to be furnished all supervisory and administrative and other services reasonably necessary for the operation of the Fund under what is essentially an <FONT
STYLE="white-space:nowrap">all-in</FONT> fee structure, including but not limited to the supervision and coordination of matters relating to the operation of the Fund, including any necessary coordination among the custodian, transfer agent,
dividend disbursing agent, and recordkeeping agent (including pricing and valuation of the Fund), accountants, attorneys, auction agents and other parties performing services or operational functions for the Fund; the provision of adequate
personnel, office space, communications facilities, and other facilities necessary for the effective supervision and administration of the Fund, as well as the services of a sufficient number of persons competent to perform such supervisory and
administrative and clerical functions as are necessary for compliance with federal securities laws and other applicable laws; the maintenance of the books and records of the Fund; the preparation of all federal, state, local and foreign tax returns
and reports for the Fund; the provision of administrative services to shareholders for the Fund including the maintenance of a shareholder information telephone number, the provision of certain statistical information and performance of the Fund, an
internet website (if requested), and maintenance of privacy protection systems and procedures; the preparation and filing of such registration statements and other documents with such authorities as may be required to register and maintain the
listing of the shares of the Fund; the taking of other such actions as may be required by applicable law (including establishment and maintenance of a compliance program for the Fund); and the preparation, filing and distribution of proxy materials,
periodic reports to shareholders and other regulatory filings. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">In addition, under the Investment Management Agreement, PIMCO will procure, at its own
expense, the following services, and will bear expenses associated with the following for the Fund, which expenses are currently borne directly by the Fund: a custodian or custodians for the Fund to provide for the safekeeping of the Fund&#146;s
assets; a recordkeeping agent to maintain the portfolio accounting records for the Fund; a transfer agent for the Fund; a dividend disbursing agent and/or registrar for the Fund; all audits by the Fund&#146;s independent public accountant (except
fees to auditors associated with satisfying rating agency requirements for preferred shares or other securities issued by the Fund and other related requirements in the Fund&#146;s organizational documents); valuation services; maintaining the
Fund&#146;s tax records; all costs and/or fees incident to meetings of the Fund&#146;s shareholders, the preparation, printing and mailing of the Fund&#146;s prospectuses, notices and proxy statements, press releases and reports to its Shareholders,
the filing of reports with regulatory bodies, the maintenance of the Fund&#146;s existence and qualification to do business, the expense of issuing, redeeming, registering and qualifying for sale, common shares with the federal and state securities
authorities, and the expense of qualifying and listing Shares with any securities exchange or other trading system; legal services (except for extraordinary legal expenses); costs of printing certificates representing Shares of the Fund; the
Fund&#146;s pro rata portion of its fidelity bond and other insurance premiums; and association membership dues. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">101 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund (and not PIMCO) will be responsible for certain fees and expenses that are not covered by the unified
fee under the Investment Management Agreement. These include fees and expenses, including travel expenses, and fees and expenses of legal counsel retained for their benefit, of Trustees who are not officers, employees, partners, shareholders or
members of PIMCO or its subsidiaries or affiliates; the salaries and other compensation or expenses, including travel expenses, of the Fund&#146;s executive officers and employees, if any, who are not officers, directors, shareholders, members,
partners or employees of PIMCO or its subsidiaries or affiliates; taxes and governmental fees, if any, levied against the Fund; brokerage fees and commissions, and other portfolio transaction expenses incurred by or for the Fund; expenses of the
Fund&#146;s securities lending (if any), including any securities lending agent fees, as governed by a separate securities lending agreement; costs, including interest expenses, of borrowing money or engaging in other types of leverage financing;
costs, including dividend and/or interest expenses and other costs associated with the Fund&#146;s issuance, offering, redemption and maintenance of preferred shares, commercial paper or other senior securities for the purpose of incurring leverage;
fees and expenses of any underlying funds or other pooled vehicles in which the Fund invests; dividend and interest expenses on short positions taken by the Fund; organizational and offering expenses of the Fund, including with respect to share
offerings following the Fund&#146;s initial offering, and expenses associated with tender offers and other share repurchases and redemptions; extraordinary legal costs; and expenses of the Fund which are capitalized in accordance with generally
accepted accounting principles. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Because the fees received by the Investment Manager are based on the Fund&#146;s average daily &#147;total managed
assets&#148; (including any assets attributable to any reverse repurchase agreements, dollar rolls, borrowings and preferred shares that may be outstanding) minus accrued liabilities (other than liabilities representing reverse repurchase
agreements, dollar rolls and borrowings), the Investment Manager has a financial incentive for the Fund to use certain forms of leverage (e.g., reverse repurchase agreements, dollar rolls, borrowings and preferred shares), which may create a
conflict of interest between the Investment Manager, on the one hand, and the Common Shareholders, on the other hand. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Pursuant to the Investment
Management Agreement, the Fund paid the Investment Manager a total of $[ ] for the fiscal year ended June&nbsp;30, 2016, $[ ] for the fiscal year ended June&nbsp;30, 2015<SUP STYLE="font-size:85%; vertical-align:top">1</SUP> and $[ ] for the fiscal
year ended March&nbsp;31, 2015. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Certain Terms of the Investment Management Agreement </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Investment Management Agreement was approved by the Trustees of the Fund (including all of the Trustees who are not &#147;interested persons&#148; of the
Investment Manager). By its terms the Investment Management Agreement continues in force with respect to the Fund for an initial one year period, and continues in force from year to year thereafter, but only so long as its </P>
<p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="line-height:8.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000;width:26%">&nbsp;</P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:8pt; font-family:Times New Roman"><SUP STYLE="font-size:85%; vertical-align:top">1</SUP> On December&nbsp;16, 2014, the Board approved a change of the Fund&#146;s fiscal year end from
March&nbsp;31 to June 30. Information is provided for the &#147;stub&#148; period from April&nbsp;1, 2015 through the Fund&#146;s new fiscal year end of June&nbsp;30, 2015. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">102 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">
continuance is approved at least annually by (i)&nbsp;vote, cast in person at a meeting called for that purpose, of a majority of those Trustees who are not &#147;interested persons&#148; of the
Investment Manager or the Fund, and (ii)&nbsp;by the full Board of Trustees or the vote of a majority of the outstanding shares of all classes of the Fund. The Investment Management Agreement automatically terminates on assignment. The Investment
Management Agreement may be terminated on not less than 60 days&#146; notice by the Investment Manager to the Fund or by the Fund to the Investment Manager. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Investment Management Agreement provides that the Investment Manager shall not be subject to any liability in connection with the performance of its
services thereunder in the absence of willful misfeasance, bad faith, gross negligence or reckless disregard of its obligations and duties. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Portfolio
Managers </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Other Accounts Managed.</B> Joshua Anderson, Daniel J. Ivascyn and Alfred T. Murata also manage the other registered investment
companies, other pooled investment vehicles and/or other accounts indicated below. The following table identifies, as of June&nbsp;30, 2016 (i)&nbsp;the number of registered investment companies, pooled investment vehicles and other accounts managed
by the portfolio managers; and (ii)&nbsp;the total assets of such companies, vehicles and accounts, and the number and total assets of such companies, vehicles and accounts with respect to which the advisory fee is based on performance.<B><SUP
STYLE="font-size:85%; vertical-align:top"> </SUP></B> </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:12pt" ALIGN="center">


<TR>
<TD WIDTH="49%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="9%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="11%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="12%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="15%"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="border-bottom:1.00pt solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:10pt; font-family:Times New Roman"><B>Total<BR>Number&nbsp;of&nbsp;&nbsp;<BR>Accounts</B></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="border-bottom:1.00pt solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Total&nbsp;Assets<BR>of All<BR>Accounts</B></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:10pt; font-family:Times New Roman"><B>(in&nbsp;$Millions)&nbsp;&nbsp;</B></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="border-bottom:1.00pt solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:10pt; font-family:Times New Roman"><B>Number of<BR>Accounts<BR>Paying a<BR>Performance&nbsp;&nbsp;&nbsp;&nbsp;<BR>Fee</B></P></TD>

<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="border-bottom:1.00pt solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:10pt; font-family:Times New Roman"><B>Total Assets of<BR>Accounts&nbsp;Paying&nbsp;a&nbsp;&nbsp;<BR>Performance Fee<BR>(in
$Millions)</B></P></TD></TR>


<TR BGCOLOR="#cceeff" STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><I>Joshua Anderson</I></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Registered Investment Companies</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">1</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$657.48</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">0</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">$0</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Other Pooled Investment Vehicles</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">2</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$87.35</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">0</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">$0</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Other Accounts</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">10</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$2,077.90</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">1</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">$2,015.39</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><I>Daniel J. Ivascyn</I></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Registered Investment Companies</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">13</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$73,831.13</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">0</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">$0</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Other Pooled Investment Vehicles</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">13</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$18,726.94</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">1</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">$12.94</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Other Accounts</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">128</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$8,809.33</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">3</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">$2,273.58</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><I>Alfred T. Murata</I></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Registered Investment Companies</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">9</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$69,327.27</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">0</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">$0</TD></TR>
<TR BGCOLOR="#cceeff" STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Other Pooled Investment Vehicles</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">4</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$8,726.94</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">0</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">$0</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Other Accounts</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">7</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">$997.22</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">0</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">$0</TD></TR>
</TABLE>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">103 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Conflicts of Interest </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">From time to time, potential and actual conflicts of interest may arise between a portfolio manager&#146;s management of the investments of the Fund, on the
one hand, and the management of other accounts, on the other.&nbsp;Potential and actual conflicts of interest may also arise as a result of PIMCO&#146;s other business activities and PIMCO&#146;s possession of material
<FONT STYLE="white-space:nowrap">non-public</FONT> information about an issuer. Other accounts managed by a portfolio manager might have similar investment objectives or strategies as the Fund, track the same index as the Fund or otherwise hold,
purchase, or sell securities that are eligible to be held, purchased or sold by the Fund.&nbsp;The other accounts might also have different investment objectives or strategies than the Fund.&nbsp;Potential and actual conflicts of interest may also
arise as a result of PIMCO serving as investment adviser to accounts that invest in the Fund. In this case, such conflicts of interest could in theory give rise to incentives for PIMCO to, among other things, vote proxies of the Fund in a manner
beneficial to the investing account but detrimental to the Fund. Conversely, PIMCO&#146;s duties to the Fund, as well as regulatory or other limitations applicable to the Fund, may affect the courses of action available to PIMCO-advised accounts
(including certain funds) that invest in the Fund in a manner that is detrimental to such investing accounts. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Because PIMCO is affiliated with Allianz, a
large multi-national financial institution, conflicts similar to those described below may occur between the Fund and other accounts managed by PIMCO and PIMCO&#146;s affiliates or accounts managed by those affiliates. Those affiliates (or their
clients), which generally operate autonomously from PIMCO, may take actions that are adverse to the Fund or other accounts managed by PIMCO. In many cases, PIMCO will not be in a position to mitigate those actions or address those conflicts, which
could adversely affect the performance of the Fund or other accounts managed by PIMCO. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><U>Knowledge and Timing of Fund Trades</U>.&nbsp;A potential
conflict of interest may arise as a result of the portfolio manager&#146;s <FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">day-to-day</FONT></FONT> management of the Fund.&nbsp;Because of their positions with the Fund, the
portfolio managers know the size, timing and possible market impact of the Fund&#146;s trades.&nbsp;It is theoretically possible that the portfolio managers could use this information to the advantage of other accounts they manage and to the
possible detriment of the Fund. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><U>Investment Opportunities</U>.&nbsp;A potential conflict of interest may arise as a result of the portfolio
manager&#146;s management of a number of accounts with varying investment guidelines.&nbsp;Often, an investment opportunity may be suitable for both the Fund and other accounts managed by the portfolio manager, but may not be available in sufficient
quantities for both the Fund and the other accounts to participate fully.&nbsp;In addition, regulatory issues applicable to PIMCO or the Fund or other accounts may result in the Fund not receiving securities that may otherwise be appropriate for it.
Similarly, there may be limited opportunity to sell an investment held by the Fund and another account.&nbsp;PIMCO has adopted policies and procedures reasonably designed to allocate investment opportunities on a fair and equitable basis over time.
</P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Under PIMCO&#146;s allocation procedures, investment opportunities are allocated among various investment strategies based on individual account
investment guidelines and PIMCO&#146;s investment outlook.&nbsp;PIMCO has also adopted additional procedures to complement the general trade allocation policy that are designed to address potential conflicts of interest due to the <FONT
STYLE="white-space:nowrap">side-by-side</FONT> management of the Fund and certain pooled investment vehicles, including investment opportunity allocation issues. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">104 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Conflicts potentially limiting the Fund&#146;s investment opportunities may also arise when the Fund and other
PIMCO clients invest in different parts of an issuer&#146;s capital structure, such as when the Fund owns senior debt obligations of an issuer and other clients own junior tranches of the same issuer.&nbsp;In such circumstances, decisions over
whether to trigger an event of default, over the terms of any workout, or how to exit an investment may result in conflicts of interest.&nbsp;In order to minimize such conflicts, a portfolio manager may avoid certain investment opportunities that
would potentially give rise to conflicts with other PIMCO clients or PIMCO may enact internal procedures designed to minimize such conflicts, which could have the effect of limiting the Fund&#146;s investment opportunities.&nbsp;Additionally, if
PIMCO acquires material <FONT STYLE="white-space:nowrap">non-public</FONT> confidential information in connection with its business activities for other clients, a portfolio manager may be restricted from purchasing securities or selling securities
for the Fund.&nbsp;Moreover, the Fund or other accounts managed by PIMCO may invest in a transaction in which one or more other funds or accounts managed by PIMCO are expected to participate, or already have made or will seek to make, an investment.
Such funds or accounts may have conflicting interests and objectives in connection with such investments, including, for example and without limitation, with respect to views on the operations or activities of the issuer involved, the targeted
returns from the investment, and the timeframe for, and method of, exiting the investment. When making investment decisions where a conflict of interest may arise, PIMCO will endeavor to act in a fair and equitable manner as between the Fund and
other clients; however, in certain instances the resolution of the conflict may result in PIMCO acting on behalf of another client in a manner that may not be in the best interest, or may be opposed to the best interest, of the Fund. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><U>Performance Fees</U>.&nbsp;A portfolio manager may advise certain accounts with respect to which the management fee is based entirely or partially on
performance.&nbsp;Performance fee arrangements may create a conflict of interest for the portfolio manager in that the portfolio manager may have an incentive to allocate the investment opportunities that he or she believes might be the most
profitable to such other accounts instead of allocating them to the Fund.&nbsp;PIMCO has adopted policies and procedures reasonably designed to allocate investment opportunities between the Fund and certain pooled investment vehicles on a fair and
equitable basis over time. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Portfolio Manager Compensation </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">PIMCO has adopted a Total Compensation Plan for its professional level employees, including its portfolio managers, that is designed to pay competitive
compensation and reward performance, integrity and teamwork consistent with the firm&#146;s mission statement. The Total Compensation Plan includes an incentive component that rewards high performance standards, work ethic and consistent individual
and team contributions to the firm. The compensation of portfolio managers consists of a base salary and discretionary performance bonuses, and may include an equity or long term incentive component. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">105 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Certain employees of PIMCO, including portfolio managers, may elect to defer compensation through PIMCO&#146;s
deferred compensation plan. PIMCO also offers its employees a non-contributory defined contribution plan through which PIMCO makes a contribution based on the employee&#146;s compensation. PIMCO&#146;s contribution rate increases at a specified
compensation level, which is a level that would include portfolio managers. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Key Principles on Compensation Philosophy include: </B></P>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:12pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">PIMCO&#146;s pay practices are designed to attract and retain high performers. </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:12pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">PIMCO&#146;s pay philosophy embraces a corporate culture of rewarding strong performance, a strong work ethic and meritocracy. </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:12pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">PIMCO&#146;s goal is to ensure key professionals are aligned to PIMCO&#146;s long-term success through equity participation. </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:12pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">PIMCO&#146;s &#147;Discern and Differentiate&#148; discipline is exercised where individual performance rating is used for guidance as it relates to total compensation levels. </TD></TR></TABLE>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>The Total Compensation Plan consists of the following components</B>: </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:12pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"><B>Base Salary</B> &#150; Base salary is determined based on core job responsibilities, positions/levels and market factors. Base salary levels are reviewed annually, when there is a significant change in job
responsibilities or position, or a significant change in market levels. </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:12pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"><B>Performance Bonus</B> &#150; Performance bonuses are designed to reward individual performance. Each professional and his or her supervisor will agree upon performance objectives to serve as a basis for performance
evaluation during the year. The objectives will outline individual goals according to <FONT STYLE="white-space:nowrap">pre-established</FONT> measures of the group or department success. Achievement against these goals as measured by the employee
and supervisor will be an important, but not exclusive, element of the bonus decision process. Award amounts are determined at the discretion of the Compensation Committee (and/or certain senior portfolio managers, as appropriate) and will also
consider firm performance. </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:12pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"><B>Deferred Compensation</B>&nbsp;&#150; M Options and/or Long-Term Incentive Plan (LTIP) is awarded to key professionals. Employees who reach a total compensation threshold are delivered their annual compensation in a
mix of cash and/or deferred compensation. PIMCO incorporates a progressive allocation of deferred compensation as a percentage of total compensation, which is in line with market practices. </TD></TR></TABLE>
<P STYLE="margin-top:12pt; margin-bottom:0pt; margin-left:10%; font-size:12pt; font-family:Times New Roman">The M Unit program provides <FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">mid-to-senior</FONT></FONT> level employees
with the potential to acquire an equity stake in PIMCO over their careers and to better align employee incentives with the firm&#146;s long-term results. In the program, options are awarded and vest over a number of years and may convert into PIMCO
equity which shares in the profit distributions of the firm. M Units are <FONT STYLE="white-space:nowrap">non-voting</FONT> common equity of PIMCO and provide a mechanism for individuals to build a significant equity stake in PIMCO over time. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">106 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:10%; font-size:12pt; font-family:Times New Roman">The LTIP provides deferred cash awards that appreciate or depreciate based on PIMCO&#146;s
operating earnings over a rolling three-year period. The plan provides a link between longer term company performance and participant pay, further motivating participants to make a long-term commitment to PIMCO&#146;s success. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; margin-left:10%; font-size:12pt; font-family:Times New Roman">Participation in M Unit program and LTIP is contingent upon continued employment at PIMCO. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">In addition, the following <FONT STYLE="white-space:nowrap">non-exclusive</FONT> list of qualitative criteria may be considered when specifically determining
the total compensation for portfolio managers: </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:12pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">&#9679;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="white-space:nowrap">3-year,</FONT> <FONT STYLE="white-space:nowrap">2-year</FONT> and <FONT STYLE="white-space:nowrap">1-year</FONT> dollar-weighted and account-weighted,
<FONT STYLE="white-space:nowrap">pre-tax</FONT> investment performance as judged against the applicable benchmarks for each account managed by a portfolio manager (including the Fund) and relative to applicable industry peer groups;
</TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:12pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">&#9679;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">Appropriate risk positioning that is consistent with PIMCO&#146;s investment philosophy and the Investment Committee/CIO approach to the generation of alpha; </TD></TR></TABLE>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:12pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">&#9679;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">Amount and nature of assets managed by the portfolio manager; </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:12pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">&#9679;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">Consistency of investment performance across portfolios of similar mandate and guidelines (reward low dispersion); </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:12pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">&#9679;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">Generation and contribution of investment ideas in the context of PIMCO&#146;s secular and cyclical forums, portfolio strategy meetings, Investment Committee meetings, and on a <FONT STYLE="white-space:nowrap"><FONT
STYLE="white-space:nowrap">day-to-day</FONT></FONT> basis; </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:12pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">&#9679;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">Absence of defaults and price defaults for issues in the portfolios managed by the portfolio manager; </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:12pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">&#9679;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">Contributions to asset retention, gathering and client satisfaction; </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:12pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">&#9679;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">Contributions to mentoring, coaching and/or supervising; and </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:12pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">&#9679;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">Personal growth and skills added. </TD></TR></TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">A portfolio manager&#146;s compensation is not based directly on the
performance of any fund or any other account managed by that portfolio manager. They are also evaluated against some of the <FONT STYLE="white-space:nowrap">non-exclusive</FONT> list of qualitative criteria listed above. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">107 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Securities Ownership </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The following table discloses the dollar range of equity securities beneficially owned by the portfolio managers of the Fund. The information is as of
June&nbsp;30, 2016. </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">


<TR>
<TD WIDTH="51%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD WIDTH="47%"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="bottom"><B>Name of Portfolio Manager</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"><B>Dollar Range of Equity Securities in the Fund</B></TD></TR>


<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Joshua Anderson</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"><FONT STYLE="white-space:nowrap">$100,001-$500,000</FONT></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Daniel J. Ivascyn</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Over $1,000,000</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Alfred T. Murata</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"><FONT STYLE="white-space:nowrap">$100,001-$500,000</FONT></TD></TR>
</TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Proxy Voting Policies </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">PIMCO has adopted written proxy voting policies and procedures (&#147;Proxy Policy&#148;) as required by Rule <FONT STYLE="white-space:nowrap">206(4)-6</FONT>
under the Advisers Act. In addition to covering the voting of equity securities, the Proxy Policy also applies generally to voting and/or consent rights of fixed income securities, including but not limited to, plans of reorganization, and waivers
and consents under applicable indentures. The Proxy Policy does not apply, however, to consent rights that primarily entail decisions to buy or sell investments, such as tender or exchange offers, conversions, put options, redemption and Dutch
auctions. The Proxy Policy is designed and implemented in a manner reasonably expected to ensure that voting and consent rights (collectively, &#147;proxies&#148;) are exercised in the best interests of accounts. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">With respect to the voting of proxies relating to equity securities, PIMCO has selected an unaffiliated third party proxy research and voting service
(&#147;Proxy Voting Service&#148;), to assist it in researching and voting proxies. With respect to each proxy received, the Proxy Voting Service researches the financial implications of the proposals and provides a recommendation to PIMCO as to how
to vote on each proposal based on the Proxy Voting Service&#146;s research of the individual facts and circumstances and the Proxy Voting Service&#146;s application of its research findings to a set of guidelines that have been approved by PIMCO.
Upon the recommendation of the applicable portfolio managers, PIMCO may determine to override any recommendation made by the Proxy Voting Service. In the event that the Proxy Voting Service does not provide a recommendation with respect to a
proposal, PIMCO may determine to vote on the proposals directly. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">With respect to the voting of proxies relating to fixed income securities, PIMCO&#146;s
fixed income credit research group (the &#147;Credit Research Group&#148;) is responsible for researching and issuing recommendations for voting proxies. With respect to each proxy received, the Credit Research Group researches the financial
implications of the proxy proposal and makes voting recommendations specific for each account that holds the related fixed income security. PIMCO considers each proposal regarding a fixed income security on a <FONT STYLE="white-space:nowrap"><FONT
STYLE="white-space:nowrap">case-by-case</FONT></FONT> basis taking into consideration any relevant contractual obligations as well as other relevant facts and circumstances at the time of the vote. Upon the recommendation of the applicable portfolio
managers, PIMCO may determine to override any recommendation made by the Credit Research Group. In the event that the Credit Research Group does not provide a recommendation with respect to a proposal, PIMCO may determine to vote the proposal
directly. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">108 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">PIMCO may determine not to vote a proxy for an equity or fixed income security if: (1)&nbsp;the effect on the
applicable account&#146;s economic interests or the value of the portfolio holding is insignificant in relation to the account&#146;s portfolio; (2)&nbsp;the cost of voting the proxy outweighs the possible benefit to the applicable account,
including, without limitation, situations where a jurisdiction imposes share blocking restrictions which may affect the ability of the portfolio managers to effect trades in the related security; or (3)&nbsp;PIMCO otherwise has determined that it is
consistent with its fiduciary obligations not to vote the proxy. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">In the event that the Proxy Voting Service or the Credit Research Group, as applicable,
does not provide a recommendation or the portfolio managers of a client account propose to override a recommendation by the Proxy Voting Service, or the Credit Research Group, as applicable, PIMCO will review the proxy to determine whether there is
a material conflict between PIMCO and the applicable account or among PIMCO-advised accounts. If no material conflict exists, the proxy will be voted according to the portfolio managers&#146; recommendation. If a material conflict does exist, PIMCO
will seek to resolve the conflict in good faith and in the best interests of the applicable client account, as provided by the Proxy Policy. The Proxy Policy permits PIMCO to seek to resolve material conflicts of interest by pursuing any one of
several courses of action. With respect to material conflicts of interest between PIMCO and a client account, the Proxy Policy permits PIMCO to either: (i)&nbsp;convene a committee to assess and resolve the conflict (the &#147;Proxy Conflicts
Committee&#148;); or (ii)&nbsp;vote in accordance with protocols previously established by the Proxy Policy, the Proxy Conflicts Committee and/or other relevant procedures approved by PIMCO&#146;s Legal and Compliance department with respect to
specific types of conflicts. With respect to material conflicts of interest between one or more PIMCO-advised accounts, the Proxy Policy permits PIMCO to: (i)&nbsp;designate a PIMCO portfolio manager who is not subject to the conflict to determine
how to vote the proxy if the conflict exists between two accounts with at least one portfolio manager in common; or (ii)&nbsp;permit the respective portfolio managers to vote the proxies in accordance with each client account&#146;s best interests
if the conflict exists between client accounts managed by different portfolio managers. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">PIMCO will supervise and periodically review its proxy voting
activities and the implementation of the Proxy Policy. PIMCO&#146;s Proxy Policy, and information about how PIMCO voted a client&#146;s proxies, is available upon request. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Information about how the Fund voted proxies relating to portfolio securities held during the most recent twelve month period ended June&nbsp;30th will be
made available without charge, upon request, by calling <FONT STYLE="white-space:nowrap">(844)&nbsp;33-PIMCO</FONT> <FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">(844-337-4626)</FONT></FONT> and on the Fund&#146;s website at
www.pimco.com and on the SEC&#146;s website at http://www.sec.gov. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B><A NAME="sai302337_6"></A>PORTFOLIO TRANSACTIONS </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Investment Decisions and Portfolio Transactions </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Investment decisions for the Fund and for the other investment advisory clients of PIMCO are made with a view to achieving their respective investment
objectives. Investment decisions are the product of many factors in addition to basic suitability for the particular client involved (including the Fund). Some securities considered for investments by the Fund also may be
</P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">109 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">
appropriate for other clients served by PIMCO. Thus, a particular security may be bought or sold for certain clients even though it could have been bought or sold for other clients at the same
time, including accounts in which PIMCO, its affiliates and its employees may have a financial interest. If a purchase or sale of securities consistent with the investment policies of the Fund and one or more of these clients served by PIMCO is
considered at or about the same time, transactions in such securities will be allocated among the Fund and other clients pursuant to PIMCO&#146;s trade allocation policy, as applicable, that is designed to ensure that all accounts, including the
Fund, are treated fairly, equitably, and in a <FONT STYLE="white-space:nowrap">non-preferential</FONT> manner, such that allocations are not based upon fee structure or portfolio manager preference. PIMCO may acquire on behalf of its clients
(including the Fund) securities or other financial instruments providing exposure to different aspects of the capital and debt structure of an issuer, including without limitation those that relate to senior and junior/subordinate obligations of
such issuer. In certain circumstances, the interests of those clients exposed to one portion of the issuer&#146;s capital and debt structure may diverge from those clients exposed to a different portion of the issuer&#146;s capital and debt
structure. PIMCO may advise some clients or take actions for them in their best interests with respect to their exposures to an issuer&#146;s capital and debt structure that may diverge from the interests of other clients with different exposures to
the same issuer&#146;s capital and debt structure. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">PIMCO may aggregate orders for the Fund with simultaneous transactions entered into on behalf of its
other clients when, in its reasonable judgment, aggregation may result in an overall economic benefit to the Fund and the other clients in terms of pricing, brokerage commissions or other expenses. When feasible, PIMCO allocates trades prior to
execution. When <FONT STYLE="white-space:nowrap">pre-execution</FONT> allocation is not feasible, PIMCO promptly allocates trades following established and objective procedures. Allocations generally are made at or about the time of execution and
before the end of the trading day. As a result, one account may receive a price for a particular transaction that is different from the price received by another account for a similar transaction on the same day. In general, trades are allocated
among portfolio managers on a pro rata basis (to the extent a portfolio manager decides to participate fully in the trade), for further allocation by each portfolio manager among that manager&#146;s eligible accounts. In allocating trades among
accounts, portfolio managers generally consider a number of factors, including, but not limited to, each account&#146;s deviation (in terms of risk exposure and/or performance characteristics) from a relevant model portfolio, each account&#146;s
investment objectives, restrictions and guidelines, its risk exposure, its available cash, and its existing holdings of similar securities. Once trades are allocated, they may be reallocated only in unusual circumstances due to recognition of
specific account restrictions. In some cases, PIMCO may sell a security on behalf of a client, including the Fund, to a broker-dealer that thereafter may be purchased for the accounts of one or more other clients, including the Fund, from that or
another broker-dealer. PIMCO have adopted procedures they believe are reasonably designed to obtain the best execution for the transactions by each account. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Brokerage and Research Services </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">There is generally no
stated commission in the case of fixed-income securities, which are often traded in the <FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">over-the-counter</FONT></FONT> markets, but the price paid by the Fund usually includes an
undisclosed dealer commission or <FONT STYLE="white-space:nowrap">mark-up.</FONT> In underwritten offerings, the price paid by the Fund </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">110 </P>


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includes a disclosed, fixed commission or discount retained by the underwriter or dealer. Transactions on U.S. stock exchanges and other agency transactions involve the payment by the Fund of
negotiated brokerage commissions. Such commissions vary among different brokers. Also, a particular broker may charge different commissions according to such factors as the difficulty and size of the transaction. Transactions in foreign securities
generally involve the payment of fixed brokerage commissions, which are generally higher than those in the United States. Transactions in fixed income securities on certain foreign exchanges may involve commission payments. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">PIMCO places all orders for the purchase and sale of portfolio securities, options, futures contracts, swap agreements and other instruments for the Fund and
buys and sells such securities, options, futures, swap agreements and other instruments for the Fund through a substantial number of brokers and dealers. In so doing, PIMCO uses its best efforts to obtain for the Fund the best execution available,
except to the extent it may be permitted to pay higher brokerage commissions as described below. In seeking best execution, PIMCO, having in mind the Fund&#146;s best interests, considers all factors it deems relevant, including, by way of
illustration, price, the size of the transaction, the nature of the market for the security, the amount of the commission, the timing of the transaction taking into account market prices and trends, the reputation, experience and financial stability
of the broker-dealer involved and the quality of service rendered by the broker-dealer in other transactions. Changes in the aggregate amount of brokerage commissions paid by the Fund from <FONT STYLE="white-space:nowrap"><FONT
STYLE="white-space:nowrap">year-to-year</FONT></FONT> may be attributable to changes in the asset size of the Fund, the volume of the portfolio transactions effected by the Fund, the types of instruments in which the Fund invests, or the rates
negotiated by PIMCO on behalf of the Fund. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund paid brokerage commissions of $[ ] for the fiscal year ended June&nbsp;30, 2016, $[ ] for the fiscal
year ended June&nbsp;30, 2015<SUP STYLE="font-size:85%; vertical-align:top">2</SUP> and $[ ] for the fiscal year ended March&nbsp;31, 2015. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">PIMCO places
orders for the purchase and sale of portfolio investments for the Fund&#146;s account with brokers or dealers selected by it in its discretion. In effecting purchases and sales of portfolio securities for the account of the Fund, PIMCO will seek the
best price and execution of the Fund&#146;s orders. In doing so, the Fund may pay higher commission rates than the lowest available when PIMCO believes it is reasonable to do so in light of the value of the brokerage and research services provided
by the broker effecting the transaction, as discussed below. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">It has for many years been a common practice in the investment advisory business for
advisers of investment companies and other institutional investors to receive research and brokerage products and services (together, &#147;services&#148;) from broker-dealers that execute portfolio transactions for the clients of such advisers.
Consistent with this practice, PIMCO may receive research services from many broker-dealers with which PIMCO places the Fund&#146;s portfolio transactions. PIMCO also may receive research or research related credits from brokers that are generated
from underwriting commissions when purchasing new issues of fixed-income securities or other assets for the Fund. These services, which in some cases may also be </P> <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
<P STYLE="line-height:0.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000;width:26%">&nbsp;</P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><SUP STYLE="font-size:85%; vertical-align:top">2</SUP> On December&nbsp;16, 2014, the Board approved a change of the Fund&#146;s fiscal year end from
March&nbsp;31 to June 30. Information is provided for the &#147;stub&#148; period from April&nbsp;1, 2015 through the Fund&#146;s new fiscal year end of June&nbsp;30, 2015. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">111 </P>


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purchased for cash, include such matters as general economic and security market reviews, industry and company reviews, evaluations of securities and recommendations as to the purchase and sale
of securities and services related to the execution of securities transactions. Some of these services are of value to PIMCO in advising various of its clients (including the Fund), although not all of these services are necessarily useful and of
value in managing the Fund. Conversely, research and brokerage services provided to the Fund by broker-dealers in connection with trades executed on behalf of other clients of PIMCO may be useful to PIMCO in managing the Fund, although not all of
these services may be necessarily useful and of value to PIMCO in managing such other clients. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">In reliance on the &#147;safe harbor&#148; provided by
Section 28(e) of the Exchange Act, as amended, PIMCO may cause the Fund to pay broker-dealers which provide them with &#147;brokerage and research services&#148; (as defined in the Exchange Act) an amount of commission for effecting a securities
transaction for the Fund in excess of the commission which another broker-dealer would have charged for effecting that transaction if PIMCO determines in good faith that the commission is reasonable in relation to the value of the brokerage and
research services provided by the broker-dealer viewed in terms of either a particular transaction or PIMCO&#146;s overall responsibilities to the advisory accounts for which PIMCO exercises investment discretion. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">PIMCO may place orders for the purchase and sale of exchanged-listed portfolio securities with a broker-dealer that is an affiliate of PIMCO where, in the
judgment of PIMCO, such firm will be able to obtain a price and execution at least as favorable as other qualified broker-dealers. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Pursuant to rules of
the SEC, a broker-dealer that is an affiliate of PIMCO may receive and retain compensation for effecting portfolio transactions for the Fund on a national securities exchange of which the broker-dealer is a member if the transaction is
&#147;executed&#148; on the floor of the exchange by another broker which is not an &#147;associated person&#148; of the affiliated broker-dealer, and if there is in effect a written contract between PIMCO and the Fund expressly permitting the
affiliated broker-dealer to receive and retain such compensation. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">SEC rules further require that commissions paid to such an affiliated broker dealer, or
PIMCO by the Fund on exchange transactions not exceed &#147;usual and customary brokerage commissions.&#148; The rules define &#147;usual and customary&#148; commissions to include amounts which are &#147;reasonable and fair compared to the
commission, fee or other remuneration received or to be received by other brokers in connection with comparable transactions involving similar securities being purchased or sold on a securities exchange during a comparable period of time.&#148; </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">[The Fund did not pay any commissions to affiliated brokers during the fiscal years ended June&nbsp;30, 2016, June&nbsp;30, 2015<SUP
STYLE="font-size:85%; vertical-align:top">3</SUP> and March&nbsp;31, 2015.] </P> <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
<P STYLE="line-height:8.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000;width:26%">&nbsp;</P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><SUP STYLE="font-size:85%; vertical-align:top">3</SUP> On December&nbsp;16, 2014, the Board approved a change of the Fund&#146;s fiscal year end from
March&nbsp;31 to June 30. Information is provided for the &#147;stub&#148; period from April&nbsp;1, 2015 through the Fund&#146;s new fiscal year end of June&nbsp;30, 2015. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">112 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Holdings of Securities of the Fund&#146;s Regular Brokers and Dealers </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The following table lists the regular brokers or dealers of the Fund whose securities the Fund acquired during the fiscal year ended June&nbsp;30, 2016, as
well as the Fund&#146;s holdings in such brokers or dealers as of June&nbsp;30, 2016. </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:12pt" ALIGN="center">


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<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-left:8pt"><B>Broker or Dealer</B></TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-right:8pt"><B>Value of Securities Held by the Fund as of June&nbsp;30, 2016</B></TD></TR>


<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-left:8pt">[ ]</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-right:8pt">[ ]</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-left:8pt">[ ]</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-right:8pt">[ ]</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-left:8pt">[ ]</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-right:8pt">[ ]</TD></TR>
</TABLE> <P STYLE="margin-top:30pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B><A NAME="sai302337_7"></A>DISTRIBUTIONS </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">See &#147;Distributions&#148; in the Prospectus for information relating to distributions to Fund shareholders. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Board of Trustees has declared a dividend of $[ ] per Common Share payable on [ ]. </P>
<P STYLE="margin-top:22pt; margin-bottom:0pt; font-size:14pt; font-family:Times New Roman" ALIGN="center"><B>DESCRIPTION OF SHARES </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><I>Common Shares
</I></P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Declaration authorizes the issuance of an unlimited number of Common Shares. The Common Shares currently outstanding have been issued with a par
value of $0.00001 per share. All Common Shares of the Fund have equal rights as to the payment of dividends and the distribution of assets upon liquidation of the Fund. The Common Shares have been fully paid and, subject to matters discussed in
&#147;Anti-Takeover and Other Provisions in the Declaration of Trust&#151;Shareholder Liability&#148; below, are <FONT STYLE="white-space:nowrap">non-assessable,</FONT> and will have no <FONT STYLE="white-space:nowrap">pre-emptive</FONT> or
conversion rights or rights to cumulative voting. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Common Shares are listed on the New York Stock Exchange. The Fund intends to hold annual meetings
of shareholders so long as the Common Shares are listed on a national securities exchange and such meetings are required as a condition to such listing. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Shares of <FONT STYLE="white-space:nowrap">closed-end</FONT> investment companies may frequently trade at prices lower than net asset value. Shares of <FONT
STYLE="white-space:nowrap">closed-end</FONT> investment companies like the Fund that invest predominantly in corporate debt obligations have during some periods traded at prices higher than net asset value and during other periods traded at prices
lower than net asset value. There can be no assurance that Common Shares or shares of other similar funds will trade at a price higher than net asset value in the future. Net asset value generally increases when interest rates decline, and decreases
when interest rates rise, and these changes are likely to be greater in the case of a fund, such as the Fund, having a leveraged capital structure. Whether investors realize gains or losses upon the sale of Common Shares will not depend upon the
Fund&#146;s net asset value but will depend entirely upon whether the market price of the Common Shares at the time of sale is above or below the original purchase price for the shares. Since the market price of the Fund&#146;s Common
</P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">113 </P>


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Shares will be determined by factors beyond the control of the Fund, the Fund cannot predict whether the Common Shares will trade at, below, or above net asset value or at, below or above the
initial public offering price. Accordingly, the Common Shares are designed primarily for long-term investors, and investors in the Common Shares should not view the Fund as a vehicle for trading purposes. See &#147;Repurchase of Common Shares;
Conversion to <FONT STYLE="white-space:nowrap">Open-End</FONT> Fund.&#148; </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B><I><A NAME="sai302337_8"></A>Anti-Takeover And Other Provisions in the
Declaration of Trust </I></B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><I>Shareholder Liability </I></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Under Massachusetts law, shareholders could, under certain circumstances, be held personally liable for the obligations of the Fund. However, the Declaration
contains an express disclaimer of shareholder liability for acts or obligations of the Fund and requires that notice of such limited liability be given in each agreement, obligation or instrument entered into or executed by the Fund or the Trustees.
The Declaration also provides for indemnification out of the Fund&#146;s assets and property for all loss and expense of any shareholder held personally liable on account of being or having been a shareholder. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability should be limited to circumstances in which such disclaimer is inoperative or the Fund is unable to meet its obligations, and thus should be considered remote.<B><I> </I></B> </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><I>Anti-Takeover Provisions </I></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">As described below, the
Declaration includes provisions that could limit the ability of other entities or persons to acquire control of the Fund, convert the Fund to <FONT STYLE="white-space:nowrap">open-end</FONT> status or to change the composition of its Board of
Trustees, and could have the effect of depriving shareholders of opportunities to sell their shares at a premium over prevailing market prices by discouraging a third party from seeking to obtain control of the Fund. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund&#146;s Trustees are divided into three classes (Class I, Class&nbsp;II and Class&nbsp;III), having initial terms of one, two and three years,
respectively. At each annual meeting of shareholders, the term of one class will expire and each Trustee elected to that class will hold office until the third annual meeting thereafter. The classification of the Board of Trustees in this manner
could delay for an additional year the replacement of a majority of the Board of Trustees. In addition, the Declaration provides that a Trustee may be removed only for cause and only (i)&nbsp;by action of at least seventy-five percent (75%)&nbsp;of
the outstanding shares of the classes or series of shares entitled to vote for the election of such Trustee, or (ii)&nbsp;by written instrument, signed by at least seventy-five percent (75%)&nbsp;of the remaining Trustees, specifying the date when
such removal shall become effective. Cause for these purposes shall require willful misconduct, dishonesty or fraud on the part of the Trustee in the conduct of his office or such Trustee being convicted of a felony. Except as provided in the next
paragraph, the affirmative vote or consent of at least seventy-five percent (75%)&nbsp;of the Board of Trustees and at least seventy-five percent (75%)&nbsp;of the holders of shares of the Fund outstanding and entitled to vote thereon are required
to authorize any of the following transactions (each a &#147;Material Transaction&#148;): (1)&nbsp;a merger, consolidation or share exchange of the Fund or any series or class of shares of the Fund with or into any other person or company, or of any
such person or company with or into the Fund or any such series or class of shares; (2)&nbsp;the issuance or transfer by the Fund or any series or class of shares (in one or a series of transactions in any twelve-month period) of any securities of
the Fund or such series or class to any other person or entity for cash, securities or other property (or </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">114 </P>


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combination thereof) having an aggregate fair market value of $1,000,000 or more, excluding sales of securities of the Fund or such series or class in connection with a public offering, issuances
of securities of the Fund or such series or class pursuant to a dividend reinvestment plan adopted by the Fund and issuances of securities of the Fund or such series or class upon the exercise of any stock subscription rights distributed by the
Fund; or (3)&nbsp;a sale, lease, exchange, mortgage, pledge, transfer or other disposition by the Fund or any series or class of shares (in one or a series of transactions in any twelve-month period) to or with any person of any assets of the Fund
or such series or class having an aggregate fair market value of $1,000,000 or more, except for transactions in securities effected by the Fund or such series or class in the ordinary course of its business. The same affirmative votes are required
with respect to any shareholder proposal as to specific investment decisions made or to be made with respect to the Fund&#146;s assets or the assets of any series or class of shares of the Fund. Notwithstanding the approval requirements specified in
the preceding paragraph, the Declaration requires no vote or consent of the Fund&#146;s shareholders to authorize a Material Transaction if the transaction is approved by a vote of both a majority of the Board of Trustees and seventy-five percent
(75%)&nbsp;of the Continuing Trustees (as defined below), so long as all other conditions and requirements, if any, provided for in the Fund&#146;s Bylaws and applicable law (including any shareholder voting rights under the 1940 Act) have been
satisfied. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">In addition, the Declaration provides that the Fund may be terminated at any time by vote or consent of at least seventy-five percent
(75%)&nbsp;of the Fund&#146;s shares entitled to vote or, alternatively, by vote or consent of both a majority of the Board of Trustees and seventy-five percent (75%)&nbsp;of the Continuing Trustees (as defined below) upon written notice to
shareholders of the Fund. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">In certain circumstances, the Declaration also imposes shareholder voting requirements that are more demanding than those
required under the 1940 Act in order to authorize a conversion of the Fund from a <FONT STYLE="white-space:nowrap">closed-end</FONT> to an <FONT STYLE="white-space:nowrap">open-end</FONT> investment company. See &#147;Repurchase of Common Shares;
Conversion to <FONT STYLE="white-space:nowrap">Open-End</FONT> Fund&#148; below. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">As noted, the voting provisions described above could have the effect of
depriving Common Shareholders of an opportunity to sell their Common Shares at a premium over prevailing market prices by discouraging a third party from seeking to obtain control of the Fund in a tender offer or similar transaction. In the view of
the Fund&#146;s Board of Trustees, however, these provisions offer several possible advantages, including: (1)&nbsp;requiring persons seeking control of the Fund to negotiate with its management regarding the price to be paid for the amount of
Common Shares required to obtain control; (2)&nbsp;promoting continuity and stability; and (3)&nbsp;enhancing the Fund&#146;s ability to pursue long-term strategies that are consistent with its investment objectives and management policies. The
Board of Trustees has determined that the voting requirements described above, which are generally greater than the minimum requirements under the 1940 Act, are in the best interests of the Fund&#146;s Common Shareholders generally. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">A &#147;Continuing Trustee,&#148; as used in the discussion above, is any member of the Fund&#146;s Board of Trustees who either (i)&nbsp;has been a member of
the Board for a period of at least <FONT STYLE="white-space:nowrap">thirty-six</FONT> months (or since the commencement of the Fund&#146;s operations, if less than <FONT STYLE="white-space:nowrap">thirty-six</FONT> months) or (ii)&nbsp;was nominated
to serve as a member of the Board of Trustees by a majority of the Continuing Trustees then members of the Board. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">115 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The foregoing is intended only as a summary and is qualified in its entirety by reference to the full text of the
Declaration and the Fund&#146;s Bylaws, both of which have been filed as exhibits to the Fund&#146;s registration statement on file with the SEC. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><I>Liability of Trustees </I></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Declaration provides that the
obligations of the Fund are not binding upon the Trustees of the Fund individually, but only upon the assets and property of the Fund, and that the Trustees shall not be liable for errors of judgment or mistakes of fact or law. Nothing in the
Declaration, however, protects a Trustee against any liability to which he would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office. </P>
<P STYLE="margin-top:24pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B><A NAME="sai302337_9"></A>REPURCHASE OF COMMON SHARES; CONVERSION TO <FONT STYLE="white-space:nowrap">OPEN-END</FONT> FUND </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund is a <FONT STYLE="white-space:nowrap">closed-end</FONT> investment company and as such its shareholders will not have the right to cause the Fund to
redeem their shares. Instead, the Fund&#146;s Common Shares will trade in the open market at a price that will be a function of several factors, including dividend levels and stability (which will in turn be affected by dividend and interest
payments by the Fund&#146;s portfolio holdings, regulations affecting the timing and character of Fund&#146;s distributions, Fund expenses and other factors), portfolio credit quality, liquidity, call protection, market supply and demand, and
similar factors relating to the Fund&#146;s portfolio holdings. Shares of a <FONT STYLE="white-space:nowrap">closed-end</FONT> investment company may frequently trade at prices lower than net asset value. The Fund&#146;s Board will regularly monitor
the relationship between the market price and net asset value of the Common Shares. If the Common Shares were to trade at a substantial discount to net asset value for an extended period of time, the Board may consider the repurchase of its Common
Shares on the open market or in private transactions, the making of a tender offer for such shares or the conversion of the Fund to an <FONT STYLE="white-space:nowrap">open-end</FONT> investment company. The Fund cannot assure you that the Board
will decide to take or propose any of these actions, or that share repurchases or tender offers will actually reduce any market discount. The Fund has no present intention to repurchase its Common Shares and would do so only in the circumstances
described in this section. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Subject to its investment limitations, the Fund may borrow to finance the repurchase of shares or to make a tender offer.
Interest on any borrowings to finance share repurchase transactions or the accumulation of cash by the Fund in anticipation of share repurchases or tenders will reduce the Fund&#146;s net income. Any share repurchase, tender offer or borrowing that
might be approved by the Board of Trustees would have to comply with the Securities Exchange Act of 1934, as amended, and the 1940 Act and the rules and regulations thereunder. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund&#146;s Board of Trustees may also from time to time consider submitting to the holders of the shares of beneficial interest of the Fund a proposal to
convert the Fund to an <FONT STYLE="white-space:nowrap">open-end</FONT> investment company. In determining whether to exercise its sole discretion to submit this issue to shareholders, the Board of Trustees would consider all factors then relevant,
including the relationship of the market price of the Common Shares to net asset value and the extent to which the Fund&#146;s capital structure is leveraged. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">116 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Declaration requires the affirmative vote or consent of holders of at least seventy-five percent (75%) of
each class of the Fund&#146;s shares entitled to vote on the matter to authorize a conversion of the Fund from a <FONT STYLE="white-space:nowrap">closed-end</FONT> to an <FONT STYLE="white-space:nowrap">open-end</FONT> investment company, unless the
conversion is authorized by both a majority of the Board of Trustees and seventy-five percent (75%) of the Continuing Trustees (as defined above under &#147;Anti-Takeover and Other Provisions in the Declaration of Trust&#151;Anti-Takeover
Provisions&#148;). This seventy-five percent (75%) shareholder approval requirement is higher than is required under the 1940 Act. In the event that a conversion is approved by the Trustees and the Continuing Trustees as described above, the minimum
shareholder vote required under the 1940 Act would be necessary to authorize the conversion. Currently, the 1940 Act would require approval of the holders of a &#147;majority of the outstanding&#148; Common Shares and, if issued, preferred shares
voting together as a single class, and the holders of a &#147;majority of the outstanding&#148; preferred shares (if issued), voting as a separate class, in order to authorize a conversion. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">If the Fund were to convert to an <FONT STYLE="white-space:nowrap">open-end</FONT> company, the Common Shares likely would no longer be listed on the NYSE. In
contrast to a <FONT STYLE="white-space:nowrap">closed-end</FONT> investment company, shareholders of an <FONT STYLE="white-space:nowrap">open-end</FONT> investment company may require the company to redeem their shares at any time (except in certain
circumstances as authorized by or under the 1940 Act) at their net asset value, less any redemption charge that is in effect at the time of redemption. In addition, if the Fund were to convert to an <FONT STYLE="white-space:nowrap">open-end</FONT>
company, it would likely have to significantly reduce any leverage it is then employing and would not be able to invest more than 15% of its net assets in illiquid securities, either or both of which may necessitate a substantial repositioning of
the Fund&#146;s investment portfolio, which may in turn generate substantial transaction costs, which would be borne by Common Shareholders, and may adversely affect Fund performance and Fund dividends. Shareholders of an <FONT
STYLE="white-space:nowrap">open-end</FONT> investment company may require the company to redeem their shares on any business day (except in certain circumstances as authorized by or under the 1940 Act) at their net asset value, less such redemption
charge, if any, as might be in effect at the time of redemption. In order to avoid maintaining large cash positions or liquidating favorable investments to meet redemptions, <FONT STYLE="white-space:nowrap">open-end</FONT> companies typically engage
in a continuous offering of their shares. <FONT STYLE="white-space:nowrap">Open-end</FONT> companies are thus subject to periodic asset <FONT STYLE="white-space:nowrap">in-flows</FONT> and <FONT STYLE="white-space:nowrap">out-flows</FONT> that can
complicate portfolio management. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The repurchase by the Fund of its shares at prices below net asset value will result in an increase in the net asset
value of those shares that remain outstanding. However, there can be no assurance that share repurchases or tenders at or below net asset value will result in the Fund&#146;s shares trading at a price equal to their net asset value. Nevertheless,
the fact that the Fund&#146;s shares may be the subject of repurchase or tender offers at net asset value from time to time, or that the Fund may be converted to an <FONT STYLE="white-space:nowrap">open-end</FONT> company, may reduce any spread
between market price and net asset value that might otherwise exist. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">In addition, a purchase by the Fund of its Common Shares will decrease the
Fund&#146;s total assets. This would likely have the effect of increasing the Fund&#146;s expense ratio. Any purchase by the Fund of its Common Shares at a time when Preferred Shares, reverse repurchase agreements, credit default swaps or other
forms of leverage are outstanding will increase the leverage applicable to the outstanding Common Shares then remaining. See the Prospectus under &#147;Principal Risks of the Fund&#151;Leverage Risk.&#148; </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">117 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Before deciding whether to take any action if the Fund&#146;s Common Shares trade below net asset value, the
Board of Trustees would consider all relevant factors, including the extent and duration of the discount, the liquidity of the Fund&#146;s portfolio, the impact of any action that might be taken on the Fund or its shareholders and market
considerations. Based on these considerations, even if the Fund&#146;s shares should trade at a discount, the Board of Trustees may determine that, in the interest of the Fund and its shareholders, no action should be taken. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B><A NAME="sai302337_10"></A>[TAX MATTERS] [TO BE UPDATED] </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">[The following discussion of U.S. federal income tax consequences of an investment in Common Shares of the Fund is based on the Code, U.S. Treasury
regulations promulgated thereunder, and other applicable authority, as of the date of this Statement of Additional Information. These authorities may be changed, possibly with retroactive effect, or subject to new legislative, administrative, or
judicial interpretation. The following discussion is only a summary of some of the important U.S. federal tax considerations generally applicable to investments in Common Shares of the Fund. This summary does not purport to be a complete description
of the U.S. federal income tax considerations applicable to an investment in Common Shares of the Fund. There may be other U.S. federal income tax consequences applicable to particular shareholders. For example, except as otherwise specifically
noted herein, we have not described certain tax considerations that may be relevant to certain types of holders subject to special treatment under the U.S. federal income tax laws, including shareholders subject to the U.S. federal alternative
minimum tax, insurance companies, <FONT STYLE="white-space:nowrap">tax-exempt</FONT> organizations, pension plans and trusts, regulated investment companies, dealers in securities, shareholders holding Common Shares through <FONT
STYLE="white-space:nowrap">tax-advantaged</FONT> accounts (such as 401(k) plans or individual retirement accounts), financial institutions, shareholders holding Common Shares as part of a hedge, straddle, or conversion transaction, entities that are
not organized under the laws of the United States or a political subdivision thereof, and persons who are neither citizens nor residents of the United States. This summary assumes that investors hold Common Shares as capital assets (within the
meaning of the Code). Shareholders should consult their own tax advisors regarding their particular situation and the possible application of U.S. federal, state, local, foreign or other tax laws. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Taxation of the Fund </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund has elected to be treated
as a regulated investment company (&#147;RIC&#148;) under Subchapter M of the Code and intends each year to qualify and be eligible to be treated as such. In order to qualify for the special tax treatment accorded RICs and their shareholders, the
Fund must, among other things: (i)&nbsp;derive at least 90% of its gross income in each taxable year from dividends, interest, payments with respect to certain securities loans, and gains from the sale or other disposition of stock, securities or
foreign currencies, or other income (including, but not limited to, gains from options, futures or forward contracts) derived with respect to its business of investing in such stock, securities or currencies and net income derived from interests in
&#147;qualified publicly traded partnerships&#148; (as defined below); (ii) diversify its holdings so that at the close of each quarter of the Fund&#146;s taxable year, (a)&nbsp;at least 50% of the value of its total assets consists of cash and cash
items (including receivables), U.S. Government securities, securities of other RICs, and other securities limited, with respect to any one issuer, to no more </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">118 </P>


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than 5% of the value of the Fund&#146;s total assets and no more than 10% of the outstanding voting securities of such issuer, and (b)&nbsp;not more than 25% of the value of the Fund&#146;s total
assets is invested in the securities (other than those of the U.S. Government or other RICs) of any one issuer or of two or more issuers that the Fund controls and that are engaged in the same, similar or related trades or businesses, or in the
securities of one or more qualified publicly traded partnerships; and (iii)&nbsp;distribute with respect to each taxable year at least 90% of the sum of its investment company taxable income (as that term is defined in the Code, without regard to
the deduction for dividends paid&#151;generally, taxable ordinary income and the excess, if any, of net short-term capital gains over net long-term capital losses) and net <FONT STYLE="white-space:nowrap">tax-exempt</FONT> income for such year. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">In general, for purposes of the 90% gross income requirement described in (i)&nbsp;above, income derived from a partnership will be treated as qualifying
income only to the extent such income is attributable to items of income of the partnership that would be qualifying income if realized directly by the RIC. However, 100% of the net income derived from an interest in a qualified publicly traded
partnership (a partnership (a)&nbsp;the interests in which are traded on an established securities market or are readily tradable on a secondary market or the substantial equivalent thereof and (b)&nbsp;that derives less than 90% of its income from
the qualifying income described in (i)&nbsp;above) will be treated as qualifying income. In general, such entities will be treated as partnerships for U.S. federal income tax purposes because they meet the passive income requirement under Code
Section 7704(c)(2). In addition, although in general the passive loss rules of the Code do not apply to RICs, such rules do apply to a RIC with respect to items attributable to an interest in a qualified publicly traded partnership. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">For purposes of the diversification test described in (ii)&nbsp;above, the term &#147;outstanding voting securities of such issuer&#148; will include the
equity securities of a qualified publicly traded partnership. Also, for purposes of the diversification test in (ii)&nbsp;above, the identification of the issuer (or, in some cases, issuers) of a particular investment can depend on the terms and
conditions of that investment. In some cases, identification of the issuer (or issuers) is uncertain under current law, and an adverse determination or future guidance by the IRS with respect to issuer identification for a particular type of
investment may adversely affect the Fund&#146;s ability to meet the diversification test in (ii)&nbsp;above. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">If the Fund qualifies for treatment as a
RIC, the Fund will not be subject to federal income tax on income distributed to Common Shareholders in a timely manner in the form of dividends (including Capital Gain Dividends, as defined below). The Fund&#146;s intention to qualify for treatment
as a RIC may negatively affect the Fund&#146;s return to Common Shareholders by limiting its ability to acquire or continue to hold positions that would otherwise be consistent with its investment strategy or by requiring it to engage in
transactions it would otherwise not engage in, resulting in additional transaction costs. If the Fund were to fail to meet the income, diversification, or distribution test described above, the Fund could in some cases cure such failure, including
by paying a Fund-level tax, paying interest, making additional distributions, and disposing of certain assets. If the Fund were ineligible to or otherwise did not cure such failure for any year, or if the Fund were otherwise to fail to qualify as a
RIC accorded special tax treatment for such year, the Fund would be subject to tax on its taxable income at corporate rates, and all distributions from earnings and profits, including any distributions of net
<FONT STYLE="white-space:nowrap">tax-exempt</FONT> </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">119 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">
income and net long-term capital gains, would be taxable to Common Shareholders as dividend income. Such dividend income generally would be eligible for the dividends received deduction in the
case of corporate shareholders and to be treated as qualified dividend income in the case of <FONT STYLE="white-space:nowrap">non-corporate</FONT> shareholders (at least for taxable years beginning before January&nbsp;1, 2013, see discussion below),
provided, in both cases, that the shareholder meets certain holding period and other requirements in respect of the Fund&#146;s Common Shares (as described below). In addition, the Fund could be required to recognize unrealized gains, pay
substantial taxes and interest and make substantial distributions before <FONT STYLE="white-space:nowrap">re-qualifying</FONT> as a RIC that is accorded special tax treatment. Thus failure to qualify as a RIC would likely materially reduce the
investment return to the Common Shareholders. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund intends to distribute all or substantially all of its investment company taxable income, its net <FONT
STYLE="white-space:nowrap">tax-exempt</FONT> income (if any) and its net capital gain (that is, the excess of net long-term capital gain over net short-term capital loss, in each case determined with reference to any loss carryforwards) in each
taxable year. Any taxable income including any net capital gain retained by the Fund will be subject to tax at the Fund level at regular corporate rates. In the case of net capital gain, the Fund is permitted to designate the retained amount as
undistributed capital gain in a notice to its shareholders who would then (i)&nbsp;be required to include in income for U.S. federal income tax purposes, as long-term capital gain, their shares of such undistributed amount, and (ii)&nbsp;be entitled
to credit their proportionate shares of the tax paid by the Fund on such undistributed amount against their U.S. federal income tax liabilities, if any, and to claim refunds on a properly filed U.S. tax return to the extent the credit exceeds such
liabilities. If the Fund makes this designation, for U.S. federal income tax purposes, the tax basis of Common Shares owned by a shareholder will be increased by an amount equal under current law to the difference between the amount of undistributed
capital gains included in the shareholder&#146;s gross income under clause (i)&nbsp;of the preceding sentence and the tax deemed paid by the shareholder under clause (ii)&nbsp;of the preceding sentence. The Fund is not required to, and there can be
no assurance that the Fund will, make this designation if it retains all or a portion of its net capital gain in a taxable year. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">As described under
&#147;Distributions&#148; above, if at any time when Preferred Shares are outstanding the Fund does not meet applicable asset coverage requirements, it will be required to suspend distributions to Common Shareholders until the requisite asset
coverage is restored. Any such suspension may cause the Fund to pay a U.S. federal income and excise tax on undistributed income or gains and may, in certain circumstances, prevent the Fund from qualifying for treatment as a RIC. The Fund may
repurchase or otherwise retire Preferred Shares in an effort to comply with the distribution requirement applicable to regulated investment companies. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">In
determining its net capital gain, including in connection with determining the amount available to support a Capital Gain Dividend (as defined below), its taxable income and its earnings and profits, a RIC generally may elect to treat part or all of
any post-October capital loss (defined as the greatest of net capital loss, net long-term capital loss, or net short-term capital loss, in each case attributable to the portion of the taxable year after October 31) or late-year ordinary loss
(generally, (i)&nbsp;net ordinary loss from the sale, exchange or other taxable disposition of property, attributable to the portion of the taxable year after October&nbsp;31, plus (ii) other net ordinary loss attributable to the portion of the
taxable year after December 31) as if incurred in the succeeding taxable year. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">120 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">A nondeductible excise tax at the rate of 4% will be imposed on the excess, if any, of the Fund&#146;s
&#147;required distribution&#148; over its actual distributions in any calendar year. Generally, the required distribution is 98% of the Fund&#146;s ordinary income for the calendar year plus 98.2% of its capital gain net income recognized during
the <FONT STYLE="white-space:nowrap">one-year</FONT> period ending on October&nbsp;31, plus undistributed amounts from prior years. For purposes of the required excise tax distribution, a RIC&#146;s ordinary gains and losses from the sale, exchange,
or other taxable disposition of property that would otherwise be taken into account after October&nbsp;31 generally are treated as arising on January&nbsp;1 of the following calendar year. Also, for purposes of the excise tax, the Fund will be
treated as having distributed any amount on which it is subject to corporate income tax for the taxable year ending within the calendar year. The Fund intends to make distributions sufficient to avoid imposition of the excise tax, although there can
be no assurance that it will be able to do so. The Fund may determine to pay the excise tax in a year to the extent it is deemed to be in the best interest of the Fund (e.g., if the excise tax is <I>de minimis</I>). </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Capital losses in excess of capital gains (&#147;net capital losses&#148;) are not permitted to be deducted against the Fund&#146;s net investment income.
Instead, potentially subject to certain limitations, the Fund may carry net capital losses from any taxable year forward to subsequent taxable years to offset capital gains, if any, realized during such subsequent taxable years. Capital loss
carryforwards are reduced to the extent they offset current-year net realized capital gains, whether the Fund retains or distributes such gains. If the Fund incurs or has incurred net capital losses in taxable years beginning after December&nbsp;22,
2010 (&#147;post-2010 losses&#148;), those losses will be carried forward to one or more subsequent taxable years without expiration; any such carryforward losses will retain their character as short-term or long-term. If the Fund incurred net
capital losses in a taxable year beginning on or before December&nbsp;22, 2010 <FONT STYLE="white-space:nowrap">(&#147;pre-2011</FONT> losses&#148;), the Fund is permitted to carry such losses forward for eight taxable years; in the year to which
they are carried forward, such losses are treated as short-term capital losses that first offset any short-term capital gains, and then offset any long-term capital gains. The Fund must use any post-2010 losses, which will not expire, before it uses
any <FONT STYLE="white-space:nowrap">pre-2011</FONT> losses. This increases the likelihood that <FONT STYLE="white-space:nowrap">pre-2011</FONT> losses will expire unused at the conclusion of the eight-year carryforward period. The Fund&#146;s
available capital loss carryforwards, if any, will be set forth in its annual shareholder report for each fiscal year. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Distributions </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund intends to make monthly distributions. Unless a shareholder elects otherwise, all distributions will be automatically reinvested in additional Common
Shares of the Fund pursuant to the Fund&#146;s Dividend Reinvestment Plan (see &#147;Dividend Reinvestment Plan&#148; in the Prospectus). A shareholder whose distributions are reinvested in Common Shares under the Dividend Reinvestment Plan will be
treated for U.S. federal income tax purposes as having received an amount in distribution equal to either (i)&nbsp;if Newly Issued Common Shares are issued under the Dividend Reinvestment Plan, generally the fair market value of the Newly Issued
Common Shares issued to the shareholder or (ii)&nbsp;if reinvestment is made through Open-Market Purchases under the Dividend Reinvestment Plan, the amount of cash allocated to the </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">121 </P>


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shareholder for the purchase of Common Shares on its behalf in the open market. For U.S. federal income tax purposes, all distributions are generally taxable in the manner described below,
whether a shareholder takes them in cash or they are reinvested pursuant to the Dividend Reinvestment Plan in additional shares of the Fund. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">For U.S.
federal income tax purposes, distributions of net investment income are generally taxable to Common Shareholders as ordinary income. Taxes on distributions of capital gains are determined by how long the Fund owned the investments that generated the
gains, rather than how long a shareholder has owned his or her Common Shares. In general, the Fund will recognize long-term capital gain or loss on investments it has owned (or is deemed to have owned) for more than one year, and short-term capital
gain or loss on investments it has owned (or is deemed to have owned) for one year or less. Distributions of net capital gain that are properly reported by the Fund as capital gain dividends (&#147;Capital Gain Dividends&#148;) will be taxable to
shareholders as long-term capital gains includible in net capital gain and taxed to individuals at reduced rates. Distributions of net short-term capital gain (as reduced by any net long-term capital loss for the taxable year) will be taxable to
shareholders as ordinary income. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund may report certain dividends as derived from &#147;qualified dividend income&#148; which, when received by a <FONT
STYLE="white-space:nowrap">non-corporate</FONT> shareholder, will be taxed at the rates applicable to net capital gain, provided holding period and other requirements are met at both the shareholder and Fund levels. Interest income, short-term
capital gain and, generally, REIT distributions, are not qualified dividend income. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Dividends received by corporate shareholders may qualify for the 70%
dividends-received deduction to the extent of the amount of qualifying dividends received by the Fund from domestic corporations and to the extent, if any, that a portion of interest paid or accrued on certain high yield discount obligations owned
by the Fund is treated as a dividend, providing holding period and other requirements are met at both the shareholder and Fund levels. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Any distribution
of income that is attributable to (i)&nbsp;income received by the Fund in lieu of dividends with respect to securities on loan pursuant to a securities lending transaction or (ii)&nbsp;dividend income received by the Fund on securities it
temporarily purchased from a counterparty pursuant to a repurchase agreement that is treated for U.S. federal income tax purposes as a loan by the Fund, will not constitute qualified dividend income to
<FONT STYLE="white-space:nowrap">non-corporate</FONT> shareholders and will not be eligible for the dividends-received deduction for corporate shareholders. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The IRS currently requires a RIC that the IRS recognizes as having two or more &#147;classes&#148; of stock for U.S. federal income tax purposes to allocate
to each such class proportionate amounts of each type of its income (such as ordinary income and capital gains) based upon the percentage of total dividends distributed to each class for the tax year. Accordingly, the Fund intends each tax year to
allocate Capital Gain Dividends between and among its Common Shares and each series of its Preferred Shares in proportion to the total dividends paid to each class with respect to such tax year. Dividends qualifying and not qualifying for the
dividends received deduction or as qualified dividend income will similarly be allocated between and among Common Shares and each series of Preferred Shares. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">122 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">If, in and with respect to any taxable year, the Fund makes a distribution in excess of its current and
accumulated &#147;earnings and profits,&#148; the excess distribution will be treated as a return of capital to the extent of a shareholder&#146;s tax basis in his or her Common Shares, and thereafter as capital gain. A return of capital is not
taxable, but it reduces a shareholder&#146;s basis in his or her shares, thus reducing any loss or increasing any gain on a subsequent taxable disposition by the shareholder of such shares. Where one or more such distributions occur in and with
respect to any taxable year of the Fund, the available earnings and profits will be allocated first to the distributions made to the holders of Preferred Shares, and only thereafter to distributions made to holders of Common Shares. As a result, the
holders of Preferred Shares will receive a disproportionate share of the distributions treated as dividends, and the holders of the Common Shares will receive a disproportionate share of the distributions treated as a return of capital. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">A distribution by the Fund will be treated as paid on December&nbsp;31 of any calendar year if it is declared by the Fund in October, November or December
with a record date in such a month and paid by the Fund during January of the following calendar year. Such distributions will be taxable to shareholders in the calendar year in which the distributions are declared, rather than the calendar year in
which the distributions are received. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">As required by federal law, detailed federal tax information with respect to each calendar year will be furnished
to shareholders early in the succeeding year. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Dividends and distributions on the Common Shares are generally subject to federal income tax as described
herein to the extent they do not exceed the Fund&#146;s realized income and gains, even though such dividends and distributions may economically represent a return of a particular shareholder&#146;s investment. Such distributions are likely to occur
in respect of Common Shares purchased at a time when the Fund&#146;s net asset value reflects unrealized gains or income or gains that are realized but not yet distributed. Such realized income and gains may be required to be distributed even when
the Fund&#146;s net asset value also reflects unrealized losses. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Sales or Exchanges of Shares </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The sale or exchange of shares of the Fund by a shareholder may give rise to a gain or loss. In general, any gain or loss realized upon a taxable disposition
of shares will be treated as long-term capital gain or loss if the shares have been held for more than 12 months. Otherwise, the gain or loss on the taxable disposition of shares will be treated as short-term capital gain or loss. However, any loss
realized upon a taxable disposition of shares held for six months or less will be treated as long-term, rather than short-term, to the extent of any Capital Gain Dividends received (or deemed received) by the shareholder with respect to those
shares. All or a portion of any loss realized upon a taxable disposition of shares will be disallowed under the Code&#146;s &#147;wash sale&#148; rule if other substantially identical shares of the Fund are purchased (whether through the automatic
reinvestment of dividends or otherwise) within 30 days before or after the disposition. In such a case, the basis of the newly purchased shares will be adjusted to reflect the disallowed loss. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">123 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">From time to time the Fund may make a tender offer for its Common Shares. Shareholders who tender all Common
Shares held, or considered to be held, by them and do not hold (directly or by attribution) any other Fund shares (namely, Preferred Shares) will be treated as having sold their shares and generally will realize a capital gain or loss. If a
shareholder tenders fewer than all of its Common Shares or continues to hold (directly or by attribution) other Fund shares (Preferred Shares) in certain circumstances, such shareholder will be treated as having received a taxable dividend upon the
tender of its Common Shares. In such a case, there is a risk that <FONT STYLE="white-space:nowrap">non-tendering</FONT> shareholders will be treated as having received taxable distributions from the Fund. The extent of such risk will vary depending
upon the particular circumstances of the tender offer, in particular whether such offer is a single and isolated event or is part of a plan for periodically redeeming the Common Shares of the Fund; if isolated, any such risk is likely remote. To the
extent that the Fund recognizes net gains on the liquidation of portfolio securities to meet such tenders of Common Shares, the Fund will be required to make additional distributions to its Common Shareholders. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund&#146;s repurchase of Common Shares on the open market similarly results in a percentage increase in the interests of remaining shareholders. In such
a case, a selling shareholder would likely have no specific knowledge that he or she is selling his or her shares to the Fund. It is therefore less likely that shareholders whose percentage share interests in the Fund increase as a result of any
such open-market sale will be treated as having received a taxable distribution from the Fund. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Medicare Tax </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Section&nbsp;1411 of the Code generally imposes a 3.8% Medicare contribution tax on the net investment income of certain individuals whose income exceeds
certain threshold amounts, and of certain trusts and estates under similar rules. The details of the implementation of this tax and of the calculation of net investment income, among other issues, are currently unclear and remain subject to future
guidance. For these purposes, &#147;net investment income&#148; generally includes, among other things, (i)&nbsp;distributions paid by the Fund of net investment income and capital gains as described above, and (ii)&nbsp;any net gain from the sale
or exchange of Fund shares. Common Shareholders are advised to consult their tax advisors regarding the possible implications of this additional tax on their investment in the Fund. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Original Issue Discount, Market Discount, <FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">Payment-in-Kind</FONT></FONT> Securities and
Preferred Securities </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Some debt obligations with a fixed maturity date of more than one year from the date of issuance (including <FONT
STYLE="white-space:nowrap">zero-coupon</FONT> bonds) will be treated as debt obligations that are issued originally at a discount. Generally, the amount of the original issue discount (&#147;OID&#148;) is treated as interest income and is included
in the Fund&#146;s income (and thus is required to be distributed) over the term of the debt security, even though payment of that amount is not received until a later time, upon partial or full repayment or disposition of the debt obligation. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Some debt obligations with a fixed maturity date of more than one year from the date of issuance that are acquired by the Fund in the secondary market may be
treated as having &#147;market discount.&#148; Very generally, market discount is the excess of the stated redemption price of a debt obligation (or, in the case of an obligation issued with OID, its &#147;revised issue price&#148;) over the
</P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">124 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">
purchase price of such obligation. Generally, any gain recognized on the disposition of, and any partial payment of principal on, a debt obligation having market discount is treated as ordinary
income to the extent the gain, or principal payment, does not exceed the &#147;accrued market discount&#148; on such debt obligation. Alternatively, the Fund may elect to accrue market discount currently. If this election is made, the Fund will be
required to include currently any accrued market discount on such debt obligations in the Fund&#146;s taxable income (as ordinary income) and thus distribute it over the term of the debt obligations, even though payment of those amounts is not
received until a later time, upon partial or full repayment or disposition of the debt obligations. The Fund reserves the right to revoke such an election at any time pursuant to applicable IRS procedures. The rate at which the market discount
accrues, and thus is included in the Fund&#146;s income, will depend upon which of the permitted accrual methods the Fund elects. In the case of higher-risk securities, the amount of market discount may be unclear. See &#147;Higher Risk
Securities.&#148; </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">From time to time, a substantial portion of the Fund&#146;s investments in debt obligations could be treated as having OID and/or
market discount, which, in some cases could be significant. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Some debt obligations with a fixed maturity date of one year or less from the date of
issuance may be treated as having OID or, in certain cases, &#147;acquisition discount&#148; (very generally, the excess of the stated redemption price over the purchase price). The Fund will be required to include the OID or acquisition discount in
income (as ordinary income) and thus distribute it over the term of the debt obligation, even though payment of that amount is not received until a later time, upon partial or full repayment or disposition of the debt obligation. The rate at which
OID or acquisition discount accrues, and thus is included in the Fund&#146;s income, will depend upon which of the permitted accrual methods the Fund elects.<B><I> </I></B> </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Some preferred securities may include provisions that permit the issuer, at its discretion, to defer the payment of distributions for a stated period without
any adverse consequences to the issuer. If the Fund owns a preferred security that is deferring the payment of its distributions, the Fund may be required to report income for U.S. federal income tax purposes to the extent of any such deferred
distributions even though the Fund has not yet actually received the cash distribution. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">In addition, <FONT STYLE="white-space:nowrap"><FONT
STYLE="white-space:nowrap">payment-in-kind</FONT></FONT> securities will give rise to income which is required to be distributed even though the Fund receives no interest payment in cash on the security during the year. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">By reason of holding the foregoing kinds of securities, the Fund may be required to pay out as an income distribution each year an amount which is greater
than the total amount of cash interest the Fund actually received. Such distributions may be made from the cash assets of the Fund or by liquidation of portfolio securities, if necessary (including when it is not advantageous to do so). The Fund may
realize gains or losses from such liquidations. In the event the Fund realizes net capital gains from such transactions, its shareholders may receive a larger capital gain distribution, if any, than they would in the absence of such transactions.
</P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">125 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Securities Purchased at a Premium </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Very generally, where the Fund purchases a bond at a price that exceeds the redemption price at maturity &#150; that is, at a premium &#151; the premium is
amortizable over the remaining term of the bond. In the case of a taxable bond, if the Fund makes an election applicable to all such bonds it purchases, which election is irrevocable without consent of the IRS, the Fund reduces the current taxable
income from the bond by the amortized premium and reduces its tax basis in the bond by the amount of such offset; upon the disposition or maturity of such bonds acquired on or after January&nbsp;4, 2013, the Fund is permitted to deduct any remaining
premium allocable to a prior period. In the case of a <FONT STYLE="white-space:nowrap">tax-exempt</FONT> bond, tax rules require the Fund to reduce its tax basis by the amount of amortized premium. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Higher-Risk Securities </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Investments in debt obligations
that are at risk of or in default present special tax issues for the Fund. Tax rules are not entirely clear about issues such as whether or to what extent the Fund should recognize market discount on a debt obligation, when the Fund may cease to
accrue interest, OID or market discount, when and to what extent the Fund may take deductions for bad debts or worthless securities and how the Fund should allocate payments received on obligations in default between principal and income. These and
other related issues will be addressed by the Fund when, as and if it invests in such securities, in order to seek to ensure that it distributes sufficient income to preserve its status as a RIC and does not become subject to federal income or
excise tax. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>High Yield Discount Obligations </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">A
portion of the interest paid or accrued on certain high yield discount obligations owned by the Fund may not, and interest paid on debt obligations, if any, that are considered for tax purposes to be payable in the equity of the issuer or a related
party will not be deductible to the issuer. This may affect the cash flow of the issuer. If a portion of the interest paid or accrued on certain high yield discount obligations is not deductible, that portion will be treated as a dividend paid by
the issuer for purposes of the corporate dividends received deduction. In such cases, if the issuer of the high yield discount obligations is a domestic corporation, dividend payments by the Fund may be eligible for the dividends-received deduction
to the extent attributable to the deemed dividend portion of such accrued interest. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Municipal Bonds </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The interest on municipal bonds is generally exempt from U.S. federal income tax. The Fund does not expect to invest 50% or more of its assets in municipal
bonds on which the interest is exempt from U.S. federal income tax, or in interests in other RICs. As a result, it does not expect to be eligible to pay &#147;exempt-interest dividends&#148; to its shareholders under the applicable tax rules. As a
result, interest on municipal bonds is taxable to shareholders of the Fund when received as a distribution from the Fund. In addition, gains realized by the Fund on the sale or exchange of municipal bonds are taxable to shareholders of the Fund when
distributed to them. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">126 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">As discussed in &#147;Investment Objectives and Policies,&#148; unlike most municipal bonds, interest paid by an
issuer on a Build America Bond is taxable to the bondholder. Thus, the interest the Fund receives on such bonds will be included in the Fund&#146;s taxable income and taxable to shareholders as ordinary income when distributed by the Fund. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">If the Fund holds, directly or indirectly, one or more tax credit Build America Bonds (which will have been issued prior to December&nbsp;31, 2010)<B> </B>on
one or more applicable dates during a taxable year, it is possible that the Fund will elect to permit its shareholders to claim a tax credit on their income tax returns equal to each shareholder&#146;s proportionate share of tax credits from the
applicable bonds that otherwise would be allowed to the Fund. In such a case, a shareholder will be deemed to receive a distribution of money with respect to its Fund shares equal to the shareholder&#146;s proportionate share of the amount of such
credits and be allowed a credit against the shareholder&#146;s U.S. federal income tax liability equal to the amount of such deemed distribution, subject to certain limitations imposed by the Code on the credits involved. Even if the Fund is
eligible to pass through tax credits to shareholders, the Fund may choose not to do so. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Certain Investments in REITs and Mortgage-Related Securities
</B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Any investment by the Fund in equity securities of REITs may result in the Fund&#146;s receipt of cash in excess of the REIT&#146;s earnings; if the
Fund distributes these amounts, these distributions could constitute a return of capital to Fund shareholders for U.S. federal income tax purposes. Investments in REIT equity securities also may require the Fund to accrue and to distribute income
not yet received. To generate sufficient cash to make the requisite distributions, the Fund may be required to sell securities in its portfolio (including when it is not advantageous to do so) that it otherwise would have continued to hold.
Dividends received by the Fund from a REIT generally will not constitute qualified dividend income. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund may invest directly or indirectly in real
estate mortgage investment conduits (&#147;REMICs&#148;) (including by investing in residual interests in CMOs with respect to which an election to be treated as a REMIC is in effect) or equity interests in taxable mortgage pools (&#147;TMPs&#148;).
Under a notice issued by the IRS in October 2006 and Treasury Regulations that have yet to be issued but may apply retroactively, a portion of the Fund&#146;s income (including income allocated to the Fund from a REIT or other pass-through entity)
that is attributable to a residual interest in a REMIC or an equity interest in a TMP &#151; referred to in the Code as an &#147;excess inclusion&#148;&#151; will be subject to U.S. federal income tax in all events. This notice also provides, and
the regulations are expected to provide, that &#147;excess inclusion income&#148; of a RIC, such as the Fund, will generally be allocated to shareholders of the RIC in proportion to the dividends received by such shareholders, with the same
consequences as if the shareholders held the related interest directly. As a result, the Fund may not be a suitable investment for charitable remainder trusts, as noted below. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">In general, excess inclusion income allocated to shareholders (i)&nbsp;cannot be offset by net operating losses (subject to a limited exception for certain
thrift institutions), (ii) in the case of a <FONT STYLE="white-space:nowrap">non-U.S.</FONT> shareholder, will not qualify for any reduction in U.S. federal withholding tax (discussed below), and (iii)&nbsp;will constitute unrelated business taxable
income (&#147;UBTI&#148;) to entities (including a qualified pension plan, an individual retirement account, a 401(k) plan, a Keogh plan or other <FONT STYLE="white-space:nowrap">tax-exempt</FONT> entity) subject to tax on unrelated business income,
thereby potentially requiring such an entity that is allocated excess inclusion income, and otherwise might not be required to file a U.S. federal income tax return, to file such a tax return and pay tax on such income. A shareholder will be subject
to U.S. federal income tax on such inclusions notwithstanding any exemption from such income tax otherwise available under the Code. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">127 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Income of a RIC that would be UBTI if earned directly by a <FONT STYLE="white-space:nowrap">tax-exempt</FONT>
entity will not generally be attributed as UBTI to a <FONT STYLE="white-space:nowrap">tax-exempt</FONT> shareholder of the RIC. Notwithstanding this &#147;blocking&#148; effect, a <FONT STYLE="white-space:nowrap">tax-exempt</FONT> shareholder could
realize UBTI by virtue of its investment in the Fund if shares in the Fund constitute debt-financed property in the hands of the <FONT STYLE="white-space:nowrap">tax-exempt</FONT> shareholder within the meaning of Code Section 514(b). A <FONT
STYLE="white-space:nowrap">tax-exempt</FONT> shareholder may also recognize UBTI if the Fund recognizes &#147;excess inclusion income&#148; derived from direct or indirect investments in residual interests in REMICs or equity interests in TMPs as
described above, if the amount of such income recognized by the Fund exceeds the Fund&#146;s investment company taxable income (after taking into account deductions for dividends paid by the Fund). </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">In addition, special tax consequences apply to charitable remainder trusts (&#147;CRTs&#148;) that invest in RICs that invest directly or indirectly in
residual interests in REMICs or equity interests in TMPs. Under legislation enacted in December 2006, if a charitable remainder trust (&#147;CRT&#148;), as defined in Section&nbsp;664 of the Code, realizes any UBTI for a taxable year, a 100% excise
tax is imposed on such UBTI. Under IRS guidance issued in October 2006, a CRT will not recognize UBTI solely as a result of investing in a RIC that recognizes &#147;excess inclusion income.&#148; Rather, if at any time during any taxable year a CRT
(or one of certain other <FONT STYLE="white-space:nowrap">tax-exempt</FONT> shareholders, such as the United States, a state or political subdivision, or an agency or instrumentality thereof, and certain energy cooperatives) is a record holder of a
share in a RIC that recognizes &#147;excess inclusion income,&#148; then the RIC will be subject to a tax on that portion of its &#147;excess inclusion income&#148; for the taxable year that is allocable to such shareholders at the highest federal
corporate income tax rate. The extent to which this IRS guidance remains applicable in light of the December 2006 legislation is unclear. To the extent permitted under the 1940 Act, the Fund may elect to specially allocate any such tax to the
applicable CRT, or other shareholder, and thus reduce such shareholder&#146;s distributions for the year by the amount of the tax that relates to such shareholder&#146;s interest in the Fund. CRTs and other
<FONT STYLE="white-space:nowrap">tax-exempt</FONT> shareholders are urged to consult their tax advisors concerning the consequences of investing in the Fund. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Options, Futures, and Forward Contracts, Swap Agreements, and other Derivatives </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The U.S. federal income tax treatment of the Fund&#146;s options activity will vary based on the nature and the subject of the options. In general, option
premiums from the Fund&#146;s option writing activity are not immediately included in the income of the Fund when received. Instead, in the case of certain options (including options on single stocks, options on certain narrow-based indexes and
options not listed on certain exchanges) the premiums are recognized when the option contract expires, the option is exercised by the holder, or the Fund transfers or otherwise terminates the option. If a call option written by the Fund with respect
to individual stocks is exercised and the Fund sells or delivers the underlying stock, the Fund generally will recognize capital gain or loss equal to (a)&nbsp;the sum of the strike price and the option premium received by the Fund minus
(b)&nbsp;the Fund&#146;s adjusted tax basis in the stock. Such gain or loss generally will be short-term or long-term depending upon the holding period of the underlying stock. If securities are purchased by the Fund pursuant to the exercise of a
put option written by it, the Fund will </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">128 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">
generally subtract the premium received for purposes of computing its cost basis in the stock purchased. Gain or loss arising in respect of a termination of the Fund&#146;s obligation under an
option other than through the exercise of the option and related sale or delivery of the underlying stock will be short-term capital gain or loss depending on whether the premium income received by the Fund is greater or less than the amount paid by
the Fund (if any) in terminating the transaction. Thus, for example, if an option written by the Fund expires unexercised, the Fund generally will recognize short-term capital gain equal to the premium received. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The tax treatment of certain options that are listed on a qualified board of exchange (&#147;listed options&#148;) written or purchased by the Fund (including
options on futures contracts, broad-based equity indices and debt securities), as well as certain futures contracts, will be governed by Section&nbsp;1256 of the Code (&#147;Section&nbsp;1256 contracts&#148;). Gains or losses on Section&nbsp;1256
contracts generally are considered 60% long-term and 40% short-term capital gains or losses (&#147;60/40&#148;), although certain foreign currency gains and losses from such contracts may be treated as ordinary in character. Also, Section&nbsp;1256
contracts held by the Fund at the end of each taxable year (and, for purposes of the nondeductible 4% excise tax, on certain other dates as prescribed under the Code) are &#147;marked to market&#148; with the result that unrealized gains or losses
are treated as though they were realized and the resulting gain or loss is treated as ordinary or 60/40 gain or loss, as applicable. Certain options and futures listed on <FONT STYLE="white-space:nowrap">non-U.S.</FONT> exchanges will meet the
requirements for Section&nbsp;1256 treatment. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Certain covered call-writing activities of the Fund, if any, may trigger the U.S. federal income tax
straddle rules of Section&nbsp;1092 of the Code, requiring that losses be deferred and holding periods be tolled on offsetting positions in options and stocks deemed to constitute substantially similar or related property. Options on single stocks
that are not &#147;deep in the money&#148; may constitute qualified covered calls, which generally are not subject to the straddle rules; the holding period on stock underlying qualified covered calls that are &#147;in the money&#148; although not
&#147;deep in the money&#148; will be suspended while such calls are outstanding. Thus, the straddle rules and the rules governing qualified covered calls could cause gains that would otherwise constitute long-term capital gains to be treated as
short-term capital gains, and distributions that would otherwise constitute &#147;qualified dividend income&#148; to fail to satisfy the holding period requirements and therefore to be taxed as ordinary income or to fail to qualify for the 70%
dividends received deduction for corporations. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">In addition to the foregoing special rules in respect of futures and options transactions, the Fund&#146;s
transactions in other derivatives contracts (<I>e.g.</I>, swap agreements and forward contracts), as well as any of its hedging, short sale, securities loan or similar transactions may be subject to one or more special tax rules (<I>e.g.</I>,
notional principal contract, <FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">mark-to-market,</FONT></FONT> constructive sale, straddle, wash sale and short sale rules), the effect of which may be, among other things, to accelerate
the recognition of income to the Fund, to defer losses to the Fund, to cause adjustments in the holding periods of the Fund&#146;s securities, to convert lower taxed long-term capital gains or &#147;qualified dividend income&#148; into higher taxed
short-term capital gains or ordinary income and to convert short-term capital losses into long-term capital losses. These rules, therefore, could affect the amount, timing and/or character of distributions to shareholders. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">129 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Because these and other tax rules applicable to these types of transactions are in some cases uncertain under
current law, an adverse determination or future guidance by the IRS with respect to these rules (which determination or guidance could be retroactive) may affect whether the Fund has made sufficient distributions, and otherwise satisfied the
relevant requirements, to maintain its qualification as a RIC and avoid a Fund-level tax. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B><FONT STYLE="white-space:nowrap">Book-Tax</FONT> Differences
</B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Certain of the Fund&#146;s investments in derivative instruments and hedging activities, are likely to produce a difference between its book income
and the sum of its taxable income and net <FONT STYLE="white-space:nowrap">tax-exempt</FONT> income (if any). If such a difference arises and the Fund&#146;s book income is less than the sum of its taxable income (including realized capital gains)
and net <FONT STYLE="white-space:nowrap">tax-exempt</FONT> income (if any), the Fund could be required to make distributions exceeding book income to qualify as a RIC that is accorded special tax treatment. If the Fund&#146;s book income exceeds the
sum of its taxable income (including realized capital gains) and net <FONT STYLE="white-space:nowrap">tax-exempt</FONT> income (if any), the distribution (if any) of such excess will be treated as (i)&nbsp;a dividend to the extent of the Fund&#146;s
remaining current or accumulated earnings and profits, (ii)&nbsp;thereafter, as a return of capital to the extent of the recipient&#146;s adjusted tax basis in the shares and (iii)&nbsp;thereafter, as gain from the sale or exchange of a capital
asset. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B><FONT STYLE="white-space:nowrap">Non-U.S.</FONT> Taxation </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Income received by the Fund from sources within foreign countries may be subject to withholding and other taxes imposed by such countries. Tax treaties
between certain countries and the United States may reduce or eliminate such taxes. The Fund does not expect to be eligible to elect to &#147;pass through&#148; such foreign taxes and therefore does not expect that Common Shareholders will be
entitled to a credit or deduction in respect of such taxes. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B><FONT STYLE="white-space:nowrap">Non-U.S.</FONT> Shareholders </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">In general, dividends other than Capital Gain Dividends paid by the Fund to a Common Shareholder that is not a &#147;United States person&#148; within the
meaning of the Code (such shareholder, a <FONT STYLE="white-space:nowrap">&#147;non-U.S.</FONT> person&#148; or a <FONT STYLE="white-space:nowrap">&#147;non-U.S.</FONT> shareholder&#148;) are subject to withholding of federal income tax at a rate of
30% (or lower applicable treaty rate) even if they are funded by income or gains (such as portfolio interest, short-term capital gains, or <FONT STYLE="white-space:nowrap">non-U.S.-source</FONT> dividend and interest income) that, if paid to a <FONT
STYLE="white-space:nowrap">non-U.S.</FONT> person directly, would not be subject to withholding. Effective for taxable years of the Fund beginning before January&nbsp;1, 2014, the Fund is not required to withhold any amounts with respect to
(i)&nbsp;distributions (other than distributions to a <FONT STYLE="white-space:nowrap">non-U.S.</FONT> person (w)&nbsp;that has not provided a satisfactory statement that the beneficial owner is not a United States person, (x)&nbsp;to the extent
that the dividend is attributable to certain interest on an obligation if the <FONT STYLE="white-space:nowrap">non-U.S.</FONT> person is the issuer or is a 10% shareholder of the issuer, (y)&nbsp;that is within certain
<FONT STYLE="white-space:nowrap">non-U.S.</FONT> countries that have inadequate information exchange with the United States, or (z)&nbsp;to the extent the dividend is attributable to interest paid by a person that is a related person of the <FONT
STYLE="white-space:nowrap">non-U.S.</FONT> person and the <FONT STYLE="white-space:nowrap">non-U.S.</FONT> person is a controlled foreign corporation) from U.S.-source interest income of types similar to those that would not be subject to U.S.
federal income tax if earned directly by an individual <FONT STYLE="white-space:nowrap">non-U.S.</FONT> person, to the extent such distributions </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">130 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">
are properly reported by the Fund (&#147;interest-related dividends&#148;), and (ii)&nbsp;properly reported distributions (other than (a)&nbsp;distributions to an individual <FONT
STYLE="white-space:nowrap">non-U.S.</FONT> person who was present in the United States for a period or periods aggregating 183 days or more during the year of the distribution and (b)&nbsp;distributions subject to special rules regarding the
disposition of U.S. real property interests, as described below) of net short-term capital gains in excess of net long-term capital losses (&#147;net short-term capital gain dividends&#148;). The Fund is permitted to report such part of its
dividends as interest-related and/or short-term capital gain dividends as are eligible, but is not required to do so. In the case of shares held through an intermediary, the intermediary may withhold against a payment even if the Fund reports such
payment as an interest-related and/or short-term capital gain dividend. It is currently unclear whether Congress will extend these exemptions for distributions with respect to taxable years of a RIC beginning on or after January&nbsp;1, 2014, or
what the terms of such an extension would be. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><FONT STYLE="white-space:nowrap">Non-U.S.</FONT> shareholders should contact their intermediaries regarding
the application of these rules to their accounts. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Subject to certain exceptions (<I>e.g.</I>, if the Fund were a &#147;United States real property
holding company&#148; as described below), the Fund is generally not required to withhold on the amount of a <FONT STYLE="white-space:nowrap">non-dividend</FONT> distribution (<I>i.e.</I>, a distribution that is not paid out of the Fund&#146;s
current or accumulated &#147;earnings and profits&#148; for the applicable taxable year) when paid to its <FONT STYLE="white-space:nowrap">non-U.S.</FONT> shareholders. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Special rules would apply if the Fund were either a &#147;U.S. real property holding corporation&#148; (&#147;USRPHC&#148;) or would be a USRPHC but for the
operation of certain exceptions to the definition thereof. Very generally, a USRPHC is a domestic corporation that holds USRPIs the fair market value of which equals or exceeds 50% of the sum of the fair market values of the corporation&#146;s
USPRIs, interests in real property located outside the United States, and other trade or business assets. USRPIs are generally defined as any interest in U.S. real property and any interest (other than solely as a creditor) in a USRPHC or former
USRPHC. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">If the Fund were a USRPHC or would be a USRPHC but for the exceptions referred to above, under a special look through rule any distributions by
the Fund to a <FONT STYLE="white-space:nowrap">non-U.S.</FONT> shareholder attributable to gains realized by the Fund on the disposition of USRPIs or to distributions received by the Fund from a lower-tier RIC or REIT that the Fund is required to
treat as USRPI gain in its hands, generally would be subject to U.S. withholding tax. In addition, such distributions could result in the <FONT STYLE="white-space:nowrap">non-U.S.</FONT> shareholder being required to file a U.S. tax return and pay
tax on the distributions at regular U.S. federal income tax rates. The consequences to a <FONT STYLE="white-space:nowrap">non-U.S.</FONT> shareholder, including the rate of such withholding and character of such distributions (<I>e.g.</I>, as
ordinary income or USRPI gain), would vary depending upon the extent of the <FONT STYLE="white-space:nowrap">non-U.S.</FONT> shareholder&#146;s current and past ownership of the Fund. On and after January&nbsp;1, 2014, the special
&#147;look-through&#148; rule described above for distributions by the Fund (which applies only if the Fund is either a USRPHC or would be a USRPHC but for the operation of the exceptions referred to above) applies only to those distributions that,
in turn, are attributable directly or indirectly to distributions received by the Fund from a lower-tier REIT, unless Congress enacts legislation providing otherwise. It is currently unclear whether Congress will extend the expiring
&#147;look-through&#148; provisions to distributions made on or after January&nbsp;1, 2014, and what the terms of any such extension would be. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">131 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">In addition, if the Fund were a USRPHC or former USRPHC, a
<FONT STYLE="white-space:nowrap">greater-than-5%</FONT> <FONT STYLE="white-space:nowrap">non-U.S.</FONT> shareholder generally would be required to file a U.S. tax return in connection with the sale of its Fund shares, and pay related taxes due on
any gain realized on the sale. Moreover, if the Fund were a USRPHC or former USRPHC, it could be required to withhold on amounts distributed to a <FONT STYLE="white-space:nowrap">greater-than-5%</FONT>
<FONT STYLE="white-space:nowrap">non-U.S.</FONT> shareholder to the extent such amounts are in excess of the Fund&#146;s current and accumulated &#147;earnings and profits&#148; for the applicable taxable year. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund generally does not expect that it will be a USRPHC or would be a USRPHC but for the operation of certain of the special exceptions referred to above.
<FONT STYLE="white-space:nowrap">Non-U.S.</FONT> shareholders should consult their tax advisers and, if holding shares through intermediaries, their intermediaries, concerning the application of these rules to their investment in the Fund. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">In order to qualify for any exemptions from withholding described above or for lower withholding tax rates under income tax treaties, or to establish an
exemption from backup withholding, a <FONT STYLE="white-space:nowrap">non-U.S.</FONT> shareholder must comply with special certification and filing requirements relating to its <FONT STYLE="white-space:nowrap">non-U.S.</FONT> status (including, in
general, furnishing an IRS Form <FONT STYLE="white-space:nowrap">W-8BEN</FONT> or substitute form). <FONT STYLE="white-space:nowrap">Non-U.S.</FONT> shareholders should consult their tax advisors in this regard. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Under U.S. federal tax law, a beneficial holder of shares who is a <FONT STYLE="white-space:nowrap">non-U.S.</FONT> shareholder generally is not subject to
U.S. federal income tax on gains (and is not allowed a deduction for losses) realized on the sale of shares of the Fund or on Capital Gain Dividends unless (i)&nbsp;such gain or dividend is effectively connected with the conduct of a trade or
business carried on by such holder within the United States, (ii)&nbsp;in the case of an individual holder, the holder is present in the United States for a period or periods aggregating 183 days or more during the year of the sale or receipt of the
Capital Gain Dividend and certain other conditions are met, or (iii)&nbsp;the special rules relating to gain attributable to the sale or exchange of USRPIs apply to the <FONT STYLE="white-space:nowrap">non-U.S.</FONT> shareholder&#146;s sale of
Common Shares or to the Capital Gain Dividend the <FONT STYLE="white-space:nowrap">non-U.S.</FONT> shareholder received (as described above). </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">If a
beneficial holder who is a <FONT STYLE="white-space:nowrap">non-U.S.</FONT> person has a trade or business in the United States, and the dividends are effectively connected with the conduct by the beneficial holder of a trade or business in the
United States, the dividend will be subject to federal net income taxation at regular income tax rates. If a <FONT STYLE="white-space:nowrap">non-U.S.</FONT> person is eligible for the benefits of a tax treaty, any effectively connected income or
gain will generally be subject to federal income tax on a net basis only if it is attributable to a permanent establishment maintained by such person in the United States. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">A beneficial holder of shares who is a <FONT STYLE="white-space:nowrap">non-U.S.</FONT> person may be subject to state and local tax and to the U.S. federal
estate tax in addition to the U.S. federal tax on income referred to above. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">132 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Reporting and Withholding for U.S. Shareholders and <FONT STYLE="white-space:nowrap">Non-U.S.</FONT>
Shareholders </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Foreign Account Tax Compliance Act (&#147;FATCA&#148;) generally requires the Fund to obtain information sufficient to identify the
status of each of its shareholders under FATCA. If a shareholder fails to provide this information or otherwise fails to comply with FATCA, the Fund may be required to withhold under FATCA at a rate of 30% with respect to that shareholder on
dividends, including Capital Gain Dividends, and the proceeds of the sale, redemption or exchange of Fund shares. If a payment by the Fund is subject to FATCA withholding, the Fund is required to withhold even if such payment would otherwise be
exempt from withholding under the rules applicable to <FONT STYLE="white-space:nowrap">non-U.S.</FONT> shareholders described above (e.g., Capital Gain Dividends and short-term capital gain and interest-related dividends), beginning as early as
July&nbsp;1, 2014. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Each prospective investor is urged to consult its tax adviser regarding the applicability of FATCA and any other reporting
requirements with respect to the prospective investor&#146;s own situation, including investments through an intermediary. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Reporting Requirements
regarding Foreign Bank and Financial Accounts </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Common Shareholders that are U.S. persons and own, directly or indirectly, more than 50% of the Fund
could be required to report annually their &#147;financial interest&#148; in the Fund&#146;s &#147;foreign financial accounts,&#148; if any, on Treasury Department Form TD F <FONT STYLE="white-space:nowrap">90-22.1,</FONT> Report of Foreign Bank and
Financial Accounts (FBAR). Common Shareholders should consult a tax advisor regarding the applicability to them of this reporting requirement. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Backup
Withholding </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Backup withholding is generally required with respect to taxable distributions or the gross proceeds of a sale or exchange of Common
Shares paid to any <FONT STYLE="white-space:nowrap">non-corporate</FONT> shareholder who fails to properly furnish a correct taxpayer identification number, who has under-reported dividend or interest income, or who fails to certify that he or she
is not subject to such withholding. The backup withholding rate is 28%. Amounts withheld as a result of backup withholding are remitted to the U.S. Treasury but do not constitute an additional tax imposed on the shareholder; such amounts may be
claimed as a credit on the shareholder&#146;s U.S. federal income tax return, provided the appropriate information is furnished to the IRS. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Tax
Shelter Reporting Regulations </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Under U.S. Treasury regulations, if a shareholder recognizes a loss with respect to the Fund&#146;s shares of
$2&nbsp;million or more for an individual shareholder or $10&nbsp;million or more for a corporate shareholder, the shareholder must file with the IRS a disclosure statement on Form 8886. Direct shareholders of portfolio securities are in many cases
excepted from this reporting requirement, but under current guidance, shareholders of a RIC are not excepted. Future guidance may extend the current exception from this reporting requirement to shareholders of most or all RICs. The fact that a loss
is reportable under these regulations does not affect the legal determination of whether the taxpayer&#146;s treatment of the loss is proper. Shareholders should consult their tax advisors to determine the applicability of these regulations in light
of their individual circumstances. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">133 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Shares Purchased Through <FONT STYLE="white-space:nowrap">Tax-Qualified</FONT> Plans </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Special tax rules apply to investments through defined contribution plans and other <FONT STYLE="white-space:nowrap">tax-qualified</FONT> plans. Shareholders
should consult their tax advisors to determine the suitability of shares of the Fund as an investment through such plans and the precise effect of an investment on their particular tax situation. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman"><B>Other Taxation </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Distributions also may be subject to
additional state, local and <FONT STYLE="white-space:nowrap">non-U.S.</FONT> taxes, depending on each shareholder&#146;s particular situation. Additionally, most states permit mutual funds, such as the Fund, to &#147;pass through&#148; to their
shareholders the state tax exemption on income earned from investments in certain direct U.S. Treasury obligations, as well as some limited types of U.S. government agency securities (such as Federal Farm Credit Bank and Federal Home Loan Bank
securities), so long as a fund meets all applicable state requirements. Therefore, shareholders in the Fund may be allowed to exclude from their state taxable income distributions made to them by the Fund to the extent attributable to interest the
Fund earned on such investments. The availability of these exemptions varies by state. Investments in securities of certain U.S. government agencies, including securities issued by GNMA and FNMA, and repurchase agreements collateralized by U.S.
government securities generally do not qualify for these exemptions. Moreover, these exemptions may not be available to corporate shareholders. All shareholders should consult their tax advisors regarding the applicability of these exemptions to
their situation. The Fund will provide information annually to shareholders indicating the amount and percentage of its dividend distribution which is attributable to interest on federal obligations, and will indicate to the extent possible from
what types of federal obligations such dividends are derived. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund is organized as a Massachusetts business trust. Under current law, so long as the
Fund qualifies for the federal income tax treatment described above, it is believed that the Fund will not be liable for any income or franchise tax imposed by Massachusetts. Shareholders, in any event, are advised to consult their own tax advisors
with respect to the particular tax consequences to them of an investment in the Fund.] </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B><A NAME="sai302337_11"></A>PERFORMANCE RELATED
AND COMPARATIVE INFORMATION </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund may quote certain performance-related information and may compare certain aspects of its portfolio and structure
to other substantially similar <FONT STYLE="white-space:nowrap">closed-end</FONT> funds as categorized by Lipper, Inc. (&#147;Lipper&#148;), Morningstar Inc. or other independent services. Comparison of the Fund to an alternative investment should
be made with consideration of differences in features and expected performance. The Fund may obtain data from sources or reporting services, such as Bloomberg Financial and Lipper, that the Fund believes to be generally accurate. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">134 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund, in its advertisements, may refer to pending legislation from time to time and the possible effect of
such legislation on investors, investment strategy and related matters. At any time in the future, yields and total return may be higher or lower than past yields and there can be no assurance that any historical results will continue. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Past performance is not indicative of future results. At the time Common Shareholders sell their shares, they may be worth more or less than their original
investment. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B><A NAME="sai302337_12"></A>CUSTODIAN, TRANSFER AGENT AND DIVIDEND DISBURSEMENT AGENT </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">State Street Bank and Trust Company, 801 Pennsylvania Avenue Kansas City, MO 64105, serves as custodian for assets of the Fund. The custodian performs
custodial and fund accounting services. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">American Stock Transfer&nbsp;&amp; Trust Company, LLC, 6201
15<SUP STYLE="font-size:85%; vertical-align:top">th</SUP> Avenue, Brooklyn, New York 11219 serves as the Fund&#146;s transfer agent, registrar, dividend disbursement agent and shareholder servicing agent for the Common Shares, as well as agent for
the Dividend Reinvestment Plan relating to the Common Shares. </P> <P STYLE="margin-top:24pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B><A NAME="sai302337_13"></A>INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
</B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">[ ], [ ] serves as independent registered public accounting firm for the Fund. [ ] provides audit services, tax and other audit related services to
the Fund. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B><A NAME="sai302337_14"></A>COUNSEL </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Ropes&nbsp;&amp; Gray LLP, Prudential Tower, 800 Boylston Street, Boston, Massachusetts 02199, passes upon certain legal matters in connection with shares
offered by the Fund, and also acts as counsel to the Fund. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B><A NAME="sai302337_15"></A>REGISTRATION STATEMENT </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">A Registration Statement on Form <FONT STYLE="white-space:nowrap">N-2,</FONT> including any amendments thereto (the &#147;Registration Statement&#148;),
relating to the Common Shares of the Fund offered hereby, has been filed by the Fund with the SEC, Washington, D.C. The Prospectus and this Statement of Additional Information are parts of, but do not contain all of the information set forth in, the
Registration Statement, including any exhibits and schedules thereto. For further information with respect to the Fund and the Common Shares offered or to be offered hereby, reference is made to the Fund&#146;s Registration Statement. Statements
contained in the Prospectus and this Statement of Additional Information as to the contents of any contract or other document referred to are not necessarily complete and in each instance reference is made to the copy of such contract or other
document filed as an exhibit to the Registration Statement, each such statement being qualified in all respects by such reference. Copies of the Registration Statement may be inspected without charge at the SEC&#146;s principal office in Washington,
D.C., and copies of all or any part thereof may be obtained from the SEC upon the payment of certain fees prescribed by the SEC. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">135 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B><A NAME="sai302337_16"></A>FINANCIAL STATEMENTS </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">The Fund&#146;s financial statements appearing in the Fund&#146;s annual shareholder reports for the years ended June&nbsp;30, 2016 and June&nbsp;30, 2015<SUP
STYLE="font-size:85%; vertical-align:top">4</SUP> are incorporated by reference in this Statement of Additional Information and have been so incorporated in reliance upon the reports of [ ], independent registered public accounting firm for the
Fund, which reports are included in such annual shareholder reports. The annual shareholder reports are available upon request and without charge by writing to the Fund at 1633 Broadway, New York, New York 10019. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">[To be updated] </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<P STYLE="line-height:8.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000;width:26%">&nbsp;</P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><SUP STYLE="font-size:85%; vertical-align:top">4</SUP> On December&nbsp;16, 2014, the Board approved a change of the Fund&#146;s fiscal year end from
March&nbsp;31 to June 30. Information is provided for the &#147;stub&#148; period from April&nbsp;1, 2015 through the Fund&#146;s new fiscal year end of June&nbsp;30, 2015. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">136 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="right"><B><U><A NAME="sai302337_17"></A>Appendix A </U></B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B><U>Procedures for Shareholders to Submit Nominee Candidates for </U></B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B><U>the PIMCO Sponsored Closed-End Funds </U></B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">A Fund shareholder must follow the following procedures in order to properly submit a nominee recommendation for the Committee&#146;s consideration. </P>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">1.</TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="justify" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">The shareholder/stockholder must submit any such recommendation (a &#147;Shareholder Recommendation&#148;) in
writing to a Fund, to the attention of the Secretary, at the address of the principal executive offices of the Fund. </P></TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">2.</TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="justify" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">The Shareholder Recommendation must be delivered to or mailed and received at the principal executive offices
of a Fund not less than forty-five (45)&nbsp;calendar days nor more than seventy-five (75)&nbsp;calendar days prior to the date of the Board or shareholder meeting at which the nominee would be elected. </P></TD></TR></TABLE>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">3.</TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="justify" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">The Shareholder Recommendation must include: (i)&nbsp;a statement in writing setting forth (A)&nbsp;the name,
age, date of birth, business address, residence address and nationality of the person recommended by the shareholder (the &#147;candidate&#148;); (B) the class and number of all shares of the Fund owned of record or beneficially by the candidate, as
reported to such shareholder by the candidate; (C)&nbsp;any other information regarding the candidate called for with respect to director nominees by paragraphs (a), (d), (e) and (f)&nbsp;of Item 401 of Regulation S-K or paragraph (b)&nbsp;of Item
22 of Rule 14a-101 (Schedule 14A) under the Securities Exchange Act of 1934, as amended (the &#147;Exchange Act&#148;), adopted by the Securities and Exchange Commission (or the corresponding provisions of any regulation or rule subsequently adopted
by the Securities and Exchange Commission or any successor agency applicable to the Fund); (D) any other information regarding the candidate that would be required to be disclosed if the candidate were a nominee in a proxy statement or other filing
required to be made in connection with solicitation of proxies for election of Directors/Trustees or directors pursuant to Section&nbsp;14 of the Exchange Act and the rules and regulations promulgated thereunder; and (E)&nbsp;whether the
recommending shareholder believes that the candidate is or will be an &#147;interested person&#148; of the Fund (as defined in the Investment Company Act of 1940, as amended) and, if not an &#147;interested person,&#148; information regarding the
candidate that will be sufficient for the Fund to make such determination; (ii)&nbsp;the written and signed consent of the candidate to be named as a nominee and to serve as a Director/Trustee if elected; (iii)&nbsp;the recommending
shareholder&#146;s name as it appears on the Fund&#146;s books; (iv)&nbsp;the class and number of all shares of the Fund owned beneficially and of record by the recommending shareholder; and (v)&nbsp;a description of all arrangements or
understandings between the recommending shareholder and the candidate and any other person or persons (including their names) pursuant to which the recommendation is being made by the recommending shareholder. In addition, the Committee may require
the candidate to furnish such other information as it may reasonably require or deem necessary to determine the eligibility of such candidate to serve on the Board. </P></TD></TR></TABLE>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">A-1 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>PART C&#151;OTHER INFORMATION </B></P>
<P STYLE="font-size:20pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="9%" VALIGN="top" ALIGN="left"><B>Item&nbsp;25:</B></TD>
<TD ALIGN="left" VALIGN="top"><B>Financial Statements and Exhibits </B></TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">1.</TD>
<TD ALIGN="left" VALIGN="top">Financial Statements: </TD></TR></TABLE> <P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:5%; font-size:10pt; font-family:Times New Roman"><B>Included in Part A: </B></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:5%; font-size:10pt; font-family:Times New Roman">[To be provided by amendment.] </P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:5%; font-size:10pt; font-family:Times New Roman"><B>Incorporated into Part B by reference to Registrant&#146;s most recent Certified Shareholder Report on Form
<FONT STYLE="white-space:nowrap">N-CSR,</FONT> filed August&nbsp;26, 2016 (File No.&nbsp;811- 22673): </B></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:5%; font-size:10pt; font-family:Times New Roman">Schedule of Investments as of
June&nbsp;30, 2016 </P> <P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:5%; font-size:10pt; font-family:Times New Roman">Statement of Assets and Liabilities as of June&nbsp;30, 2016 </P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:5%; font-size:10pt; font-family:Times New Roman">Statement of Operations for the year ended June&nbsp;30, 2016 </P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:5%; font-size:10pt; font-family:Times New Roman">Statements of Changes in Net Assets for the year ended June&nbsp;30, 2016; the fiscal period from January&nbsp;1, 2015 to June&nbsp;30, 2015;
and the year ended December&nbsp;31, 2014 </P> <P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:5%; font-size:10pt; font-family:Times New Roman">Notes to Financial Statements </P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:5%; font-size:10pt; font-family:Times New Roman">Report of Independent Registered Public Accounting Firm dated August&nbsp;25, 2016 </P>
<P STYLE="font-size:10pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">2.</TD>
<TD ALIGN="left" VALIGN="top">Exhibits: </TD></TR></TABLE> <P STYLE="font-size:10pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">a.</TD>
<TD ALIGN="left" VALIGN="top">Amended and Restated Agreement and Declaration of Trust dated May&nbsp;7, 2012. (1) </TD></TR></TABLE> <P STYLE="font-size:10pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">b.</TD>
<TD ALIGN="left" VALIGN="top">Amended and Restated Bylaws of Registrant dated May&nbsp;7, 2012. (1) </TD></TR></TABLE> <P STYLE="font-size:10pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">c.</TD>
<TD ALIGN="left" VALIGN="top">None. </TD></TR></TABLE> <P STYLE="font-size:10pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">d.1</TD>
<TD ALIGN="left" VALIGN="top">Article III (Shares) and Article V (Shareholders&#146; Voting Powers and Meetings) of the Amended and Restated Agreement and Declaration of Trust. * </TD></TR></TABLE>
<P STYLE="font-size:10pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">d.2</TD>
<TD ALIGN="left" VALIGN="top">Article 10 (Shareholders&#146; Voting Powers and Meetings) of the Amended and Restated Bylaws of Registrant. * </TD></TR></TABLE> <P STYLE="font-size:10pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">d.3</TD>
<TD ALIGN="left" VALIGN="top">Form of Share Certificate of the Common Shares. (1) </TD></TR></TABLE> <P STYLE="font-size:10pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">e.</TD>
<TD ALIGN="left" VALIGN="top">Terms and Conditions of Dividend Reinvestment Plan.* </TD></TR></TABLE> <P STYLE="font-size:10pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">f.</TD>
<TD ALIGN="left" VALIGN="top">None. </TD></TR></TABLE> <P STYLE="font-size:10pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">g.1</TD>
<TD ALIGN="left" VALIGN="top">Investment Management Agreement between Registrant and Pacific Investment Management Company LLC dated September&nbsp;5, 2014. * </TD></TR></TABLE> <P STYLE="font-size:10pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">h.1</TD>
<TD ALIGN="left" VALIGN="top">Form of Sales Agreement.* </TD></TR></TABLE> <P STYLE="font-size:10pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">i</TD>
<TD ALIGN="left" VALIGN="top">None. </TD></TR></TABLE> <P STYLE="font-size:10pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">j.1</TD>
<TD ALIGN="left" VALIGN="top">Form of Custodian Agreement between Registrant and State Street Bank&nbsp;&amp; Trust Co. (1) </TD></TR></TABLE> <P STYLE="font-size:10pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">k.1</TD>
<TD ALIGN="left" VALIGN="top">Form of Transfer Agency Services Agreement between Registrant and American Stock Transfer&nbsp;&amp; Trust Company, LLC.* </TD></TR></TABLE> <P STYLE="font-size:10pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">k.2</TD>
<TD ALIGN="left" VALIGN="top">Form of Support Services Agreement between Registrant and PIMCO Investments LLC.* </TD></TR></TABLE>

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<h5 align="left"><a href="#toc">Table of Contents</a></h5>


<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">l.</TD>
<TD ALIGN="left" VALIGN="top">Opinion and consent of Ropes&nbsp;&amp; Gray LLP.* </TD></TR></TABLE> <P STYLE="font-size:10pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">m.</TD>
<TD ALIGN="left" VALIGN="top">None. </TD></TR></TABLE> <P STYLE="font-size:10pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">n.</TD>
<TD ALIGN="left" VALIGN="top">Consent of Registrant&#146;s independent registered public accounting firm.* </TD></TR></TABLE> <P STYLE="font-size:10pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">o.</TD>
<TD ALIGN="left" VALIGN="top">None. </TD></TR></TABLE> <P STYLE="font-size:10pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">p.</TD>
<TD ALIGN="left" VALIGN="top">Subscription Agreement of Allianz Asset Management of America L.P. (1) </TD></TR></TABLE> <P STYLE="font-size:10pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">q.</TD>
<TD ALIGN="left" VALIGN="top">None. </TD></TR></TABLE> <P STYLE="font-size:10pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">r.1</TD>
<TD ALIGN="left" VALIGN="top">Code of Ethics of Registrant.* </TD></TR></TABLE> <P STYLE="font-size:10pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">r.2</TD>
<TD ALIGN="left" VALIGN="top">Code of Ethics of Pacific Investment Management Company LLC.* </TD></TR></TABLE> <P STYLE="font-size:10pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">r.3</TD>
<TD ALIGN="left" VALIGN="top">Code of Ethics Pursuant to Section&nbsp;406 of the Sarbanes-Oxley Act of 2002 for Principal Executive and Senior Financial Officers.* </TD></TR></TABLE>
<P STYLE="font-size:10pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">s.</TD>
<TD ALIGN="left" VALIGN="top">Powers of Attorney for William Gallipeau, Peter Strelow, Deborah A. DeCotis, Bradford K. Gallagher, James A. Jacobson, Hans W. Kertess, John C. Maney, William B. Ogden, IV, Alan Rappaport, and Craig A. Dawson &#150;
filed herewith. </TD></TR></TABLE> <P STYLE="font-size:14pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P> <P STYLE="line-height:8.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000;width:26%">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">(1)</TD>
<TD ALIGN="left" VALIGN="top">Incorporated by reference to <FONT STYLE="white-space:nowrap">Pre-Effective</FONT> Amendment No.&nbsp;3 the Registrant&#146;s Registration Statement on Form <FONT STYLE="white-space:nowrap">N-2,</FONT> Registration <FONT
STYLE="white-space:nowrap">No.&nbsp;333-179887</FONT> and 811- 22673 (filed on May&nbsp;11, 2012). </TD></TR></TABLE>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">*</TD>
<TD ALIGN="left" VALIGN="top">To be filed by amendment. </TD></TR></TABLE> <P STYLE="font-size:10pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="9%" VALIGN="top" ALIGN="left"><B>Item&nbsp;26:</B></TD>
<TD ALIGN="left" VALIGN="top"><B>Marketing Arrangements </B></TD></TR></TABLE> <P STYLE="margin-top:10pt; margin-bottom:0pt; text-indent:5%; font-size:10pt; font-family:Times New Roman">Reference is made to the form of sales agreement for the
Registrant&#146;s common shares to be filed in a post-effective amendment to the Registrant&#146;s Registration Statement and the section entitled &#147;Plan of Distribution&#148; contained in Registrant&#146;s Prospectus, filed herewith as
Part&nbsp;A of Registrant&#146;s Registration Statement. </P> <P STYLE="font-size:10pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="9%" VALIGN="top" ALIGN="left"><B>Item&nbsp;27:</B></TD>
<TD ALIGN="left" VALIGN="top"><B>Other Expenses of Issuance and Distribution </B></TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="97%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">


<TR>
<TD WIDTH="95%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="4%"></TD></TR>


<TR BGCOLOR="#daeef3" STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Securities and Exchange Commission Fees</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">$&nbsp;&nbsp;&nbsp;&nbsp;*</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Financial Industry Regulatory Authority, Inc. Fees</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">*</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Printing and Engraving Expenses</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">*</TD></TR>
<TR BGCOLOR="#daeef3" STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Legal Fees</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">*</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">New York Stock Exchange Fees</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">*</TD></TR>
<TR BGCOLOR="#daeef3" STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Accounting Expenses</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">*</TD></TR>
<TR BGCOLOR="#daeef3" STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Transfer Agent Fees</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">*</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Marketing Expenses</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">*</TD></TR>
<TR BGCOLOR="#daeef3" STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Miscellaneous Expenses</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">*</TD></TR>
<TR STYLE="font-size:1px; ">
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:3.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Total</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">*</TD></TR>
</TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P> <P STYLE="line-height:8.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000;width:10%">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="2%" VALIGN="top" ALIGN="left">*</TD>
<TD ALIGN="left" VALIGN="top">To be completed by amendment. </TD></TR></TABLE> <P STYLE="font-size:10pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="9%" VALIGN="top" ALIGN="left"><B>Item&nbsp;28:</B></TD>
<TD ALIGN="left" VALIGN="top"><B>Persons Controlled by or under Common Control with Registrant </B></TD></TR></TABLE> <P STYLE="margin-top:10pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Not applicable. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">-2- </P>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>


<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="9%" VALIGN="top" ALIGN="left"><B>Item&nbsp;29:</B></TD>
<TD ALIGN="left" VALIGN="top"><B>Number of Holders of Securities </B></TD></TR></TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">At ___________, 2017: </P>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="97%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">


<TR>
<TD WIDTH="51%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD WIDTH="47%"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:8pt">
<TD VALIGN="bottom" NOWRAP ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:8pt; font-family:Times New Roman" ALIGN="center"><B>Title of Class</B></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" NOWRAP ALIGN="center" STYLE="border-bottom:1.00pt solid #000000">
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:8pt; font-family:Times New Roman" ALIGN="center"><B>Number&nbsp;of&nbsp;Record&nbsp;Holders</B></P></TD></TR>


<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Common Shares, par value $0.00001</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">[To be completed by amendment.]</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Preferred Shares</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD></TR>
</TABLE> <P STYLE="font-size:10pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="9%" VALIGN="top" ALIGN="left"><B>Item&nbsp;30:</B></TD>
<TD ALIGN="left" VALIGN="top"><B>Indemnification </B></TD></TR></TABLE> <P STYLE="margin-top:10pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Reference is made to Article VIII, Sections 1 through 4, of the Registrant&#146;s
Amended and Restated Agreement and Declaration of Trust, which is incorporated by reference herein. </P> <P STYLE="margin-top:10pt; margin-bottom:0pt; text-indent:2%; font-size:10pt; font-family:Times New Roman">Insofar as indemnification for
liabilities arising under the Securities Act of 1933, as amended (the &#147;Securities Act&#148;), may be permitted to trustees, officers and controlling persons of the Registrant by the Registrant pursuant to the Trust&#146;s Amended and Restated
Agreement and Declaration of Trust, its Amended and Restated Bylaws or otherwise, the Registrant is aware that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act
and, therefore, is unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by trustees, officers or controlling persons of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such trustees, officers or controlling persons in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
</P> <P STYLE="font-size:20pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="9%" VALIGN="top" ALIGN="left"><B>Item&nbsp;31:</B></TD>
<TD ALIGN="left" VALIGN="top"><B>Business and Other Connections of Investment Adviser </B></TD></TR></TABLE> <P STYLE="margin-top:10pt; margin-bottom:0pt; text-indent:6%; font-size:10pt; font-family:Times New Roman">Descriptions of the business of
Pacific Investment Management Company LLC, the Registrant&#146;s investment manager, are set forth under the captions &#147;Investment Manager&#148; under &#147;Management of the Fund&#148; in both the Prospectus and Statement of Additional
Information forming part of this Registration Statement. The following sets forth business and other connections of each director and executive officer (and persons performing similar functions) of Pacific Investment Management Company LLC. </P>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">


<TR>
<TD WIDTH="27%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD WIDTH="71%"></TD></TR>


<TR STYLE="font-size:1px; ">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:8pt">
<TD VALIGN="bottom"><B>Name</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"><B>Business and Other Connections</B></TD></TR>
<TR STYLE="font-size:1px; ">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-top:1.00px solid #000000">&nbsp;</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Amey, Mike</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Managing Director, PIMCO</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Anderson, Joshua M.</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Managing Director, PIMCO</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Balls, Andrew Thomas</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Managing Director and CIO Global, PIMCO</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Baz, Jamil</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Managing Director, PIMCO; Formerly Senior Managing Director and Chief Investment Strategist, Man Group.</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Blute, Ryan Patrick</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Managing Director, PIMCO</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Bodereau, Philippe</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Managing Director, PIMCO</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Bosomworth, Andrew</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Managing Director, PIMCO</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Braun, David</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Managing Director, PIMCO</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Bridwell, Jennifer S</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Managing Director, PIMCO</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Clarida, Richard H.</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Managing Director, PIMCO</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Dawson, Craig A.</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Managing Director and Head of Europe, Middle East and Africa, PIMCO. Trustee of the Trust and PIMCO Managed Accounts Trust.</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">De Leon, William G.</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Managing Director, PIMCO</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Devlin, Edward</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Managing Director, PIMCO</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Dialynas, Chris P.</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Managing Director, PIMCO</TD></TR></TABLE>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">-3- </P>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>


<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">


<TR>
<TD WIDTH="27%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD WIDTH="71%"></TD></TR>

<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Durham, Jennifer E.</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Managing Director and Chief Compliance Officer, PIMCO. Chief Compliance Officer, PIMCO Funds, PIMCO Variable Insurance Trust, PIMCO ETF Trust, PIMCO Equity Series and PIMCO Equity Series VIT</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Fahmi, Mohsen</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Managing Director, PIMCO; Formerly Senior Portfolio Manager, Moore Capital Management</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Fels, Joachim</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Managing Director, PIMCO; Formerly Managing Director and Chief Economist, Morgan Stanley</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Fisher III, David N.</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Managing Director, PIMCO</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Flattum, David C.</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Managing Director, General Counsel, PIMCO. Chief Legal Officer, PIMCO Funds, PIMCO Variable Insurance Trust, PIMCO ETF Trust, PIMCO Equity Series and PIMCO Equity Series VIT</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Gomez, Michael A.</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Managing Director, PIMCO</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Graham, Stuart</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Managing Director, PIMCO</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Harris, Brent Richard</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Managing Director, PIMCO. Director and President, StocksPLUS Management, Inc. Trustee, Chairman and Senior Vice President of PIMCO Funds, PIMCO Variable Insurance Trust, PIMCO ETF Trust, PIMCO Equity Series and PIMCO Equity Series
VIT. Director, PIMCO Luxembourg S.A. and PIMCO Luxembourg II</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Hodge, Douglas M.</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Managing Director and Senior Advisor, PIMCO. Trustee and Senior Vice President, PIMCO Funds, PIMCO Variable Insurance Trust and PIMCO ETF Trust. Senior Vice President of PIMCO Equity Series and PIMCO Equity Series VIT. Director and
Vice President, StocksPLUS Management Inc.; Director, PIMCO Europe Ltd., PIMCO Asia Pte Ltd., PIMCO Australia Pty Ltd, PIMCO Japan Ltd. and PIMCO Asia Limited (Hong Kong)</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Horne, Jonathan Lane</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Managing Director, PIMCO</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Hyman, Daniel</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Managing Director, PIMCO</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Ivascyn, Daniel J.</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Managing Director and Group Chief Investment Officer, PIMCO</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Jacobs IV, Lew W.</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Managing Director and President, PIMCO</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Jessop, Andrew</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Managing Director, PIMCO</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Johnson, Nicholas</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Managing Director, PIMCO</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Kiesel, Mark R.</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Managing Director and CIO Global Credit, PIMCO</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Korinke, Kimberley Grace</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Managing Director, PIMCO</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">LeBrun Jr., Richard R.</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Managing Director, PIMCO</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Louanges, Matthieu</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Managing Director, PIMCO</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Lown, David C.</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Managing Director, PIMCO</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Mariappa, Sudesh N.</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Managing Director, PIMCO</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Masanao, Tomoya</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Managing Director, PIMCO</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Mather, Scott A.</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Managing Director and CIO U.S. Core Strategies, PIMCO</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Matsui, Akinori</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Managing Director, PIMCO</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Mattu, Ravi K.</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Managing Director, PIMCO. Formerly, Head of Research and Strategy, Citadel Securities.</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Mead, Robert</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Managing Director, PIMCO</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Mittal, Mohit</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Managing Director, PIMCO</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Mogelof, Eric J.</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Managing Director, PIMCO</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Moore, James F.</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Managing Director, PIMCO</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Murata, Alfred T.</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Managing Director, PIMCO</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Murray, John William</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Managing Director, PIMCO</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Otterbein, Thomas J.</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Managing Director, PIMCO</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Pagani, Lorenzo P.</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Managing Director, PIMCO</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Rodosky, Stephen A.</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Managing Director, PIMCO</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Roman, Emmanuel</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Managing Director and Chief Executive Officer, PIMCO; Formerly Chief Executive Officer, Man Group PLC.</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Schneider, Jerome M.</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Managing Director, PIMCO</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Seidner, Marc Peter</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Managing Director and CIO, <FONT STYLE="white-space:nowrap">Non-traditional</FONT> Strategies, PIMCO</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Shanahan, Robin Christine</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Managing Director, PIMCO</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Stracke, Christian</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Managing Director, PIMCO</TD></TR></TABLE>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">-4- </P>


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<h5 align="left"><a href="#toc">Table of Contents</a></h5>


<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">


<TR>
<TD WIDTH="27%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD WIDTH="71%"></TD></TR>

<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Strelow, Peter G.</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Managing Director, PIMCO. President and Principal Executive Officer of the Trust. President of PIMCO Funds, PIMCO Variable Insurance Trust, PIMCO ETF Trust, PIMCO Equity Series, PIMCO Equity Series VIT and PIMCO Managed Accounts
Trust</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Sundstrom, Geraldine</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Managing Director, PIMCO; Formerly, Portfolio Manager, Brevan Howard</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Sutherland, Eric Michael</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Managing Director, PIMCO; Head of Sales, PIMCO Investments. Formerly, Managing Director, Nuveen Investments.</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Thimons, Joshua</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Managing Director, PIMCO</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Vaden, Andrew Taylor</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Managing Director, PIMCO</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Wang, Qi</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Managing Director, PIMCO</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Whitten, Candice Stack</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Managing Director, PIMCO</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Wilson, Susan L.</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Managing Director, PIMCO</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Witt, Frank</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Managing Director, PIMCO</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Worah, Mihir P.</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Managing Director and CIO Real Return and Asset Allocation, PIMCO</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Young, Robert O.</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Managing Director, PIMCO</TD></TR>
</TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The address of PIMCO is 650 Newport Center Drive, Newport Beach, CA 92660. </P>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="9%" VALIGN="top" ALIGN="left"><B>Item&nbsp;32:</B></TD>
<TD ALIGN="left" VALIGN="top"><B>Location of Accounts and Records </B></TD></TR></TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The account books and other documents required to be
maintained by the Registrant pursuant to Section&nbsp;31(a) of the Investment Company Act of 1940 and the rules thereunder will be maintained at the offices of Pacific Investment Management Company LLC, 1633 Broadway, New York, NY 10019 or the
Registrant&#146;s custodian, State Street Bank and Trust Company, 801 Pennsylvania Avenue, Kansas City, Missouri 64105. </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="9%" VALIGN="top" ALIGN="left"><B>Item&nbsp;33:</B></TD>
<TD ALIGN="left" VALIGN="top"><B>Management Services </B></TD></TR></TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Not applicable. </P>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TR>
<TD WIDTH="9%" VALIGN="top" ALIGN="left"><B>Item&nbsp;34:</B></TD>
<TD ALIGN="left" VALIGN="top"><B>Undertakings </B></TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TR>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">1.</TD>
<TD ALIGN="left" VALIGN="top">Registrant undertakes to suspend the offering of its Common Shares until it amends the prospectus filed herewith if (1)&nbsp;subsequent to the effective date of its registration statement, the net asset value declines
more than 10&nbsp;percent from its net asset value as of the effective date of the registration statement, or (2)&nbsp;the net asset value increases to an amount greater than its net proceeds as stated in the prospectus. </TD></TR></TABLE>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TR>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">2.</TD>
<TD ALIGN="left" VALIGN="top">Not applicable. </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">3.</TD>
<TD ALIGN="left" VALIGN="top">Not applicable. </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">4.</TD>
<TD ALIGN="left" VALIGN="top">The Registrant undertakes: </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">(a)</TD>
<TD ALIGN="left" VALIGN="top">to file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="10%">&nbsp;</TD>
<TD WIDTH="6%" VALIGN="top" ALIGN="left">(1)</TD>
<TD ALIGN="left" VALIGN="top">to include any prospectus required by Section&nbsp;10(a)(3)&nbsp;of the Securities Act; </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="10%">&nbsp;</TD>
<TD WIDTH="6%" VALIGN="top" ALIGN="left">(2)</TD>
<TD ALIGN="left" VALIGN="top">to reflect in the prospectus any facts or events after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the Registration Statement; and </TD></TR></TABLE>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">-5- </P>


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<TR>
<TD WIDTH="10%">&nbsp;</TD>
<TD WIDTH="6%" VALIGN="top" ALIGN="left">(3)</TD>
<TD ALIGN="left" VALIGN="top">to include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement.
</TD></TR></TABLE> <P STYLE="font-size:10pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">(b)</TD>
<TD ALIGN="left" VALIGN="top">that for the purpose of determining any liability under the Securities Act, each post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the initial bona fide offering thereof; </TD></TR></TABLE> <P STYLE="font-size:10pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">(c)</TD>
<TD ALIGN="left" VALIGN="top">to remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering; and </TD></TR></TABLE>
<P STYLE="font-size:10pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">(d)</TD>
<TD ALIGN="left" VALIGN="top">that, for the purpose of determining liability under the Securities Act to any purchaser, if the Registrant is subject to Rule 430C: Each prospectus filed pursuant to Rule 497(b), (c), (d) or (e)&nbsp;under the
Securities Act as part of a registration statement relating to an offering, other than prospectuses filed in reliance on Rule 430A under the Securities Act shall be deemed to be part of and included in the registration statement as of the date it is
first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration or made in a document incorporated or deemed incorporated by reference into the registration
statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was
part of the registration statement or made in any such document immediately prior to such date of first use. </TD></TR></TABLE> <P STYLE="font-size:10pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">(e)</TD>
<TD ALIGN="left" VALIGN="top">that for the purpose of determining liability of the Registrant under the Securities Act to any purchaser in the initial distribution of securities: </TD></TR></TABLE>
<P STYLE="margin-top:10pt; margin-bottom:0pt; margin-left:10%; font-size:10pt; font-family:Times New Roman">The undersigned Registrant undertakes that in a primary offering of securities of the undersigned Registrant pursuant to this registration
statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned Registrant will be a seller to
the purchaser and will be considered to offer or sell such securities to the purchaser: </P> <P STYLE="font-size:10pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="10%">&nbsp;</TD>
<TD WIDTH="6%" VALIGN="top" ALIGN="left">(1)</TD>
<TD ALIGN="left" VALIGN="top">any preliminary prospectus or prospectus of the undersigned Registrant relating to the offering required to be filed pursuant to Rule 497 under the Securities Act. </TD></TR></TABLE>
<P STYLE="font-size:10pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="10%">&nbsp;</TD>
<TD WIDTH="6%" VALIGN="top" ALIGN="left">(2)</TD>
<TD ALIGN="left" VALIGN="top">the portion of any advertisement pursuant to Rule 482 under the Securities Act relating to the offering containing material information about the undersigned Registrant or its securities provided by or on behalf of the
undersigned Registrant; and </TD></TR></TABLE> <P STYLE="font-size:10pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="10%">&nbsp;</TD>
<TD WIDTH="6%" VALIGN="top" ALIGN="left">(3)</TD>
<TD ALIGN="left" VALIGN="top">any other communication that is an offer in the offering made by the undersigned Registrant to the purchaser. </TD></TR></TABLE> <P STYLE="font-size:10pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">5.</TD>
<TD ALIGN="left" VALIGN="top">The Registrant undertakes that: </TD></TR></TABLE> <P STYLE="font-size:10pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">a.</TD>
<TD ALIGN="left" VALIGN="top">For purposes of determining any liability under the 1933 Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in the form of
prospectus filed by the Registrant under Rule 497(h) under the 1933 Act shall be deemed to be part of this registration statement as of the time it was declared effective; and </TD></TR></TABLE>
<P STYLE="font-size:10pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">b.</TD>
<TD ALIGN="left" VALIGN="top">For the purpose of determining any liability under the 1933 Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered
therein, and the offering of the securities at that time shall be deemed to be the initial bona fide offering thereof. </TD></TR></TABLE>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">-6- </P>


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<TD WIDTH="5%" VALIGN="top" ALIGN="left">6.</TD>
<TD ALIGN="left" VALIGN="top">The Registrant undertakes to send by first class mail or other means designed to ensure equally prompt delivery, within two business days of receipt of a written or oral request, any Statement of Additional Information.
</TD></TR></TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>NOTICE </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:2%; font-size:10pt; font-family:Times New Roman">A copy of the Amended and Restated Agreement and Declaration of Trust of PIMCO Dynamic Income Fund (the &#147;Fund&#148;), together with all
amendments thereto, is on file with the Secretary of State of The Commonwealth of Massachusetts, and notice is hereby given that this instrument is executed on behalf of the Fund by any officer of the Fund as an officer and not individually and that
the obligations of or arising out of this instrument are not binding upon any of the Trustees of the Fund or shareholders of the Fund individually, but are binding only upon the assets and property of the Fund. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">-7- </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>SIGNATURES </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Pursuant to the requirements of the Securities Act of 1933, as amended, and the Investment Company Act of 1940, as amended, the Registrant has duly caused
this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, and the State of New York on the 17th day of January, 2017. </P>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P><DIV ALIGN="right">
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<TD WIDTH="18%"></TD></TR>


<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="3"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">PIMCO DYNAMIC INCOME FUND</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="13"></TD>
<TD HEIGHT="13" COLSPAN="2"></TD>
<TD HEIGHT="13" COLSPAN="2"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">By:</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">/s/ Peter G. Strelow</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">
<P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Name:&nbsp;&nbsp;&nbsp;&nbsp;</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Peter G. Strelow*</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Title:</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">President</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD></TR>
</TABLE></DIV> <P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed below by the
following persons in the capacities and on the date indicated. </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt">


<TR>
<TD WIDTH="37%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="44%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD WIDTH="15%"></TD></TR>


<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><B>&nbsp;&nbsp;<U>Name</U></B></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><B><U>Capacity</U></B></P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><B><U>Date</U></B></P></TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="24"></TD>
<TD HEIGHT="24" COLSPAN="2"></TD>
<TD HEIGHT="24" COLSPAN="2"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;/s/ Peter G. Strelow</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">President (Principal Executive Officer)</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">January&nbsp;17, 2017</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">&nbsp;&nbsp;Peter G. Strelow*</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"></TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="24"></TD>
<TD HEIGHT="24" COLSPAN="2"></TD>
<TD HEIGHT="24" COLSPAN="2"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;/s/ William G. Galipeau</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Treasurer (Principal Financial&nbsp;&amp; Accounting Officer)</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">January&nbsp;17, 2017</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">&nbsp;&nbsp;William G. Galipeau*</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"></TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="24"></TD>
<TD HEIGHT="24" COLSPAN="2"></TD>
<TD HEIGHT="24" COLSPAN="2"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;/s/ Craig A. Dawson</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Trustee</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">January&nbsp;17, 2017</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">&nbsp;&nbsp;Craig A. Dawson*</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"></TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="24"></TD>
<TD HEIGHT="24" COLSPAN="2"></TD>
<TD HEIGHT="24" COLSPAN="2"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;/s/ Deborah A. DeCotis*</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Trustee</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">January&nbsp;17, 2017</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">&nbsp;&nbsp;Deborah A. DeCotis*</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"></TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="24"></TD>
<TD HEIGHT="24" COLSPAN="2"></TD>
<TD HEIGHT="24" COLSPAN="2"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;/s/ Bradford K. Gallagher</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Trustee</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">January&nbsp;17, 2017</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">&nbsp;&nbsp;Bradford K. Gallagher*</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"></TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="24"></TD>
<TD HEIGHT="24" COLSPAN="2"></TD>
<TD HEIGHT="24" COLSPAN="2"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;/s/ James A. Jacobson</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Trustee</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">January&nbsp;17, 2017</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">&nbsp;&nbsp;James A. Jacobson*</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"></TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="24"></TD>
<TD HEIGHT="24" COLSPAN="2"></TD>
<TD HEIGHT="24" COLSPAN="2"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;/s/ Hans W. Kertess</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Trustee</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">January&nbsp;17, 2017</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">&nbsp;&nbsp;Hans W. Kertess*</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"></TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="24"></TD>
<TD HEIGHT="24" COLSPAN="2"></TD>
<TD HEIGHT="24" COLSPAN="2"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;/s/ John C. Maney</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Trustee</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">January&nbsp;17, 2017</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">&nbsp;&nbsp;John C. Maney*</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"></TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="24"></TD>
<TD HEIGHT="24" COLSPAN="2"></TD>
<TD HEIGHT="24" COLSPAN="2"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;/s/ William B. Ogden, IV</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Trustee</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">January&nbsp;17, 2017</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">&nbsp;&nbsp;William B. Ogden, IV*</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"></TD></TR></TABLE>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">-8- </P>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>


<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt">


<TR>
<TD WIDTH="37%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="44%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD WIDTH="15%"></TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="24"></TD>
<TD HEIGHT="24" COLSPAN="2"></TD>
<TD HEIGHT="24" COLSPAN="2"></TD></TR>

<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;/s/ Alan Rappaport</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Trustee</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">January&nbsp;17, 2017</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">&nbsp;&nbsp;Alan Rappaport*</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD></TR>
</TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="40%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt">


<TR>
<TD WIDTH="100%"></TD></TR>


<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><SUP STYLE="font-size:85%; vertical-align:top">*</SUP>By: <U>/s/ David C.
Sullivan</U></P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:3.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">David C. Sullivan</P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; margin-left:3.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">as <FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">attorney-in-fact</FONT></FONT></P></TD></TR>
</TABLE> <P STYLE="margin-top:30pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><SUP STYLE="font-size:85%; vertical-align:top">*</SUP>Pursuant to power of attorney filed herewith. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">-9- </P>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>

 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>INDEX OF EXHIBITS </B></P>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:7.5pt" ALIGN="center">


<TR>
<TD WIDTH="4%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD WIDTH="94%"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:7.5pt">
<TD VALIGN="bottom" NOWRAP STYLE="border-bottom:1.00pt solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:7.5pt; font-family:Times New Roman"><B>Exhibit</B></P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="border-bottom:1.00pt solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:7.5pt; font-family:Times New Roman"><B>Exhibit Name</B></P></TD></TR>


<TR STYLE="font-size:1pt">
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" NOWRAP> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">s.</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">Powers of Attorney for William Gallipeau, Peter Strelow, Deborah A. DeCotis, Bradford K. Gallagher, James A. Jacobson, Hans W. Kertess, John C. Maney, William B. Ogden, IV, Alan Rappaport, and Craig A. Dawson.</TD></TR>
</TABLE>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center">-10- </P>

</BODY></HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.S
<SEQUENCE>2
<FILENAME>d302337dex99s.htm
<DESCRIPTION>POWERS OF ATTORNEY
<TEXT>
<HTML><HEAD>
<TITLE>Powers of Attorney</TITLE>
</HEAD>
 <BODY BGCOLOR="WHITE">

 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B><U>POWER OF ATTORNEY </U></B></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:5%; font-size:12pt; font-family:Times New Roman">I, the undersigned Treasurer and Principal Financial and Accounting Officer of the registered investment companies listed on <U>Schedule A</U>
attached hereto (each, a &#147;<U>Fund</U>&#148;), hereby severally constitute and appoint each of Peter G. Strelow, Youse Guia, Eric D. Johnson, Ryan G. Leshaw, Joshua D. Ratner and David C. Sullivan, and each of them singly, with full powers of
substitution and resubstitution, my true and lawful attorney, with full power to him to sign for me, and in my name and in the capacity indicated below, any Registration Statement of any Fund on Form <FONT STYLE="white-space:nowrap">N-1A,</FONT>
Form <FONT STYLE="white-space:nowrap">N-2</FONT> or Form <FONT STYLE="white-space:nowrap">N-14,</FONT> all <FONT STYLE="white-space:nowrap">Pre-Effective</FONT> Amendments to any such Registration Statement of such Fund, any and all subsequent
Post-Effective Amendments to such Registration Statement, including, without limitation, pursuant to Rule 462(d), any and all supplements or other instruments in connection therewith, and any subsequent Registration Statements for the same offering
which may be filed under Rule 462(b), and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, the securities regulators of the appropriate states and territories and
any other regulatory authority having jurisdiction over the issuance of rights and the offer and sale of shares of beneficial interest of the Fund, any and all agreements, filings, documents, registrations, notices, and other instruments required or
permitted to be filed pursuant to the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, the Investment Company Act of 1940, as amended (the &#147;1940&nbsp;Act&#148;), the Investment Advisers Act of 1940, as
amended, the Commodities Exchange Act, as amended, the Federal Securities Laws (as that term is defined in Rule <FONT STYLE="white-space:nowrap">38a-1</FONT> under the 1940 Act), and the rules thereunder, and/or any rules or regulations passed or
adopted by the New York Stock Exchange or any other exchange on which a Fund&#146;s shares trade (an &#147;Exchange&#148;), the National Futures Association (&#147;NFA&#148;), the Financial Industry Regulatory Authority (&#147;FINRA&#148;), and/or
any other self-regulatory organization (each, an &#147;SRO&#148;) to whose authority a Fund is subject, and any and all agreements, filings, documents, registrations, notices, and other instruments required or permitted to be filed to comply with
the statutes, rules, regulations or law of any state or jurisdiction, including those required to qualify to do business in any such state or jurisdiction (collectively, the &#147;Securities and Commodities Laws&#148;), and to file the same, with
all exhibits thereto, and other agreements, documents and other instruments in connection therewith, with the appropriate regulatory body including, but not limited to, the Securities and Exchange Commission, the Commodity Futures Trading
Commission, an Exchange, the NFA, FINRA, and any SRO, and/or the securities regulators or other agency or regulatory body of the appropriate states and territories, and generally to do all such things in my name and on my behalf in connection
therewith as such attorney deems necessary or appropriate to comply with the Securities and Commodities Laws and all related requirements, granting unto such attorney full power and authority to do and perform each and every act and thing requisite
or necessary to be done in connection therewith, as fully to all intents and purposes as I might or could do in person, hereby ratifying and confirming all that such attorney lawfully could do or cause to be done by virtue hereof. </P>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:12pt">


<TR>
<TD WIDTH="37%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="44%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD WIDTH="15%"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"><B>Name</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"><B>Capacity</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><B>Date</B></TD></TR>


<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE="margin-top:0pt; margin-bottom:1pt; border-bottom:1px solid #000000; font-size:12pt; font-family:Times New Roman">/s/ William G. Galipeau</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman">Treasurer (Principal Financial and</P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:12pt; font-family:Times New Roman">Accounting Officer)</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">December&nbsp;14,&nbsp;2016</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="top">William G. Galipeau</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD></TR>
</TABLE>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B><U>SCHEDULE A </U></B></P>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:12pt" ALIGN="center">


<TR>
<TD WIDTH="7%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="80%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="11%"></TD></TR>


<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="top" COLSPAN="3"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">FUND NAME AND SYMBOL</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">1.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">PCM FUND, INC.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PCM</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">2.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">PIMCO CALIFORNIA MUNICIPAL INCOME FUND</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PCQ</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">3.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">PIMCO CALIFORNIA MUNICIPAL INCOME FUND II</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PCK</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">4.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">PIMCO CALIFORNIA MUNICIPAL INCOME FUND III</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PZC</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">5.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">PIMCO CORPORATE&nbsp;&amp; INCOME STRATEGY FUND</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PCN</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">6.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">PIMCO CORPORATE&nbsp;&amp; INCOME OPPORTUNITY FUND</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PTY</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">7.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">PIMCO DYNAMIC CREDIT AND MORTGAGE INCOME FUND</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PCI</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">8.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">PIMCO DYNAMIC INCOME FUND</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PDI</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">9.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">PIMCO INCOME STRATEGY FUND</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PFL</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">10.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">PIMCO INCOME STRATEGY FUND II</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PFN</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">11.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">PIMCO GLOBAL STOCKSPLUS&nbsp;&amp; INCOME FUND</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PGP</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">12.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">PIMCO HIGH INCOME FUND</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PHK</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">13.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">PIMCO INCOME OPPORTUNITY FUND</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PKO</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">14.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">PIMCO MUNICIPAL INCOME FUND</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PMF</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">15.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">PIMCO MUNICIPAL INCOME FUND II</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PML</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">16.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">PIMCO MUNICIPAL INCOME FUND III</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PMX</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">17.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">PIMCO NEW YORK MUNICIPAL INCOME FUND</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PNF</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">18.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">PIMCO NEW YORK MUNICIPAL INCOME FUND II</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PNI</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">19.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">PIMCO NEW YORK MUNICIPAL INCOME FUND III</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PYN</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">20.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">PIMCO STRATEGIC INCOME FUND, INC.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;RCS</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">21.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">PIMCO MANAGED ACCOUNTS TRUST</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:2.00em; font-size:12pt; font-family:Times New Roman">Fixed Income Shares: Series M</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">FXIMX</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:2.00em; font-size:12pt; font-family:Times New Roman">Fixed Income Shares: Series C</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">FXICX</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:2.00em; font-size:12pt; font-family:Times New Roman">Fixed Income Shares: Series R</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">FXIRX</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:2.00em; font-size:12pt; font-family:Times New Roman">Fixed Income Shares: Series TE</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">FXIEX</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:2.00em; font-size:12pt; font-family:Times New Roman">Fixed Income Shares: Series LD</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">FXIDX</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">22.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">PIMCO FLEXIBLE CREDIT INCOME FUND</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">PFCIX</P></TD></TR>
</TABLE>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B><U>POWER OF ATTORNEY </U></B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:5%; font-size:12pt; font-family:Times New Roman">I, the undersigned President and Principal Executive Officer of the registered investment companies listed on <U>Schedule A</U> attached
hereto (each, a &#147;<U>Fund</U>&#148;), hereby severally constitute and appoint each of William&nbsp;G.&nbsp;Galipeau, Youse Guia, Eric D. Johnson, Ryan G. Leshaw, Joshua D. Ratner and David C. Sullivan, and each of them singly, with full powers
of substitution and resubstitution, my true and lawful attorney, with full power to him to sign for me, and in my name and in the capacity indicated below, any Registration Statement of any Fund on Form <FONT STYLE="white-space:nowrap">N-1A,</FONT>
Form <FONT STYLE="white-space:nowrap">N-2</FONT> or Form <FONT STYLE="white-space:nowrap">N-14,</FONT> all <FONT STYLE="white-space:nowrap">Pre-Effective</FONT> Amendments to any such Registration Statement of such Fund, any and all subsequent
Post-Effective Amendments to such Registration Statement, including, without limitation, pursuant to Rule 462(d), any and all supplements or other instruments in connection therewith, and any subsequent Registration Statements for the same offering
which may be filed under Rule 462(b), and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, the securities regulators of the appropriate states and territories and
any other regulatory authority having jurisdiction over the issuance of rights and the offer and sale of shares of beneficial interest of the Fund, any and all agreements, filings, documents, registrations, notices, and other instruments required or
permitted to be filed pursuant to the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, the Investment Company Act of 1940, as amended (the &#147;1940&nbsp;Act&#148;), the Investment Advisers Act of 1940, as
amended, the Commodities Exchange Act, as amended, the Federal Securities Laws (as that term is defined in Rule <FONT STYLE="white-space:nowrap">38a-1</FONT> under the 1940 Act), and the rules thereunder, and/or any rules or regulations passed or
adopted by the New York Stock Exchange or any other exchange on which a Fund&#146;s shares trade (an &#147;Exchange&#148;), the National Futures Association (&#147;NFA&#148;), the Financial Industry Regulatory Authority (&#147;FINRA&#148;), and/or
any other self-regulatory organization (each, an &#147;SRO&#148;) to whose authority a Fund is subject, and any and all agreements, filings, documents, registrations, notices, and other instruments required or permitted to be filed to comply with
the statutes, rules, regulations or law of any state or jurisdiction, including those required to qualify to do business in any such state or jurisdiction (collectively, the &#147;Securities and Commodities Laws&#148;), and to file the same, with
all exhibits thereto, and other agreements, documents and other instruments in connection therewith, with the appropriate regulatory body including, but not limited to, the Securities and Exchange Commission, the Commodity Futures Trading
Commission, an Exchange, the NFA, FINRA, and any SRO, and/or the securities regulators or other agency or regulatory body of the appropriate states and territories, and generally to do all such things in my name and on my behalf in connection
therewith as such attorney deems necessary or appropriate to comply with the Securities and Commodities Laws and all related requirements, granting unto such attorney full power and authority to do and perform each and every act and thing requisite
or necessary to be done in connection therewith, as fully to all intents and purposes as I might or could do in person, hereby ratifying and confirming all that such attorney lawfully could do or cause to be done by virtue hereof. </P>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD WIDTH="15%"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"><B>Name</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"><B>Capacity</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><B>Date</B></TD></TR>


<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE="margin-top:0pt; margin-bottom:1pt; border-bottom:1px solid #000000; font-size:12pt; font-family:Times New Roman">/s/ Peter G. Strelow</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">President (Principal Executive&nbsp;Officer)</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">December&nbsp;14,&nbsp;2016</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="top">Peter G. Strelow</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD></TR>
</TABLE>

<p Style='page-break-before:always'>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B><U>SCHEDULE A </U></B></P>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="top" COLSPAN="3"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">FUND NAME AND SYMBOL</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">1.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">PCM FUND, INC.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PCM</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">2.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">PIMCO CALIFORNIA MUNICIPAL INCOME FUND</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PCQ</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">3.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">PIMCO CALIFORNIA MUNICIPAL INCOME FUND II</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PCK</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">4.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">PIMCO CALIFORNIA MUNICIPAL INCOME FUND III</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PZC</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">5.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">PIMCO CORPORATE&nbsp;&amp; INCOME STRATEGY FUND</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PCN</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">6.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">PIMCO CORPORATE&nbsp;&amp; INCOME OPPORTUNITY FUND</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PTY</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">7.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">PIMCO DYNAMIC CREDIT AND MORTGAGE INCOME FUND</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PCI</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">8.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">PIMCO DYNAMIC INCOME FUND</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PDI</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">9.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">PIMCO INCOME STRATEGY FUND</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PFL</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">10.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">PIMCO INCOME STRATEGY FUND II</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PFN</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">11.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">PIMCO GLOBAL STOCKSPLUS&nbsp;&amp; INCOME FUND</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PGP</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">12.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">PIMCO HIGH INCOME FUND</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PHK</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">13.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">PIMCO INCOME OPPORTUNITY FUND</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PKO</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">14.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">PIMCO MUNICIPAL INCOME FUND</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PMF</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">15.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">PIMCO MUNICIPAL INCOME FUND II</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PML</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">16.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">PIMCO MUNICIPAL INCOME FUND III</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PMX</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">17.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">PIMCO NEW YORK MUNICIPAL INCOME FUND</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PNF</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">18.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">PIMCO NEW YORK MUNICIPAL INCOME FUND II</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PNI</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">19.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">PIMCO NEW YORK MUNICIPAL INCOME FUND III</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PYN</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">20.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">PIMCO STRATEGIC INCOME FUND, INC.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;RCS</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">21.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">PIMCO MANAGED ACCOUNTS TRUST</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:2.00em; font-size:12pt; font-family:Times New Roman">Fixed Income Shares: Series M</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;FXIMX</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:2.00em; font-size:12pt; font-family:Times New Roman">Fixed Income Shares: Series C</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;FXICX</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:2.00em; font-size:12pt; font-family:Times New Roman">Fixed Income Shares: Series R</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;FXIRX</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:2.00em; font-size:12pt; font-family:Times New Roman">Fixed Income Shares: Series TE</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;FXIEX</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:2.00em; font-size:12pt; font-family:Times New Roman">Fixed Income Shares: Series LD</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;FXIDX</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">22.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">PIMCO FLEXIBLE CREDIT INCOME FUND</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PFCIX</P></TD></TR>
</TABLE>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B><U>POWER OF ATTORNEY </U></B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:5%; font-size:12pt; font-family:Times New Roman">We, the undersigned Trustees/Directors of the registered investment companies listed on <U>Schedule A</U> attached hereto (each, a
&#147;<U>Fund</U>&#148;), hereby severally constitute and appoint each of Peter G. Strelow, William&nbsp;G.&nbsp;Galipeau, Youse Guia, Eric D. Johnson, Ryan G. Leshaw, Joshua D. Ratner and David C. Sullivan, and each of them singly, with full powers
of substitution and resubstitution, our true and lawful attorney, with full power to him to sign for us, and in our names and in the capacities indicated below, any Registration Statement of any Fund on Form
<FONT STYLE="white-space:nowrap">N-1A,</FONT> Form <FONT STYLE="white-space:nowrap">N-2</FONT> or Form <FONT STYLE="white-space:nowrap">N-14,</FONT> all <FONT STYLE="white-space:nowrap">Pre-Effective</FONT> Amendments to any such Registration
Statement of such Fund, including, without limitation, pursuant to Rule 462(d), any and all subsequent Post-Effective Amendments to such Registration Statement, any and all supplements or other instruments in connection therewith, and any subsequent
Registration Statements for the same offering which may be filed under Rule 462(b), and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, the securities regulators
of the appropriate states and territories and any other regulatory authority having jurisdiction over the issuance of rights and the offer and sale of shares of beneficial interest of the Fund, any and all agreements, filings, documents,
registrations, notices, and other instruments required or permitted to be filed pursuant to the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, the Investment Company Act of 1940, as amended (the
&#147;1940&nbsp;Act&#148;), the Investment Advisers Act of 1940, as amended, the Commodities Exchange Act, as amended, the Federal Securities Laws (as that term is defined in Rule <FONT STYLE="white-space:nowrap">38a-1</FONT> under the 1940 Act),
and the rules thereunder, and/or any rules or regulations passed or adopted by the New&nbsp;York Stock Exchange or any other exchange on which a Fund&#146;s shares trade (an &#147;Exchange&#148;), the National Futures Association (&#147;NFA&#148;),
the Financial Industry Regulatory Authority (&#147;FINRA&#148;), and/or any other self-regulatory organization (each, an &#147;SRO&#148;) to whose authority a Fund is subject, and any and all agreements, filings, documents, registrations, notices,
and other instruments required or permitted to be filed to comply with the statutes, rules, regulations or law of any state or jurisdiction, including those required to qualify to do business in any such state or jurisdiction (collectively, the
&#147;Securities and Commodities Laws&#148;), and to file the same, with all exhibits thereto, and other agreements, documents and other instruments in connection therewith, with the appropriate regulatory body including, but not limited to, the
Securities and Exchange Commission, the Commodity Futures Trading Commission, an Exchange, the NFA, FINRA, and any SRO, and/or the securities regulators or other agency or regulatory body of the appropriate states and territories, and generally to
do all such things in our names and on our behalves in connection therewith as such attorney deems necessary or appropriate to comply with the Securities and Commodities Laws and all related requirements, granting unto such attorney full power and
authority to do and perform each and every act and thing requisite or necessary to be done in connection therewith, as fully to all intents and purposes as any of us might or could do in person, hereby ratifying and confirming all that such attorney
lawfully could do or cause to be done by virtue hereof. </P>

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<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:12pt">


<TR>
<TD WIDTH="37%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="44%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD WIDTH="15%"></TD></TR>


<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"><B>Name</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center"><B>Capacity</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center"><B>Date</B></TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE="margin-top:0pt; margin-bottom:1pt; border-bottom:1px solid #000000; font-size:12pt; font-family:Times New Roman">/s/ Deborah A. DeCotis</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">Trustee/Director</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">December&nbsp;22,&nbsp;2016</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="top">Deborah A. DeCotis</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE="margin-top:0pt; margin-bottom:1pt; border-bottom:1px solid #000000; font-size:12pt; font-family:Times New Roman">/s/ Bradford K. Gallagher</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">Trustee/Director</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">December&nbsp;22,&nbsp;2016</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="top">Bradford K. Gallagher</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE="margin-top:0pt; margin-bottom:1pt; border-bottom:1px solid #000000; font-size:12pt; font-family:Times New Roman">/s/ James A. Jacobson</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">Trustee/Director</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">December&nbsp;22,&nbsp;2016</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="top">James A. Jacobson</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE="margin-top:0pt; margin-bottom:1pt; border-bottom:1px solid #000000; font-size:12pt; font-family:Times New Roman">/s/ Hans W. Kertess</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">Trustee/Director</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">December&nbsp;22,&nbsp;2016</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="top">Hans W. Kertess</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE="margin-top:0pt; margin-bottom:1pt; border-bottom:1px solid #000000; font-size:12pt; font-family:Times New Roman">/s/ John C. Maney</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">Trustee/Director</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">December&nbsp;22,&nbsp;2016</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="top">John C. Maney</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE="margin-top:0pt; margin-bottom:1pt; border-bottom:1px solid #000000; font-size:12pt; font-family:Times New Roman">/s/ William B. Ogden, IV</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">Trustee/Director</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">December&nbsp;22,&nbsp;2016</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="top">William B. Ogden, IV</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE="margin-top:0pt; margin-bottom:1pt; border-bottom:1px solid #000000; font-size:12pt; font-family:Times New Roman">/s/ Alan Rappaport</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">Trustee/Director</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">December&nbsp;22,&nbsp;2016</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="top">Alan Rappaport</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE="margin-top:0pt; margin-bottom:1pt; border-bottom:1px solid #000000; font-size:12pt; font-family:Times New Roman">/s/ Craig A. Dawson</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">Trustee/Director</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">December&nbsp;22,&nbsp;2016</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="top">Craig A. Dawson</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD></TR>
</TABLE>

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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B><U>SCHEDULE A </U></B></P>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:12pt" ALIGN="center">


<TR>
<TD WIDTH="7%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="80%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="11%"></TD></TR>


<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="top" COLSPAN="3"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">FUND NAME AND SYMBOL</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">1.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">PCM FUND, INC.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PCM</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">2.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">PIMCO CALIFORNIA MUNICIPAL INCOME FUND</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PCQ</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">3.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">PIMCO CALIFORNIA MUNICIPAL INCOME FUND II</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PCK</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">4.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">PIMCO CALIFORNIA MUNICIPAL INCOME FUND III</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PZC</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">5.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">PIMCO CORPORATE&nbsp;&amp; INCOME STRATEGY FUND</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PCN</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">6.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">PIMCO CORPORATE&nbsp;&amp; INCOME OPPORTUNITY FUND</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PTY</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">7.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">PIMCO DYNAMIC CREDIT AND MORTGAGE INCOME FUND</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PCI</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">8.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">PIMCO DYNAMIC INCOME FUND</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PDI</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">9.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">PIMCO INCOME STRATEGY FUND</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PFL</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">10.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">PIMCO INCOME STRATEGY FUND II</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PFN</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">11.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">PIMCO GLOBAL STOCKSPLUS&nbsp;&amp; INCOME FUND</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PGP</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">12.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">PIMCO HIGH INCOME FUND</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PHK</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">13.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">PIMCO INCOME OPPORTUNITY FUND</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PKO</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">14.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">PIMCO MUNICIPAL INCOME FUND</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PMF</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">15.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">PIMCO MUNICIPAL INCOME FUND II</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PML</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">16.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">PIMCO MUNICIPAL INCOME FUND III</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PMX</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">17.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">PIMCO NEW YORK MUNICIPAL INCOME FUND</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PNF</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">18.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">PIMCO NEW YORK MUNICIPAL INCOME FUND II</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PNI</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">19.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">PIMCO NEW YORK MUNICIPAL INCOME FUND III</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PYN</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">20.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">PIMCO STRATEGIC INCOME FUND, INC.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;RCS</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">21.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">PIMCO MANAGED ACCOUNTS TRUST</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:2.00em; font-size:12pt; font-family:Times New Roman">Fixed Income Shares: Series M</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">FXIMX</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:2.00em; font-size:12pt; font-family:Times New Roman">Fixed Income Shares: Series C</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">FXICX</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:2.00em; font-size:12pt; font-family:Times New Roman">Fixed Income Shares: Series R</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">FXIRX</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:2.00em; font-size:12pt; font-family:Times New Roman">Fixed Income Shares: Series TE</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">FXIEX</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:2.00em; font-size:12pt; font-family:Times New Roman">Fixed Income Shares: Series LD</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">FXIDX</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:12pt">
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">22.</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">PIMCO FLEXIBLE CREDIT INCOME FUND</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:12pt; font-family:Times New Roman">PFCIX</P></TD></TR>
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<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:8pt; font-family:ARIAL">ROPES&nbsp;&amp; GRAY LLP</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:8pt; font-family:ARIAL">2099 PENNSYLVANIA AVENUE, NW</P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:8pt; font-family:ARIAL">WASHINGTON, DC 20006-6807</P> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:8pt; font-family:ARIAL">WWW.ROPESGRAY.COM</P></TD></TR>
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<TD VALIGN="top"><FONT STYLE="font-size:11pt">January 17, 2017</FONT></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
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<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Nathan D. Briggs</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">T: 1 202 626 3909</P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">F: 1 202 383 9308</P> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:10pt; font-family:Times New Roman">nathan.briggs@ropesgray.com</P></TD></TR>
</TABLE> <P STYLE="font-size:48pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P> <P STYLE="margin-top:24pt; margin-bottom:0pt; font-size:11pt; font-family:Times New Roman">Securities and Exchange Commission </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:11pt; font-family:Times New Roman">Division of Investment Management </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:11pt; font-family:Times New Roman">100 F Street, N.E. </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:11pt; font-family:Times New Roman">Washington, DC 20549 </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left">Re:</TD>
<TD ALIGN="left" VALIGN="top">PIMCO Dynamic Income Fund </TD></TR></TABLE> <P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:4%; font-size:11pt; font-family:Times New Roman">(File Nos. <FONT STYLE="white-space:nowrap">333-______,</FONT> <FONT
STYLE="white-space:nowrap">811-22673)</FONT> </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:11pt; font-family:Times New Roman">Ladies and Gentleman: </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:7%; font-size:11pt; font-family:Times New Roman">We are filing today via EDGAR a Registration Statement on Form <FONT STYLE="white-space:nowrap">N-2</FONT> pursuant to the Securities Act of
1933, as amended (the &#147;Securities Act&#148;), and the Investment Company Act of 1940, as amended, on behalf of PIMCO Dynamic Income Fund, a Massachusetts business trust. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:7%; font-size:11pt; font-family:Times New Roman">Pursuant to Section&nbsp;6 of the Securities Act, we have calculated the Registration Fees and have transmitted such fees in the amount of
$115.90 to the designated lockbox at U.S. Bank in St. Louis, Missouri. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:7%; font-size:11pt; font-family:Times New Roman">Please direct any questions or comments regarding this filing to
me at (202) <FONT STYLE="white-space:nowrap">626-3909.</FONT> Thank you for your attention in this matter. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; margin-left:54%; text-indent:-2%; font-size:11pt; font-family:Times New Roman">Sincerely,
</P> <P STYLE="margin-top:12pt; margin-bottom:0pt; margin-left:54%; text-indent:-2%; font-size:11pt; font-family:Times New Roman">/s/ Nathan D. Briggs </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; margin-left:54%; text-indent:-2%; font-size:11pt; font-family:Times New Roman">Nathan D. Briggs </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="7%" VALIGN="top" ALIGN="left">cc:</TD>
<TD ALIGN="left" VALIGN="top">Joshua D. Ratner, Esq. </TD></TR></TABLE> <P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:7%; font-size:11pt; font-family:Times New Roman"><FONT STYLE="white-space:nowrap">Wu-Kwan</FONT> Kit, Esq. </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:7%; font-size:11pt; font-family:Times New Roman">David C. Sullivan, Esq. </P>
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