<DOCUMENT>
<TYPE>EX-99.H1
<SEQUENCE>4
<FILENAME>dex99h1.txt
<DESCRIPTION>FORM OF PURCHASE AGREEMENT FOR THE PREFERRED SHARES
<TEXT>
<PAGE>

                                                                     Exhibit h.1

                         PIMCO Floating Rate Income Fund
                        (a Massachusetts business trust)

 2,800 Auction Market Preferred Shares ("AMPS") of Beneficial Interest Series T
 2,800 Auction Market Preferred Shares ("AMPS") of Beneficial Interest Series W
 2,800 Auction Market Preferred Shares ("AMPS") of Beneficial Interest Series TH
                    Liquidation Preference $25,000 per share


                               PURCHASE AGREEMENT

                                                                          , 2003


Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
             Incorporated
Wachovia Capital Markets, LLC
A.G. Edwards & Sons, Inc.
Quick & Reilly, Inc.
c/o Merrill Lynch, Pierce, Fenner & Smith
                 Incorporated
4 World Financial Center
New York, New York 10080

Ladies and Gentlemen:


     PIMCO Floating Rate Income Fund, a Massachusetts business trust (the
"Fund"), proposes, upon the terms and conditions set forth herein, to issue and
sell an aggregate of 2,800 Shares of its Auction Market Preferred Shares, Series
T, 2,800 Shares of its Auction Market Preferred Shares, Series W, and 2,800
Shares of its Auction Market Preferred Shares, Series TH (the "AMPS"). The AMPS
will be authorized by, and subject to the terms and conditions of, the Second
Amended and Restated By-laws of the Fund (the "By-laws") and the Amended and
Restated Agreement and Declaration of Trust of the Fund, as amended through
August 14, 2003 (the "Declaration"), substantially in the forms filed as
exhibits to the Registration Statement referred to in the second following
paragraph of this Agreement, as the same may be amended from time to time. The
Fund and the Fund's investment adviser, PIMCO Advisors Fund Management LLC, a
Delaware limited liability company, ("PAFM"), each confirms its agreement with
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated
(together "Merrill Lynch") and each of the other Underwriters named in Schedule
A hereto (collectively, the "Underwriters", which term shall also include any
underwriter substituted as provided in Section 10 hereof), for whom Merrill
Lynch is acting as representative (in such capacity, the "Representative"), with
respect to the issue and sale by the Fund and the purchase by the Underwriters,
acting severally and not jointly, of the respective number of AMPS set forth in
said Schedule A. PAFM and the Fund's sub-adviser, Pacific Management Company
LLC, a Delaware limited liability company ("PIMCO"), are sometimes referred to
herein as the "Managers."


     The Fund understands that the Underwriters propose to make a public
offering of the AMPS as soon as the Representative deems advisable after this
Agreement has been executed and delivered.

     The Fund has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form N-2 (No. 333-108475 and No.
811-21374) covering the registration of the AMPS under the Securities Act of
1933, as amended (the "1933 Act"), including the related preliminary prospectus
or prospectuses, which registration statement also constitutes an amendment to
the Fund's

<PAGE>

registration statement under the Investment Company Act of 1940, as amended (the
"1940 Act"). Promptly after execution and delivery of this Agreement, the Fund
will, to the extent that it has not already done so, either (i) prepare and file
a prospectus in accordance with the provisions of Rule 430A ("Rule 430A") of the
rules and regulations of the Commission under the 1933 Act and the 1940 Act (the
"Rules and Regulations") and paragraph (c) or (h) of Rule 497 ("Rule 497") of
the Rules and Regulations or (ii) if the Fund has elected to rely upon Rule 434
("Rule 434") of the Rules and Regulations, prepare and file a term sheet (a
"Term Sheet") in accordance with the provisions of Rule 434 and Rule 497. The
information included in any such prospectus or in any such Term Sheet, as the
case may be, that was omitted from such registration statement at the time it
became effective but that is deemed to be part of such registration statement at
the time it became effective, if applicable, (a) pursuant to paragraph (b) of
Rule 430A is referred to as "Rule 430A Information" or (b) pursuant to paragraph
(d) of Rule 434 is referred to as "Rule 434 Information." Each prospectus used
before such registration statement became effective, and any prospectus that
omitted, as applicable, the Rule 430A Information or the Rule 434 Information,
that was used after such effectiveness and prior to the execution and delivery
of this Agreement, including in each case any statement of additional
information incorporated therein by reference, is herein called a "preliminary
prospectus." Such registration statement, including the exhibits and schedules
thereto at the time it became effective and including the Rule 430A Information
and the Rule 434 Information, as applicable, is herein called the "Registration
Statement." Any registration statement filed pursuant to Rule 462(b) of the
Rules and Regulations is herein referred to as the "Rule 462(b) Registration
Statement," and after such filing the term "Registration Statement" shall
include the Rule 462(b) Registration Statement. The final prospectus in the form
first furnished to the Underwriters for use in connection with the offering of
the AMPS, including the statement of additional information incorporated therein
by reference, is herein called the "Prospectus." If Rule 434 is relied on, the
term "Prospectus" shall refer to the preliminary prospectus dated October 24,
2003 together with the Term Sheet and all references in this Agreement to the
date of the Prospectus shall mean the date of the Term Sheet. For purposes of
this Agreement, all references to the Registration Statement, any preliminary
prospectus, the Prospectus or any Term Sheet or any amendment or supplement to
any of the foregoing shall be deemed to include the copy filed with the
Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval
system ("EDGAR").

     All references in this Agreement to financial statements and schedules and
other information which are "contained," "included" or "stated" in the
Registration Statement, any preliminary prospectus or the Prospectus (or other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is incorporated
by reference into the Registration Statement, any preliminary prospectus or the
Prospectus, as the case may be; and all references in this Agreement to
amendments or supplements to the Registration Statement, any preliminary
prospectus or the Prospectus shall be deemed to mean and include the filing of
any document under the Securities Exchange Act of 1934 (the "1934 Act") which is
incorporated by reference into the Registration Statement, such preliminary
prospectus or the Prospectus, as the case may be.

     SECTION 1. Representations and Warranties.

     (a) Representations and Warranties by the Fund and PAFM. The Fund and PAFM
jointly and severally represent and warrant to each Underwriter as of the date
hereof, and as of the Closing Time referred to in Section 2(c) hereof, and agree
with each Underwriter, as follows:

          (i) Compliance with Registration Requirements. Each of the
     Registration Statement and any Rule 462(b) Registration Statement has
     become effective under the 1933 Act and no stop order suspending the
     effectiveness of the Registration Statement or any Rule 462(b) Registration
     Statement has been issued under the 1933 Act, or order of suspension or
     revocation of registration pursuant to Section 8(e) of the 1940 Act, and no
     proceedings for any such purpose have been instituted or are pending or, to
     the knowledge of the Fund or PAFM, are contemplated by the

                                       2

<PAGE>

     Commission, and any request on the part of the Commission for additional
     information has been complied with in all material respects.

          At the respective times, the Registration Statement, any Rule 462(b)
     Registration Statement and any post-effective amendments thereto (except
     any post-effective amendments filed with the Commission after the later of
     (x) one year from the date of this Agreement or (y) the date on which the
     distribution of the AMPS is completed) became effective and at the Closing
     Time, the Registration Statement, the Rule 462(b) Registration Statement,
     the notification on Form N-8A and any amendments and supplements thereto
     complied and will comply in all material respects with the requirements of
     the 1933 Act, the 1940 Act and the Rules and Regulations and did not and
     will not contain an untrue statement of a material fact or omit to state a
     material fact required to be stated therein or necessary to make the
     statements therein not misleading. Neither the Prospectus nor any
     amendments or supplements thereto, at the time the Prospectus or any such
     amendment or supplement was issued and at the Closing Time, included or
     will include an untrue statement of a material fact or omitted or will omit
     to state a material fact necessary in order to make the statements therein,
     in the light of the circumstances under which they were made, not
     misleading. If Rule 434 is used, the Fund will comply with the requirements
     of Rule 434 and the Prospectus shall not be "materially different," as such
     term is used in Rule 434, from the prospectus included in the Registration
     Statement at the time it became effective.

          Each preliminary prospectus delivered to the Underwriters for use in
     connection with this offering and the prospectus included in the effective
     Registration Statement or as part of any amendment thereto, or filed
     pursuant to Rule 497 under the 1933 Act, complied when so filed in all
     material respects with the Rules and Regulations and each such preliminary
     prospectus and the Prospectus delivered to the Underwriters for use in
     connection with this offering was identical to the electronically
     transmitted copies thereof filed with the Commission pursuant to EDGAR,
     except to the extent permitted by Regulation S-T.

          If a Rule 462(b) Registration Statement is required in connection with
     the offering and sale of the AMPS, the Fund has complied or will comply
     with the requirements of Rule 111 under the 1933 Act Regulations relating
     to the payment of filing fees thereof.

          The foregoing representations in this Section 1(a)(i) do not apply (i)
     to statements or omissions relating to the Underwriters made in reliance on
     and in conformity with information furnished in writing to the Fund by the
     Underwriters or their agents expressly for use in the Registration
     Statement, the 462(b) Registration Statement, the Prospectus or preliminary
     prospectus (or any amendment or supplement to any of the foregoing), or
     (ii) with respect to the representations of the Fund contained in this
     Section 1(a)(i), the description of the Managers (referred to in Section
     1(b)(iii) of this Agreement) contained in the foregoing.

          (ii) Independent Accountants. As of the date of the report of the
     independent accountants contained in the Registration Statement, the
     accountants who certified the statement of assets and liabilities included
     in the Registration Statement are independent public accountants as
     required by the 1933 Act and the Rules and Regulations.

          (iii) Financial Statements. The financial statements included in the
     Registration Statement and the Prospectus, together with the related notes,
     present fairly the financial position of the Fund in all material respects
     at the date indicated; said statements have been prepared in conformity
     with generally accepted accounting principles ("GAAP").

          (iv) Expense Summary. The information set forth in the Prospectus in
     the Fee Table has been prepared in accordance with the requirements of Form
     N-2 and to the extent estimated

                                       3

<PAGE>

     or projected, such estimates or projections are reasonably believed to be
     attainable and reasonably based.

          (v) No Material Adverse Change. Since the respective dates as of which
     information is given in the Registration Statement and the Prospectus,
     except as otherwise stated therein, (A) there has been no material adverse
     change in the condition, financial or otherwise, or in the earnings,
     business affairs or business prospects of the Fund, other than as a result
     of a change in the financial markets generally, whether or not arising in
     the ordinary course of business (a "Material Adverse Effect"), (B) there
     have been no transactions entered into by the Fund, other than those in the
     ordinary course of business, which are material with respect to the Fund,
     and (C) except for regular, monthly dividends on the Fund's outstanding
     common shares, if any, there has been no dividend or distribution of any
     kind declared, paid or made by the Fund on any class of its shares.

          (vi) Good Standing of the Fund. The Fund has been duly organized and
     is validly existing as an unincorporated voluntary association in good
     standing under the laws of the Commonwealth of Massachusetts and has full
     power and authority to own, lease and operate its properties and to conduct
     its business as described in the Prospectus and to enter into and perform
     its obligations under this Agreement; and the Fund is duly qualified to
     transact business and is in good standing in each other jurisdiction in
     which such qualification is required, whether by reason of the ownership or
     leasing of property or the conduct of business, except where the failure so
     to qualify or to be in good standing would not result in a Material Adverse
     Effect.

          (vii) No Subsidiaries. The Fund has no subsidiaries.

          (viii) Investment Company Status. The Fund is duly registered with the
     Commission under the 1940 Act as a closed-end diversified management
     investment company, and no order of suspension or revocation of such
     registration has been issued or proceedings therefor initiated or, to the
     knowledge of the Fund or PAFM, threatened by the Commission.

          (ix) Officers and Trustees. No person is serving or acting as an
     officer, trustee or investment adviser of the Fund except in accordance
     with the provisions of the 1940 Act and the Rules and Regulations and the
     Investment Advisers Act of 1940, as amended (the "Advisers Act"), and the
     rules and regulations of the Commission promulgated under the Advisers Act
     (the "Advisers Act Rules and Regulations"). Except as disclosed in the
     Registration Statement and the Prospectus (or any amendment or supplement
     to either of them), no trustee of the Fund is (A) an "interested person"
     (as defined in the 1940 Act) of the Fund or (B) an "affiliated person" (as
     defined in the 1940 Act) of any Underwriter. For purposes of this Section
     1(a)(ix), the Fund and each Manager shall be entitled to rely on
     representations from such officers and trustees.

          (x) Capitalization. The authorized, issued and outstanding shares of
     beneficial interest of the Fund are as set forth in the Prospectus as of
     the date thereof, except for shares issued in connection with the Fund's
     dividend reinvestment plan. All issued and outstanding common shares of
     beneficial interest of the Fund have been duly authorized and validly
     issued and are fully paid and non-assessable (except as described in the
     Registration Statement), and have been offered and sold or exchanged by the
     Fund in compliance with all applicable laws (including, without limitation,
     federal and state securities laws); none of the outstanding common shares
     of beneficial interest of the Fund was issued in violation of the
     preemptive or other similar rights of any securityholder of the Fund.

          (xi) Authorization and Description of AMPS. The AMPS to be purchased
     by the Underwriters from the Fund have been duly authorized for issuance
     and sale to the Underwriters pursuant to this Agreement and, when issued
     and delivered by the Fund pursuant to this

                                       4

<PAGE>

     Agreement against payment of the consideration set forth herein, will be
     validly issued, fully paid and non-assessable (except as described in the
     Registration Statement). The AMPS conform to all statements relating
     thereto contained in the Prospectus and such description conforms to the
     rights set forth in the instruments defining the same (to the extent such
     rights are set forth); no holder of the AMPS will be subject to personal
     liability by reason of being such a holder (except as described in the
     Registration Statement); and the issuance of the AMPS is not subject to the
     preemptive or other similar rights of any securityholder of the Fund.

          (xii) Authorization of Agreement. This Agreement has been duly
     authorized, executed and delivered by the Fund.


          (xiii) Absence of Defaults and Conflicts. The Fund is not in violation
     of the Declaration or the By-laws, or in default in the performance or
     observance of any obligation, agreement, covenant or condition contained in
     any contract, indenture, mortgage, deed of trust, loan or credit agreement,
     note, lease or other agreement or instrument to which it is a party or by
     which it may be bound, or to which any of the property or assets of the
     Fund is subject (collectively, "Agreements and Instruments"), except for
     such violations or defaults that would not result in a Material Adverse
     Effect; and the execution, delivery and performance of this Agreement, the
     Investment Management Agreement, the Portfolio Management Agreement, the
     Custodian and Investment Accounting Agreement, the Transfer Agency and
     Services Agreement and the Auction Agency Agreement referred to in the
     Registration Statement (as used herein, the "Investment Management
     Agreement," the "Portfolio Management Agreement," the "Custodian
     Agreement," the "Transfer and Services Agreement" and the "Auction Agency
     Agreement," respectively) and the consummation of the transactions
     contemplated herein and in the Registration Statement (including the
     issuance and sale of the AMPS and the use of the proceeds from the sale of
     the AMPS as described in the Prospectus under the caption "Use of
     Proceeds") and compliance by the Fund with its obligations hereunder have
     been duly authorized by all necessary corporate action and do not and will
     not, whether with or without the giving of notice or passage of time or
     both, conflict with or constitute a breach of, default or Repayment Event
     (as defined below) under, or result in the creation or imposition of any
     lien, charge or encumbrance upon any property or assets of the Fund
     pursuant to, the Agreements and Instruments (except for such conflicts,
     breaches, defaults or liens, charges or encumbrances that would not result
     in a Material Adverse Effect), nor will such action result in any violation
     of the provisions of the Declaration or the By-laws, each as amended from
     time to time, or any applicable law, statute, rule, regulation, judgment,
     order, writ or decree of any government, government instrumentality or
     court, domestic or foreign, having jurisdiction over the Fund or any of its
     assets, properties or operations, other than State securities or "blue sky"
     laws applicable in connection with the purchase and distribution of the
     AMPS by the Underwriters pursuant to this Agreement. As used herein, a
     "Repayment Event" means any event or condition which gives the holder of
     any note, debenture or other evidence of indebtedness (or any person acting
     on such holder's behalf) the right to require the repurchase, redemption or
     repayment of all or a portion of such indebtedness by the Fund.


          (xiv) Absence of Proceedings. There is no action, suit, proceeding,
     inquiry or investigation before or brought by any court or governmental
     agency or body, domestic or foreign, now pending, or, to the knowledge of
     the Fund or PAFM, threatened, against or affecting the Fund, which is
     required to be disclosed in the Registration Statement (other than as
     disclosed therein), or which might reasonably be expected to result in a
     Material Adverse Effect, or which might reasonably be expected materially
     and adversely to affect the properties or assets of the Fund or the
     consummation of the transactions contemplated in this Agreement or the
     performance by the Fund of its obligations hereunder. The aggregate of all
     pending legal or governmental proceedings, if any, to which the Fund is a
     party or of which any of its property or assets is the

                                       5

<PAGE>

     subject which are not described in the Registration Statement, including
     ordinary routine litigation incidental to the business, could not
     reasonably be expected to result in a Material Adverse Effect.

          (xv) Accuracy of Exhibits. There are no material contracts or
     documents which are required to be described in the Registration Statement
     or the Prospectus or to be filed as exhibits thereto by the 1933 Act, the
     1940 Act or by the Rules and Regulations which have not been so described
     and filed as required.

          (xvi) Possession of Intellectual Property. Except for the Service
     marks or trademarks "AMPS" and "Auction Market Preferred Shares," either
     PAFM or the Fund owns or possesses, or can acquire on reasonable terms,
     adequate patents, patent rights, licenses, inventions, copyrights, know-how
     (including trade secrets and other unpatented and/or unpatentable
     proprietary or confidential information, systems or procedures),
     trademarks, service marks, trade names or other intellectual property
     (collectively, "Intellectual Property") necessary to carry on the business
     now operated by the Fund, and the Fund has not received any notice and is
     not otherwise aware of any infringement of or conflict with asserted rights
     of others with respect to any Intellectual Property or of any facts or
     circumstances which would render any Intellectual Property invalid or
     inadequate to protect the interest of the Fund or PAFM therein, and which
     infringement or conflict (if the subject of any unfavorable decision,
     ruling or finding), invalidity or inadequacy, singly or in the aggregate,
     would result in a Material Adverse Effect.

          (xvii) Absence of Further Requirements. No filing with, or
     authorization, approval, consent, license, order, registration,
     qualification or decree of, any court or governmental authority or agency
     is necessary or required for the performance by the Fund of its obligations
     hereunder, in connection with the offering, the issuance or sale of the
     AMPS hereunder or the consummation of the transactions contemplated by this
     Agreement, except such as have been already obtained or as may be required
     under the 1933 Act, the 1940 Act, the Securities Exchange Act of 1934, as
     amended (the "1934 Act"), or state securities laws.

          (xviii) Possession of Licenses and Permits. The Fund possesses or will
     obtain as of the Closing Time such permits, licenses, approvals, consents
     and other authorizations (collectively, "Governmental Licenses") issued by
     the appropriate federal, state, local or foreign regulatory agencies or
     bodies necessary to operate its properties and to conduct the business as
     contemplated in the Prospectus, except where the absence of such possession
     would not result in a Material Adverse Effect; the Fund is in compliance
     with the terms and conditions of all such Governmental Licenses, except
     where the failure so to comply would not, singly or in the aggregate, have
     a Material Adverse Effect; all of the Governmental Licenses are valid and
     in full force and effect, except when the invalidity of such Governmental
     Licenses or the failure of such Governmental Licenses to be in full force
     and effect would not have a Material Adverse Effect; and the Fund has not
     received any notice of proceedings relating to the revocation or
     modification of any such Governmental Licenses which, if the subject of an
     unfavorable decision, ruling or finding, would, singly or in the aggregate,
     result in a Material Adverse Effect.

          (xix) Advertisements. Any advertising, sales literature or other
     promotional material (including "prospectus wrappers," "broker kits," "road
     show slides" and "road show scripts" and "electronic road show
     presentations") authorized in writing by or prepared by the Fund or PAFM
     used in connection with the public offering of the AMPS (collectively,
     "sales material") does not contain an untrue statement of a material fact
     or omit to state a material fact required to be stated therein or necessary
     to make the statements therein, in light of the circumstances in which they
     were made, not misleading. Moreover, all sales material complied and will
     comply in all material respects with the applicable requirements of the
     1933 Act, the 1940 Act, the Rules and

                                       6

<PAGE>

     Regulations and the rules and interpretations of the National Association
     of Securities Dealers, Inc. ("NASD").

          (xx) Subchapter M. The Fund intends to direct the investment of the
     proceeds of the offering described in the Registration Statement in such a
     manner as to comply with the requirements of Subchapter M of the Internal
     Revenue Code of 1986, as amended ("Subchapter M of the Code" and the
     "Code," respectively), and intends to qualify as a regulated investment
     company under Subchapter M of the Code.

          (xxi) Distribution of Offering Materials. The Fund has not distributed
     and, prior to the later to occur of (A) the Closing Time and (B) completion
     of the distribution of the AMPS, will not distribute any offering material
     in connection with the offering and sale of the AMPS other than the
     Registration Statement, a preliminary prospectus, the Prospectus or other
     materials, if any, permitted by the 1933 Act or the 1940 Act or the Rules
     and Regulations.

          (xxii) Accounting Controls. The Fund maintains a system of internal
     accounting controls sufficient to provide reasonable assurances that (A)
     transactions are executed in accordance with management's general or
     specific authorization and with the applicable requirements of the 1940
     Act, the Rules and Regulations and the Code; (B) transactions are recorded
     as necessary to permit preparation of financial statements in conformity
     with generally accepted accounting principles and to maintain
     accountability for assets and to maintain compliance with the books and
     records requirements under the 1940 Act and the Rules and Regulations; (C)
     access to assets is permitted only in accordance with the management's
     general or specific authorization; and (D) the recorded accountability for
     assets is compared with existing assets at reasonable intervals and
     appropriate action is taken with respect to any differences.

          (xxiii) Absence of Undisclosed Payments. To the Fund's knowledge,
     neither the Fund nor any employee or agent of the Fund has made any payment
     of funds of the Fund or received or retained any funds, which payment,
     receipt or retention of funds is of a character required to be disclosed in
     the Prospectus.

          (xxiv) Material Agreements. This Agreement, the Investment Management
     Agreement, the Custodian Agreement, the Transfer Agency and Services
     Agreement and the Auction Agency Agreement have each been duly authorized
     by all requisite action on the part of the Fund and executed and delivered
     by the Fund, as of the dates noted therein, and each complies with all
     applicable provisions of the 1940 Act in all material respects. Assuming
     due authorization, execution and delivery by the other parties thereto with
     respect to the Investment Management Agreement, the Custodian Agreement,
     the Transfer Agency and Services Agreement and the Auction Agency
     Agreement, each of the Management Agreement, the Custodian Agreement, the
     Transfer Agency and Services Agreement and the Auction Agency Agreement
     constitutes a valid and binding agreement of the Fund, enforceable in
     accordance with its terms, except as affected by bankruptcy, insolvency,
     fraudulent conveyance, reorganization, moratorium and other similar laws
     relating to or affecting creditors' rights generally, general equitable
     principles (whether considered in a proceeding in equity or at law) and an
     implied covenant of good faith and fair dealing and except as rights to
     indemnification or contribution thereunder may be limited by federal or
     state laws.

          (xxv) Registration Rights. There are no persons with registration
     rights or other similar rights to have any securities of the Fund
     registered pursuant to the Registration Statement or otherwise registered
     by the Fund under the 1933 Act.

                                       7

<PAGE>

          (xxvi) Ratings. The AMPS have been, or prior to the Closing Date will
     be, assigned a rating of "Aaa" by Moody's Investors Service, Inc.
     ("Moody's") and "AAA" by Fitch Ratings, Inc. ("Fitch").

          (xxvii) Leverage. The Fund has no liability for borrowed money,
     including under any reverse repurchase agreements.

(b)  Representations and Warranties by PAFM. PAFM represents and warrants to
     each Underwriter on behalf of itself and, where applicable, PIMCO, and in
     the case of paragraph (iii) below also represents to the Fund, as of the
     date hereof, and as of the Closing Time referred to in Section 2(c) hereof
     as follows:

               (i) Good Standing of the Managers. PAFM has been duly organized
          and is validly existing and in good standing as a limited liability
          company under the laws of the State of Delaware, and PIMCO has been
          duly organized and is validly existing and in good standing as a
          limited liability company under the laws of the State of Delaware with
          full limited liability company power and authority to own, lease and
          operate its properties and to conduct its business as described in the
          Prospectus, and each is duly qualified as a foreign limited liability
          company to transact business and is in good standing in each other
          jurisdiction in which such qualification is required, except to the
          extent that failure to be so qualified and in good standing would not
          have a material adverse effect on either Manager's ability to provide
          services to the Fund.

               (ii) Investment Manager Status. Each of the Managers is duly
          registered with the Commission as an investment adviser under the
          Advisers Act, the Commission has not issued to either Manager any
          notice of any hearing or other proceeding to consider suspension or
          revocation of such registration, and neither Manager is prohibited by
          the Advisers Act or the 1940 Act, or the rules and regulations under
          such acts, from acting under the Management Agreement for the Fund as
          contemplated by the Prospectus.

               (iii) Description of the Managers. The description of the
          Managers in the Registration Statement and the Prospectus (and any
          amendment or supplement to either of them) complied and complies in
          all material respects with the provisions of the 1933 Act, the 1940
          Act, the Advisers Act, the Rules and Regulations and the Advisers Act
          Rules and Regulations and is true and correct and does not contain any
          untrue statement of a material fact or omit to state any material fact
          required to be stated therein or necessary in order to make the
          statements therein, in light of the circumstances under which they
          were made, not misleading.

               (iv) Capitalization. Each of the Managers has the financial
          resources available to it necessary for the performance of its
          services and obligations as contemplated in the Prospectus, this
          Agreement and under the Investment Management Agreement or Portfolio
          Management Agreement to which it is a party.

               (v) Authorization of Agreements; Absence of Defaults and
          Conflicts. This Agreement, the Investment Management Agreement and the
          Portfolio Management Agreement have each been duly authorized,
          executed and delivered by each Manager that is a party thereto, and
          (assuming the due authorization, execution and delivery by each of the
          parties thereto) the Investment Management Agreement and the Portfolio
          Management Agreement each constitutes a valid and binding obligation
          of each respective Manager that is a party thereto, enforceable
          against it in accordance with its terms, except as affected by
          bankruptcy, insolvency, fraudulent conveyance, reorganization,
          moratorium and other similar laws relating to or affecting creditors'
          rights generally and general equitable principles (whether considered
          in a proceeding in equity or at law); and neither the execution and
          delivery of this Agreement, the Investment Management Agreement and
          the Portfolio Management Agreement nor the performance by either of
          the

                                       8

<PAGE>

          Managers of its obligations hereunder or thereunder will conflict
          with, or result in a breach of any of the terms and provisions of, or
          constitute, with or without the giving of notice or lapse of time or
          both, a default under, any agreement or instrument to which either
          Manager is a party or by which it is bound, the certificate of
          formation, the operating agreement, or other organizational documents
          of the Managers, or to each Manager's knowledge, by any law, order,
          decree, rule or regulation applicable to it of any jurisdiction,
          court, federal or state regulatory body, administrative agency or
          other governmental body, stock exchange or securities association
          having jurisdiction over the Managers or their respective properties
          or operations; and no consent, approval, authorization or order of any
          court or governmental authority or agency is required for the
          consummation by the Managers of the transactions contemplated by, as
          applicable, this Agreement, the Investment Management Agreement and
          the Portfolio Management Agreement except as have been obtained or may
          be required under the 1933 Act, the 1940 Act, the 1934 Act or state
          securities laws.

               (vi) No Material Adverse Change. Since the respective dates as of
          which information is given in the Registration Statement and the
          Prospectus, except as otherwise stated therein, there has not occurred
          any event which should reasonably be expected to have a material
          adverse effect on the ability of either Manager to perform its
          respective obligations under this Agreement and the respective
          Investment Management Agreement and Portfolio Management Agreement to
          which it is a party.

               (vii) Absence of Proceedings. There is no action, suit,
          proceeding, inquiry or investigation before or brought by any court or
          governmental agency or body, domestic or foreign, now pending, or, to
          the knowledge of either Manager, threatened against or affecting such
          Manager or any "affiliated person" (as such term is defined in the
          1940 Act) of such Manager or any partners, members, directors,
          officers or employees of the foregoing, whether or not arising in the
          ordinary course of business, which might reasonably be expected to
          result in any material adverse change in the condition, financial or
          otherwise, or earnings, business affairs or business prospects of the
          relevant Manager, materially and adversely affect the properties or
          assets of the relevant Manager or materially impair or adversely
          affect the ability of the relevant Manager to function as an
          investment manager or sub-adviser, as applicable, or perform its
          obligations under the Investment Management Agreement or the Portfolio
          Management Agreement, or which is required to be disclosed in the
          Registration Statement and the Prospectus and has not been so
          disclosed.

               (viii) Absence of Violation or Default. Neither Manager is in
          violation of its certificate of formation, its operating agreement or
          other organizational documents or in default under any agreement,
          indenture or instrument, where such violation or default would
          reasonably be expected to have a material adverse effect on either
          Manager's ability to function as an investment adviser or perform its
          obligations under the Management Agreement or Portfolio Management
          Agreement, as applicable.

     (c) Officer's Certificates. Any certificate signed by any officer of the
Fund or a Manager delivered to the Representative or to counsel for the
Underwriters shall be deemed a representation and warranty by the Fund or the
relevant Manager, as the case may be, to each Underwriter as to the matters
covered thereby.

     SECTION 2. Sale and Delivery to Underwriters; Closing.

     (a) AMPS. On the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the Fund
agrees to sell to each Underwriter, severally and not jointly, and each
Underwriter, severally and not jointly, agrees to purchase from the Fund, at the
price per share set forth in Schedule B, the number of AMPS set forth in
Schedule A opposite the name of such

                                       9

<PAGE>

Underwriter, plus any additional number of AMPS which such Underwriter may
become obligated to purchase pursuant to the provisions of Section 10 hereof.

     (b) Commission. The Fund agrees to pay to the Underwriters a commission,
set forth in Schedule B, as compensation to the Underwriters for their
commitments under this Agreement.

     (c) Payment. Payment of the purchase price for, and delivery of
certificates for, the AMPS shall be made at the offices of Clifford Chance US
LLP, 200 Park Avenue, New York, New York 10166 or at such other place as shall
be agreed upon by the Representative and the Fund, at 10:00 A.M. (Eastern time)
on the third (fourth, if the pricing occurs after 4:30 P.M. (Eastern time) on
any given day) business day after the date hereof (unless postponed in
accordance with the provisions of Section 10), or such other time not later than
ten business days after such date as shall be agreed upon by the Representative
and the Fund (such time and date of payment and delivery being herein called
"Closing Time").

     Payment shall be made to the Fund by wire transfer of immediately available
funds to a bank account designated by the Fund, against delivery to the
Representative for the respective accounts of the Underwriters of certificates
for the AMPS to be purchased by them. It is understood that each Underwriter has
authorized the Representative, for its account, to accept delivery of and
receipt for, and make payment of the purchase price for the AMPS it has agreed
to purchase. Merrill Lynch, individually and not as representative of the
Underwriters, may (but shall not be obligated to) make payment of the purchase
price for the AMPS to be purchased by any Underwriter whose funds have not been
received by the Closing Time, but such payment shall not relieve such
Underwriter from its obligations hereunder.

     (d) Denominations; Registration. Certificates for the AMPS, each
representing one series thereof, shall be registered in the name of Cede & Co.,
as nominee for the Depository Trust Company. The certificates for the AMPS will
be made available for examination and packaging by the Representative in the
City of New York not later than 10:00 A.M. (Eastern time) on the business day
prior to the Closing Time.

     SECTION 3. Covenants.

     (a) The Fund and PAFM, jointly and severally, covenant with each
Underwriter and with respect to 3(c) the Underwriters, severally and not
jointly, covenant with the Fund and the Managers, as follows:

          (i) Compliance with Securities Regulations and Commission Requests.
     With respect to the offering of the AMPS, the Fund, subject to Section
     3(a)(ii), will comply with the requirements of Rule 430A or Rule 434, as
     applicable, and will notify the Representative immediately, and confirm the
     notice in writing, (i) when any post-effective amendment to the
     Registration Statement shall become effective, or any supplement to the
     Prospectus or any amended Prospectus shall have been filed, (ii) of the
     receipt of any comments from the Commission, (iii) of any request by the
     Commission for any amendment to the Registration Statement or any amendment
     or supplement to the Prospectus or for additional information, and (iv) of
     the issuance by the Commission of any stop order suspending the
     effectiveness of the Registration Statement or of any order preventing or
     suspending the use of any preliminary prospectus, or of the suspension of
     the qualification of the AMPS for offering or sale in any jurisdiction, or
     of the initiation or, to the knowledge of the Fund or PAFM, threatening of
     any proceedings for any of such purposes. The Fund will promptly effect the
     filings necessary pursuant to Rule 497 and will take such steps as it deems
     necessary to ascertain promptly whether the form of prospectus transmitted
     for filing under Rule 497 was received for filing by the Commission and, in
     the event that it was not, it will promptly file such prospectus. The Fund
     will make every reasonable effort to prevent the issuance of any stop
     order, or order of suspension or revocation of registration pursuant to
     Section 8(e) of the 1940 Act, and, if any such stop order or


                                       10

<PAGE>

     order of suspension or revocation of registration is issued, to obtain the
     lifting thereof at the earliest possible moment.

          (ii) Filing of Amendments. With respect to the offering of the AMPS,
     the Fund will give the Representative notice of its intention to file or
     prepare any amendment to the Registration Statement (including any filing
     under Rule 462(b)), any Term Sheet or any amendment, supplement or revision
     to either the prospectus included in the Registration Statement at the time
     it became effective or to the Prospectus, will furnish the Representative
     with copies of any such documents a reasonable amount of time prior to such
     proposed filing or use, as the case may be, and will not file or use any
     such document to which the Representative or counsel for the Underwriters
     shall reasonably object.

          (iii) Delivery of Registration Statements. The Fund has furnished or
     will deliver upon request to the Representative and counsel for the
     Underwriters, without charge, signed copies of the Registration Statement
     as originally filed and of each amendment thereto (including exhibits filed
     therewith or incorporated by reference therein) and signed copies of all
     consents and certificates of experts, and will also deliver to the
     Representative, without charge, a conformed copy of the Registration
     Statement as originally filed and of each amendment thereto (without
     exhibits) for each of the Underwriters. The copies of the Registration
     Statement and each amendment thereto furnished to the Underwriters will be
     identical to the electronically transmitted copies thereof filed with the
     Commission pursuant to EDGAR, except to the extent permitted by Regulation
     S-T. No copy of a post-effective amendment shall be required to be
     delivered after one year from the date hereof.

          (iv) Delivery of Prospectuses. The Fund has delivered to each
     Underwriter, without charge, as many copies of each preliminary prospectus
     as such Underwriter reasonably requested, and the Fund hereby consents to
     the use of such copies for purposes permitted under the 1933 Act. The Fund
     will furnish to each Underwriter, without charge, during the period when
     the Prospectus is required to be delivered by an underwriter or dealer
     under the 1933 Act, such number of copies of the Prospectus (as amended or
     supplemented) as such Underwriter may reasonably request. The Prospectus
     and any amendments or supplements thereto furnished to the Underwriters
     will be identical to the electronically transmitted copies thereof filed
     with the Commission pursuant to EDGAR, except to the extent permitted by
     Regulation S-T.

          (v) Continued Compliance with Securities Laws. If at any time when a
     prospectus is required by the 1933 Act to be delivered in connection with
     sales of the AMPS, any event shall occur or condition shall exist as a
     result of which it is necessary, in the reasonable opinion of counsel for
     the Underwriters or for the Fund, to amend the Registration Statement or
     amend or supplement the Prospectus in order that the Prospectus will not
     include any untrue statements of a material fact or omit to state a
     material fact necessary in order to make the statements therein not
     misleading in the light of the circumstances existing at the time it is
     delivered to a purchaser, or if it shall be necessary, in the reasonable
     opinion of such counsel, at any such time to amend the Registration
     Statement or amend or supplement the Prospectus in order to comply with the
     requirements of the 1933 Act or the Rules and Regulations, the Fund will
     promptly prepare and file with the Commission, subject to Section 3(a)(ii),
     such amendment or supplement as may be necessary to correct such statement
     or omission or to make the Registration Statement or the Prospectus comply
     with such requirements, and the Fund will furnish to the Underwriters such
     number of copies of such amendment or supplement as the Underwriters may
     reasonably request; provided that, if the supplement or amendment is
     required as a result of a misstatement in or omission from the information
     provided to the Fund in writing by the Underwriters expressly for use in
     the Prospectus, the Fund may deliver such supplement or amendment to the
     Underwriters and dealers at a reasonable charge not to exceed the actual
     cost thereof to the Fund.


                                       11

<PAGE>

          (vi) Blue Sky Qualifications. The Fund will use its best efforts, in
     cooperation with the Underwriters, to qualify the AMPS for offering and
     sale under the applicable securities laws of such states and other
     jurisdictions of the United States as the Representative may designate and
     to maintain such qualifications in effect for a period of not less than one
     year from the later of the effective date of the Registration Statement and
     any Rule 462(b) Registration Statement; provided, however, that the Fund
     shall not be obligated to file any general consent to service of process or
     to qualify as a foreign business trust or as a dealer in securities in any
     jurisdiction in which it is not so qualified or to subject itself to
     taxation in respect of doing business in any jurisdiction in which it is
     not otherwise so subject. In each jurisdiction in which the AMPS have been
     so qualified, the Fund will file such statements and reports, if any, as
     may be required by the laws of such jurisdiction to continue such
     qualification in effect for a period of not less than one year from the
     effective date of the Registration Statement and any Rule 462(b)
     Registration Statement.

          (vii) Rule 158. The Fund will make generally available to its
     securityholders as soon as practicable an earnings statement, if
     applicable, for the purposes of, and to provide the benefits contemplated
     by, the last paragraph of Section 11(a) of the 1933 Act.

          (viii) Use of Proceeds. The Fund will use the net proceeds received by
     it from the sale of the AMPS substantially in the manner specified in the
     Prospectus under "Use of Proceeds".

          (ix) Reporting Requirements. The Fund, during the period when the
     Prospectus is required to be delivered under the 1933 Act, will file all
     documents required to be filed with the Commission pursuant to the 1940 Act
     and the 1934 Act within the time periods required by the 1940 Act and the
     Rules and Regulations and the 1934 Act and the rules and regulations of the
     Commission thereunder, respectively.

          (x) Subchapter M. The Fund will use its best efforts to comply with
     the requirements of Subchapter M of the Code to qualify as a regulated
     investment company under the Code.

          (xi) No Manipulation of Market for AMPS. The Fund will not (a) take,
     directly or indirectly, any action designed to cause or to result in, or
     that might reasonably be expected to constitute, the stabilization (as
     defined in Regulation M under the 1934 Act) or manipulation of the price of
     any security of the Fund to facilitate the sale or resale of the AMPS in
     violation of federal or state securities laws, and (b) except for share
     repurchases permitted in accordance with applicable laws and purchases of
     AMPS in connection with the Fund's dividend reinvestment plan, until the
     Closing Date, if any, (i) sell, bid for or purchase the AMPS or pay any
     person any compensation for soliciting purchases of the AMPS or (ii) pay or
     agree to pay to any person any compensation for soliciting another to
     purchase any other AMPS of the Fund.

          (xii) Rule 462(b) Registration Statement. If the Fund elects to rely
     upon Rule 462(b), the Fund shall file a Rule 462(b) Registration Statement
     with the Commission in compliance with Rule 462(b) by 10:00 P.M.,
     Washington, D.C. time, on the date of this Agreement, or as soon thereafter
     as practicable, and the Fund shall at the time of filing either pay to the
     Commission the filing fee for the Rule 462(b) Registration Statement or
     give irrevocable instructions for the payment of such fee pursuant to Rule
     111(b) under the 1933 Act.

     (b) Except as provided in this Agreement, the Fund will not sell, contract
to sell or otherwise dispose of any of its preferred shares of beneficial
interest of the same series as the AMPS or any securities convertible into or
exercisable or exchangeable for its preferred shares of beneficial interest of
the same series as the AMPS, or grant any options or warrants to purchase its
preferred shares of beneficial interest of the same series as the AMPS, for a
period of 180 days after the date of the Prospectus, without the prior written
consent of Merrill Lynch.


                                       12

<PAGE>

     (c) No later than the Closing Time, the Underwriters will provide, and will
cause any selling group member to whom they have sold AMPS to provide, Deutsche
Bank Trust Company Americas, as auction agent for the AMPS (the "Auction
Agent"), with a list of the record names of the persons to whom they have sold
AMPS, the number of AMPS sold to each such person, and the number of AMPS they
are holding as of the Closing Date; provided that in lieu thereof, an
Underwriter may provide the Auction Agent with a list indicating itself as the
sole holder of all the AMPS sold by such Underwriter.

     SECTION 4. Payment of Expenses.

     (a) Expenses. The Fund will pay all expenses incident to the performance of
its obligations under this Agreement, including (i) the preparation, printing
and filing of the Registration Statement (including financial statements and
exhibits) as originally filed and of each amendment thereto, (ii) the reasonable
costs of the preparation, printing and delivery to the Underwriters of this
Agreement, any Agreement among Underwriters and such other documents as may be
required in connection with the offering, purchase, sale, issuance or delivery
of the AMPS, (iii) the preparation, issuance and delivery of the certificates
for the AMPS to the Underwriters, including any stock or other transfer taxes
and any stamp or other duties payable upon the sale, issuance or delivery of the
AMPS to the Underwriters, (iv) the fees and disbursements of the Fund's counsel,
accountants and other advisers, (v) the qualification of the AMPS under
securities laws in accordance with the provisions of Section 3(a)(vi) hereof,
including filing fees and the reasonable fees and disbursements of counsel for
the Underwriters in connection therewith and in connection with the preparation
of the Blue Sky survey (if applicable) and any supplement thereto, (vi) the
printing and delivery to the Underwriters of copies of each preliminary
prospectus, Prospectus and any amendments or supplements thereto, (vii) the
preparation, printing and delivery to the Underwriters of copies of any Blue Sky
survey and any supplement thereto, and (viii) the fees and expenses of any
transfer agent or registrar for the AMPS.

     (b) Termination of Agreement. If this Agreement is terminated by the
Representative in accordance with the provisions of Section 5 or Section 9(a)(i)
hereof, the Fund and PAFM, jointly and severally, agree that they shall
reimburse the Underwriters for all of their reasonable out-of-pocket expenses
arising out of this Agreement, including the fees and disbursements of counsel
for the Underwriters.

     SECTION 5. Conditions of Underwriters' Obligations.

     The obligations of the several Underwriters hereunder are subject to the
accuracy of the representations and warranties of the Fund and PAFM contained in
Section 1 hereof or in certificates of any officer of the Fund or PAFM delivered
pursuant to the provisions hereof, to the performance by the Fund and PAFM of
their respective covenants and other obligations hereunder, and to the following
further conditions:

     (a) Effectiveness of Registration Statement. The Registration Statement,
including any Rule 462(b) Registration Statement, has become effective and at
Closing Time no stop order suspending the effectiveness of the Registration
Statement shall have been issued under the 1933 Act, no notice or order pursuant
to Section 8(e) of the 1940 Act shall have been issued, and no proceedings with
respect to either shall have been initiated or, to the knowledge of counsel to
the Fund and counsel to PAFM, threatened by the Commission, and any request on
the part of the Commission for additional information shall have been complied
with or waived to the reasonable satisfaction of counsel to the Underwriters. A
prospectus containing the Rule 430A Information shall have been filed with the
Commission in accordance with Rule 497 (or a post-effective amendment providing
such information shall have been filed and declared effective in accordance with
the requirements of Rule 430A or a certification must have been filed in
accordance with Rule 497(j)) or, if the Fund has elected to rely upon Rule 434,
a Term Sheet shall have been filed with the Commission in accordance with Rule
497.


                                       13

<PAGE>

     (b) Opinion of Counsel for the Fund and the Managers. At Closing Time, the
Representative shall have received the favorable opinions, dated as of Closing
Time, of Ropes & Gray LLP, counsel for the Fund and Newton B. Schott, Jr., Esq.,
internal counsel for PAFM, in form and substance satisfactory to counsel for the
Underwriters, together with signed or reproduced copies of such letters for each
of the other Underwriters substantially to the effect set forth in Exhibits A-1
and A-2 hereto, respectively, or in such other form and substance as may be
reasonably satisfactory to the Underwriters. Such counsel may state that,
insofar as such opinion involves factual matters, they have relied, to the
extent they deem proper, upon certificates of officers of the Fund and
certificates of public officials.


     (c) Opinion of Counsel for Underwriters. At Closing Time, the
Representative shall have received the favorable opinion, dated as of Closing
Time, of Clifford Chance US LLP, counsel for the Underwriters, together with
signed or reproduced copies of such letter for each of the other Underwriters
with respect to the matters set forth in clauses (A) (i), (iv), (vi), (xiv) and
the third to last paragraph of Exhibit A hereto. In giving such opinion such
counsel may rely, as to all matters governed by the laws of jurisdictions other
than the law of the State of New York and the federal law of the United States,
upon the opinions of counsel satisfactory to the Representative. Such counsel
may also state that, insofar as such opinion involves factual matters, they have
relied, to the extent they deem proper, upon certificates of officers of the
Fund and certificates of public officials.


     (d) Officers' Certificates. At Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information is
given in the Prospectus, any material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business prospects of the
Fund, whether or not arising in the ordinary course of business, and the
Representative shall have received (A) a certificate of a duly authorized
officer of the Fund and of the chief financial or chief accounting officer of
the Fund and of the President or a Vice President or Managing Director of PAFM,
dated as of Closing Time, to the effect that (i) there has been no such material
adverse change, (ii) the representations and warranties in Sections 1(a) and (b)
hereof, as applicable, are true and correct with the same force and effect as
though expressly made at and as of Closing Time, (iii) each of the Fund and the
Managers, respectively, has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied pursuant to this Agreement
at or prior to Closing Time, and (iv) with respect to the Fund only, no stop
order suspending the effectiveness of the Registration Statement, or order of
suspension or revocation of registration pursuant to Section 8(e) of the 1940
Act, has been issued with respect to the Fund and no proceedings for any such
purpose have been instituted or are pending or are contemplated by the
Commission and (B) a certificate of the President or a Vice President or
Managing Director of PIMCO, dated as of Closing Time, to the effect that (i) the
description of PIMCO and its business, and the statements attributable to PIMCO
in the Registration Statement (and any amendment or supplement thereto) under
the headings "Prospectus Summary--Portfolio Manager," "Management of the Fund"
and "Investment Manager and Portfolio Manager," at the time such Registration
Statement became effective, were true and correct and did not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein not
misleading or (ii) the description of PIMCO and its business, and the statements
attributable to PIMCO in the Prospectus (and any amendment or supplement
thereto) under the headings "Prospectus Summary--Portfolio Manager" and
"Management of the Fund," at the time the Prospectus was issued, were true and
correct and did not, or at the Closing Time are true and correct and do not,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.

     (e) Accountant's Comfort Letter. At the time of the execution of this
Agreement, the Representative shall have received from PricewaterhouseCoopers
LLP a letter dated such date, in form


                                       14

<PAGE>

and substance satisfactory to the Representative, together with signed or
reproduced copies of such letter for each of the other Underwriters containing
statements and information of the type ordinarily included in accountants'
"comfort letters" to underwriters with respect to the financial statements and
certain financial information contained in the Registration Statement and the
Prospectus.

     (f) Bring-down Comfort Letter. At Closing Time, the Representative shall
have received from PricewaterhouseCoopers LLP a letter, dated as of Closing
Time, to the effect that they reaffirm the statements made in the letter
furnished pursuant to subsection (e) of this Section, except that the specified
date referred to shall be a date not more than three business days prior to
Closing Time.

     (g) Rating. The Fund shall have delivered and the Representative shall have
received evidence satisfactory to the Representative that the AMPS are rated
`Aaa' by Moody's and "AAA" by Fitch as of the Closing Date, and there shall not
have been given any notice of any intended or potential downgrading, or of any
review for a potential downgrading, in the rating accorded to the AMPS by
Moody's or Fitch.

     (h) Asset Coverage. As of the Closing Time and assuming the receipt of the
net proceeds from the sale of the AMPS, the 1940 Act Preferred Shares Asset
Coverage and the Preferred Shares Basic Maintenance Amount (each as defined in
the Declaration) each will be met. For purposes of this Section 5(h), the Trust
may use portfolio holdings and valuations as of the close of business of any day
not more than 48 hours (not including Sundays or holidays) preceding the Closing
Time.

     (i) Additional Documents. At Closing Time, counsel for the Underwriters
shall have been furnished with opinions, certificates and other documents as
they may reasonably require from the Fund and the Managers for the purpose of
enabling them to pass upon the issuance and sale of the AMPS as herein
contemplated, or in order to evidence the accuracy of any of the representations
or warranties, or the fulfillment of any of the conditions, herein contained;
and all proceedings taken by the Fund and the Managers in connection with the
organization and registration of the Fund under the 1940 Act and the issuance
and sale of the AMPS as herein contemplated shall be reasonably satisfactory in
form and substance to the Representative and counsel for the Underwriters.

     (j) Termination of Agreement. If any condition specified in this Section
shall not have been fulfilled when and as required to be fulfilled, this
Agreement may be terminated by the Representative by notice to the Fund at any
time at or prior to Closing Time, and such termination shall be without
liability of any party to any other party except as provided in Section 4 and
except that Sections 1, 6, 7, 8 and 13 shall survive any such termination and
remain in full force and effect.

     SECTION 6. Indemnification.

     (a) Indemnification of Underwriters. The Fund and PAFM, jointly and
severally, agree to indemnify and hold harmless each Underwriter and each
person, if any, who controls any Underwriter within the meaning of Section 15 of
the 1933 Act or Section 20 of the 1934 Act, and any director, officer, employee
or affiliate thereof as follows:

          (i) against any and all loss, liability, claim, damage and expense
     whatsoever, as incurred, arising out of any untrue statement or alleged
     untrue statement of a material fact contained in the Registration Statement
     (or any amendment thereto), including the Rule 430A Information and the
     Rule 434 Information, if applicable, or the omission or alleged omission
     therefrom of a material fact required to be stated therein or necessary to
     make the statements therein not misleading or arising out of any untrue
     statement or alleged untrue statement of a material fact included in any
     preliminary prospectus or the Prospectus (or any amendment or supplement
     thereto), or the omission or alleged omission therefrom of a material fact
     necessary in order to make the statements therein, in the light of the
     circumstances under which they were made, not misleading;

                                       15

<PAGE>

          (ii) against any and all loss, liability, claim, damage and expense
     whatsoever, as incurred, to the extent of the aggregate amount paid in
     settlement of any litigation, or any investigation or proceeding by any
     governmental agency or body, commenced or threatened, or of any claim
     whatsoever based upon any such untrue statement or omission, or any such
     alleged untrue statement or omission; provided that (subject to Section
     6(e) below) any such settlement is effected with the prior written consent
     of the Fund and PAFM; and

          (iii) against any and all expense whatsoever, as incurred and as
     reasonably incurred (including the reasonable fees and disbursements of
     counsel chosen by Merrill Lynch), in investigating, preparing or defending
     against any litigation, or any investigation or proceeding by any
     governmental agency or body, commenced or threatened, or any claim
     whatsoever based upon any such untrue statement or omission, or any such
     alleged untrue statement or omission, to the extent that any such expense
     is not paid under (i) or (ii) above;

provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Fund or either
Manager by any Underwriter through Merrill Lynch expressly for use in the
Registration Statement (or any amendment thereto), including the Rule 430A
Information and the Rule 434 Information, if applicable, or any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto); provided,
further, that the indemnity agreement contained in this Section 6(a) shall not
inure to the benefit of any Underwriter (or to the benefit of any person
controlling such Underwriter) from whom the person asserting any such loss,
liability, claim, damage and expense purchased the AMPS which are the subject
thereof if the Prospectus (as amended or supplemented if the Fund shall have
furnished any amendments or supplements thereto) corrected any such alleged
untrue statement or omission and if such Prospectus was delivered to such
Underwriter in a timely manner and if such Underwriter failed to send or give a
copy of the Prospectus (as so amended or supplemented) to such person at or
prior to the written confirmation of the sale of such AMPS to such person.

     (b) Indemnification of Fund, PAFM, Trustees, Directors and Officers. Each
Underwriter severally agrees to indemnify and hold harmless the Fund, PIMCO and
PAFM, their respective directors, members, shareholders, partners and trustees,
each of the Fund's officers who signed the Registration Statement, and each
person, if any, who controls the Fund or PAFM within the meaning of Section 15
of the 1933 Act or Section 20 of the 1934 Act against any and all loss,
liability, claim, damage and expense described in the indemnity contained in
subsection (a) of this Section, as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions, made in the
Registration Statement (or any amendment thereto), including the Rule 430A
Information and the Rule 434 Information, if applicable, or any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto) in
reliance upon and in conformity with written information furnished to the Fund
or PAFM by such Underwriter through Merrill Lynch expressly for use in the
Registration Statement (or any amendment thereto), including the Rule 430A
Information and the Rule 434 Information or such preliminary prospectus or the
Prospectus (or any amendment or supplement thereto).

     (c) Indemnification for Marketing Materials. In addition to the foregoing
indemnification, the Fund and PAFM also, jointly and severally, agree to
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act, against any and all loss, liability, claim, damage
and expense described in the indemnity contained in Section 6(a), as limited by
the provisos set forth therein, with respect to any sales material created by
the Fund for use in connection with the offering and sale of the AMPS, but only
if such sales materials are used in accordance with any instructions provided by
the Fund or set forth in such sales materials; provided, however, that neither
Fund nor PAFM will be liable to any Underwriter with respect to any sales
material to the extent that the Fund and PAFM shall sustain the burden of

                                       16

<PAGE>

proving that any such loss, liability, claim, damage or expense resulted from
the fact that such Underwriter, in contravention of a requirement of this
Agreement or applicable law, sold AMPS to a person to whom such Underwriter
failed to send or give, at or prior to the Closing Time, a copy of the
Prospectus, as then amended or supplemented if: (i) the Fund or either Manager
had previously furnished copies thereof (sufficiently in advance of the Closing
Time to allow for distribution by the Closing Time) to the Underwriter and the
loss, liability, claim, damage or expense of such Underwriter resulted from an
untrue statement or omission of a material fact contained in or omitted from
such sales material which was corrected in the Prospectus as, if applicable,
amended or supplemented prior to the Closing Time and such Prospectus was
required by law to be delivered at or prior to the written confirmation of sale
to such person and (ii) such failure to give or send such Prospectus by the
Closing Time to the party or parties asserting such loss, liability, claim,
damage or expense would have constituted a defense to the claim asserted by such
person.

     (d) Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 6(a) above,
counsel to the indemnified parties shall be selected by Merrill Lynch, and, in
the case of parties indemnified pursuant to Section 6(b) above, counsel to the
indemnified parties shall be selected by the Fund and PAFM. An indemnifying
party may participate at its own expense in the defense of any such action;
provided, however, that counsel to the indemnifying party shall not (except with
the consent of the indemnified party) also be counsel to the indemnified party.
In no event shall the indemnifying parties be liable for fees and expenses of
more than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. No indemnifying party shall,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 6 or Section
7 hereof (whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.

     (e) Settlement without Consent if Failure to Reimburse. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for reasonable fees and expenses of counsel, such indemnifying
party agrees that it shall be liable for any settlement of the nature
contemplated by Section 6(a)(ii) effected without its written consent if (i)
such settlement is entered into more than 60 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party shall
have received notice of the terms of such settlement at least 30 days prior to
such settlement being entered into and (iii) such indemnifying party shall not
have reimbursed such indemnified party in accordance with such request prior to
the date of such settlement.

     (f) Indemnification or Contribution by the Fund. Any indemnification or
contribution by the Fund shall be subject to the requirements and limitations of
Section 17(i) of the 1940 Act.

     SECTION 7. Contribution.

     If the indemnification provided for in Section 6 hereof is for any reason
unavailable to or insufficient to hold harmless an indemnified party in respect
of any losses, liabilities, claims, damages or


                                       17

<PAGE>

expenses referred to therein, then, in lieu of indemnifying such indemnified
party, each indemnifying party shall contribute to the aggregate amount of such
losses, liabilities, claims, damages and expenses incurred by such indemnified
party, as incurred, (i) in such proportion as is appropriate to reflect the
relative benefits received by the Fund and/or PAFM on the one hand and the
Underwriters on the other hand from the offering of the AMPS pursuant to this
Agreement or (ii) if the allocation provided by clause (i) is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Fund and/or PAFM on the one hand and of the Underwriters on the other hand
in connection with the statements or omissions which resulted in such losses,
liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.

     The relative benefits received by the Fund and/or PAFM on the one hand and
the Underwriters on the other hand in connection with the offering of the AMPS
pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the AMPS pursuant to
this Agreement (before deducting expenses) received by the Fund and the total
underwriting discount received by the Underwriters (whether from the Fund or
otherwise), in each case as set forth on the cover of the Prospectus or, if Rule
434 is used, the corresponding location on the Term Sheet, bear to the aggregate
initial public offering price of the AMPS as set forth on such cover.

     The relative fault of the Fund and/or PAFM on the one hand and the
Underwriters on the other hand shall be determined by reference to, among other
things, whether any such untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Fund or PAFM or by the Underwriters and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.

     The Fund, PAFM and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 7. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 7 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.

     Notwithstanding the provisions of this Section 7, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the AMPS underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such Underwriter
has otherwise been required to pay by reason of any such untrue or alleged
untrue statement or omission or alleged omission.

     No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.

     For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter, and
each trustee and shareholder of the Fund and each director and member of PAFM,
respectively, each officer of the Fund who signed the Registration Statement,
and each person, if any, who controls the Fund or PAFM, within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same
rights to contribution as the Fund and PAFM, respectively. The Underwriters'
respective obligations to contribute pursuant to this Section 7 are several in
proportion to the number of AMPS set forth opposite their respective names in
Schedule A hereto and not joint.


                                       18

<PAGE>

     SECTION 8. Representations, Warranties and Agreements to Survive Delivery.

     All representations, warranties and agreements contained in this Agreement
or in certificates of officers of the Fund or the Managers submitted pursuant
hereto, shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter or controlling person, or
by or on behalf of the Fund or the Managers, and shall survive delivery of the
AMPS to the Underwriters.

     SECTION 9. Termination of Agreement.

     (a) Termination; General. The Representative may terminate this Agreement,
by notice to the Fund, at any time at or prior to Closing Time (i) if there has
been, since the time of execution of this Agreement or since the respective
dates as of which information is given in the Prospectus, any material adverse
change in the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Fund or the Managers, whether or not
arising in the ordinary course of business, or (ii) if there has occurred any
material adverse change in the financial markets in the United States or the
international financial markets, any outbreak of hostilities or escalation
thereof or other calamity or crisis or any change or development involving a
prospective change in national or international political, financial or economic
conditions, in each case the effect of which is such as to make it, in the
judgment of the Representative, impracticable or inadvisable to market the AMPS
or to enforce contracts for the sale of the AMPS, or (iii) if trading in the
common shares of the Fund has been suspended or materially limited by the
Commission or the New York Stock Exchange (the "NYSE"), or if trading generally
on the NYSE or the American Stock Exchange or in the Nasdaq National Market has
been suspended or materially limited, or minimum or maximum prices for trading
have been fixed, or maximum ranges for prices have been required, by any of said
exchanges or by such system or by order of the Commission, the NASD or any other
governmental authority, or a material disruption has occurred in commercial
banking or securities settlement or clearance services in the United States, or
(iv) if a banking moratorium has been declared by either Federal or New York
authorities.

     (b) Liabilities. If this Agreement is terminated pursuant to this Section,
such termination shall be without liability of any party to any other party
except as provided in Section 4 hereof, and provided further that Sections 1, 6,
7, 8 and 13 shall survive such termination and remain in full force and effect.

     SECTION 10. Default by One or More of the Underwriters.

     If one or more of the Underwriters shall fail at Closing Time to purchase
the AMPS which it or they are obligated to purchase under this Agreement (the
"Defaulted AMPS"), the Representative shall have the right, within 24 hours
thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less than all,
of the Defaulted AMPS in such amounts as may be agreed upon and upon the terms
herein set forth; if, however, the Representative shall not have completed such
arrangements within such 24-hour period, then:

     (a) if the number of Defaulted AMPS does not exceed 10% of the number of
AMPS to be purchased on such date, each of the non-defaulting Underwriters shall
be obligated, severally and not jointly, to purchase the full amount thereof in
the proportions that their respective underwriting obligations hereunder bear to
the underwriting obligations of all non-defaulting Underwriters, or

     (b) if the number of Defaulted AMPS exceeds 10% of the number of AMPS to be
purchased on such date, this Agreement shall terminate without liability on the
part of any non-defaulting Underwriter.

     No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.


                                       19

<PAGE>

     In the event of any such default which does not result in a termination of
this Agreement, either the Representative or the Fund shall have the right to
postpone the Closing Time for a period not exceeding seven days in order to
effect any required changes in the Registration Statement or Prospectus or in
any other documents or arrangements. As used herein, the term "Underwriter"
includes any person substituted for an Underwriter under this Section 10.

     SECTION 11. Tax Disclosure.

     Notwithstanding any other provision of this Agreement, from the
commencement of discussions with respect to the transactions contemplated
hereby, the Fund and its Managers (and each employee, representative or other
agent of the Fund) may disclose to any and all persons, without limitation of
any kind, the tax treatment and tax structure (as such terms are used in
Sections 6011, 6111 and 6112 of the U.S. Code and the Treasury Regulations
promulgated thereunder) of the transactions contemplated by this Agreement and
all materials of any kind (including opinions or other tax analyses) that are
provided relating to such tax treatment and tax structure.

     SECTION 12. Notices.

     All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given if mailed or transmitted by any standard
form of telecommunication. Notices to the Underwriters shall be directed to the
Representative, Merrill Lynch & Co., 4 World Financial Center, New York, New
York 10080, attention of Equity Capital Markets; and notices to the Fund or the
Managers shall be directed, as appropriate, to the office of PIMCO Advisors Fund
Management LLC, 1345 Avenue of the Americas, New York, New York 10105, attention
Brian Shlissel, with a copy to PIMCO Advisors Fund Management LLC, 2187 Atlantic
Street, Stamford, CT 06902, attention Newton B. Schott, Jr.

     SECTION 13. Parties.

     This Agreement shall inure to the benefit of and be binding upon each of
the Underwriters, the Fund, each Manager and their respective partners and
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Underwriters, the Fund, each Manager and their respective successors and the
controlling persons and shareholders, partners, members, directors, officers and
trustees referred to in Sections 6 and 7 and their heirs and legal
representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision herein contained. This Agreement and
all conditions and provisions hereof are intended to be for the sole and
exclusive benefit of the Underwriters, the Fund, each Manager and their
respective partners and successors, and said controlling persons and officers,
trustees, shareholders, members, partners and directors and their heirs and
legal representatives, and for the benefit of no other person, firm or
corporation. No purchaser of AMPS from any Underwriter shall be deemed to be a
successor by reason merely of such purchase.

     SECTION 14. GOVERNING LAW AND TIME.

     THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED
IN SAID STATE. UNLESS OTHERWISE EXPLICITLY PROVIDED, SPECIFIED TIMES OF DAY
REFER TO NEW YORK CITY TIME.

     SECTION 15. Effect of Headings.

     The Article and Section headings herein are for convenience only and shall
not affect the construction hereof.


                                       20

<PAGE>

     SECTION 15. Massachusetts Business Trust

     A copy of the Declaration is on file with the Secretary of the Commonwealth
of Massachusetts, and notice is hereby given that this Agreement is executed on
behalf of the Fund by an officer or trustee of the Fund in his or her capacity
as an officer or trustee of the Fund and not individually and that the
obligations of or arising out of this instrument are not binding upon any of the
trustees, officers or shareholders individually but are binding only upon the
assets and property of the Fund.


                                       21

<PAGE>

     If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us a counterpart hereof, whereupon this instrument,
along with all counterparts, will become a binding agreement among the
Underwriters, the Fund and PAFM in accordance with its terms.

                                          Very truly yours,

                                          PIMCO FLOATING RATE INCOME FUND


                                          By:
                                              ---------------------------------
                                              Name:
                                              Title:


                                          PIMCO ADVISORS FUND MANAGEMENT LLC


                                          By:
                                              ---------------------------------
                                              Name:
                                              Title:






CONFIRMED AND ACCEPTED,
as of the date first above written:

MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
             INCORPORATED

WACHOVIA CAPITAL MARKETS, LLC
A.G. EDWARDS & SONS, INC.
QUICK & REILLY, INC.

By: Merrill Lynch, Pierce, Fenner & Smith
                 Incorporated

By:
     -------------------------------------
     Authorized Signatory

For themselves and as
Representatives of the
other Underwriters named in
Schedule A hereto.



                                       22

<PAGE>

                                   SCHEDULE A
<TABLE>
<CAPTION>

                                                      Number of
              Name of Underwriter                       AMPS
              -------------------      -------------------------------------------
                                          Series T      Series W     Series TH
                                       -------------- ------------ ---------------
<S>                                    <C>             <C>           <C>

Merrill Lynch, Pierce, Fenner & Smith
            Incorporated
Wachovia Capital Markets, LLC
A.G. Edwards & Sons, Inc.
Quick & Reilly, Inc
                                       ============== ============ ===============
Totals                                     2,800         2,800         2,800
                                       -------------- ------------ ---------------
</TABLE>

--------------------------------------------------------------------------------

                                     Sch A-1

<PAGE>

                                   SCHEDULE B

                         PIMCO Floating Rate Income Fund

                 2,800 Auction Market Preferred Shares, Series T
                 2,800 Auction Market Preferred Shares, Series W
                2,800 Auction Market Preferred Shares, Series TH
                    Liquidation Preference $25,000 per Share

       1. The liquidation preference per share for the AMPS, determined as
provided in said Section 2, shall be $25,000.

       2. The purchase price per share for the AMPS to be paid by the several
Underwriters shall be $24,750, such discount from the liquidation preference
representing the commission to be paid to the Underwriters for their commitment
hereunder of $250.

       3. The initial dividend rate of the AMPS, Series T shall be % per annum.

       4. The initial dividend rate of the AMPS, Series W shall be % per annum.

       5. The initial dividend rate of the AMPS, Series TH shall be % per annum.

                                     Sch B-1

<PAGE>

                                                                     Exhibit A-1

                        FORM OF OPINION OF FUND'S COUNSEL
                    TO BE DELIVERED PURSUANT TO SECTION 5(b)

                                                                   ___, 2003

Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
            Incorporated
[other managing underwriters]
   c/o Merrill Lynch, Pierce, Fenner & Smith
                   Incorporated
   4 World Financial Center
   New York, New York 10080

Ladies and Gentlemen:

We have acted as counsel to PIMCO Floating Rate Income Fund (the "Fund") in
connection with the proposed issuance of its 2,800Auction Market Preferred
Shares, Series T, 2,800 Auction Market Preferred Shares, Series W, and 2,800
Auction Market Preferred Shares, Series TH (collectively, the "AMPS"). This
opinion is furnished to you pursuant to Section 5(b) of the Purchase Agreement
dated as of ___, 2003 (the "Purchase Agreement") among the Fund, PIMCO Advisors
Fund Management LLC (the "Manager") and Merrill, Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated and each of the other underwriters named in
Schedule A to the Purchase Agreement (collectively, the "Underwriters").
Capitalized terms used in this opinion, unless otherwise defined, have the
meanings specified in the Purchase Agreement.

We have examined signed copies of the registration statement of the Fund on Form
N-2 (File No. 333-108475) under the Securities Act of 1933, as amended (the
"Securities Act") (which also constitutes Amendment No. 3 to the Fund's
Registration Statement on Form N-2 (File No. 811-21374) under the Investment
Company Act of 1940, as amended (the "Investment Company Act"), including all
exhibits thereto, as filed with the Securities and Exchange Commission (the
"Commission") on September 3, 2003 (the "Original Registration Statement"),
Pre-Effective Amendment No. 1 to the Original Registration Statement, including
all exhibits thereto, as filed with the Commission on October 24, 2003
("Pre-Effective Amendment No. 1") and Pre-Effective Amendment No. 2 to the
Original Registration Statement, including all exhibits thereto, as filed with
the Commission on October 29, 2003 ("Pre-Effective Amendment No. 2" and,
together with the Original Registration Statement and Pre-Effective Amendment
No. 1, the "Registration Statement"); the Fund's Notification of Registration on
Form N-8A (File No. 811-21374) under the Investment Company Act, as filed with
the Commission on June 20, 2003 (the "Notification of Registration"); the Fund's
Amended and Restated Agreement and Declaration of Trust, as amended to the date
hereof (the "Declaration of Trust"), on file in the offices of the Secretary of
The Commonwealth of Massachusetts; the Second Amended and Restated By-laws of
the Fund, as amended to the date hereof (the "Amended By-laws"); a copy of the
Prospectus dated ___, 2003, relating to the AMPS and the Statement of Additional
Information of the Fund dated ___, 2003, each as filed with the

                                       A-1

<PAGE>

Commission pursuant to Rule 497 under the Securities Act on ___, 2003 (together,
the "Prospectus"); the Investment Management Agreement dated as of August 18,
2003, between the Fund and PAFM (the "Investment Management Agreement"); the
Portfolio Management Agreement dated as of August 18, 2003, between Pacific
Investment Management Company LLC (the "Portfolio Manager") and PAFM (the
"Portfolio Management Agreement"), as agreed to and accepted by the Fund; the
Custodian and Investment Accounting Agreement dated as of August 18, 2003,
between the Fund and State Street Bank and Trust Company (the "Custodian
Agreement"); and the Auction Agency Agreement dated as of ___, 2003, between the
Fund and Deutsche Bank Trust Company Americas (the "Auction Agency Agreement,"
and, together with the Custodian Agreement, the "Fund Agreements"); and the
Purchase Agreement. Additionally, we have relied upon the oral representation
of Linda Stirling of the Commission staff to the effect that the Registration
Statement became effective as of [ ] p.m. on ___, 2003, and the oral
representation by a member of the Commission staff [on the date hereof] that as
of [ ] a.m., no stop order suspending the effectiveness of the Registration
Statement had been issued and no proceeding for any such purpose was pending or
threatened.

We have also examined and relied upon the original or copies of minutes of the
meetings or written consents of the shareholders and the Board of Trustees of
the Fund and copies of resolutions of the Board of Trustees of the Fund
certified by the Secretary of the Fund, the documents delivered to the
Underwriters by the Fund, PAFM and the Portfolio Manager dated as of the date
hereof pursuant to the Purchase Agreement and such other documents, including
certificates of officers of the Fund, as we have deemed necessary for purposes
of rendering our opinions below. For purposes of paragraph 2 below, we have
relied solely on (1) the certificate dated October 24, 2003, of the Secretary of
State of the State of California as to the entitlement of the Fund to transact
intrastate business in the State of California, (2) a Certificate of the Special
Deputy Secretary of State of the State of New York dated August 25, 2003,
certifying copies of (a) a Certificate of Designation by the Fund dated August
20, 2003 and (b) a Statement under Section 18 of the New York General
Associations Law, (3) a Filing Receipt of the Department of State of the State
of New York dated August 22, 2003 relating to the Fund and (4) a Certificate
dated October 23, 2003 of the Special Deputy Secretary of State of the State of
New York certifying that the Fund filed a Certificate of Designation in the
Department of State of the State of New York pursuant to the New York General
Associations Law on August 22, 2003 and (5) a LEXIS search on November 3, 2003
of the New York Department of State Corporate Record, showing the "status" of
the Fund as "active" and noting that "good standing status can only be
determined by performing a search in the records of both the Department of State
Corporation Records and the Department of Tax and Franchise." We have assumed
the genuineness of the signatures on all documents examined by us, the
authenticity of all documents submitted to us as originals and the conformity to
the corresponding originals of all documents submitted to us as copies. For
purposes of our opinion regarding the effectiveness of the Registration
Statement we are relying solely on the oral representations of the Commission
staff.

We express no opinion as to the laws of any jurisdiction other than The
Commonwealth of Massachusetts and the United States of America. We call your
attention to the fact that each of the Purchase Agreement and the Auction Agency
Agreement provides that it is to be governed by and construed in accordance with
the laws of the State of New York and to the fact that the Investment Management
Agreement does not provide that it is to be governed by the laws of any
particular jurisdiction. In rendering the opinion as to enforceability expressed
in paragraphs 6 and 17 below, we have limited the scope of our opinion to the
conclusions that would be reached by a Massachusetts court that had determined
that each of the Fund Agreements and the Investment Management Agreement would
be governed by, and construed in accordance with, the internal laws of The
Commonwealth of Massachusetts. Further, we express no opinion as to the state
securities or Blue Sky laws of any jurisdiction, including The Commonwealth of
Massachusetts.

For purposes of our opinion set forth in paragraph 2 below with respect to the
power and authority of the Fund to own, lease and operate its properties and
conduct its business, we have relied upon certificates of officers of the Fund
as to the states in which the Fund leases or owns real property or in which it
conducts material operations.

                                       A-2

<PAGE>

Insofar as this opinion relates to factual matters, we have made inquiries to
officers of the Fund, PAFM and the Portfolio Manager to the extent we believe
reasonable with respect to such matters and have relied, inter alia, upon
representations made by the Fund and PAFM in the Purchase Agreement,
representations made by the Portfolio Manager to PAFM and representations made
to us by one or more officers of the Fund, PAFM or the Portfolio Manager. We
have not independently verified the accuracy of such representations. Where our
opinion relates to our "knowledge," that term means the conscious awareness of
facts or other information by any lawyer in our firm giving substantive
attention to the representation of the Fund with respect to the transactions
contemplated by the Purchase Agreement, and does not require or imply (i) any
examination of this firm's, any such lawyer's or any other person's or entity's
files, or (ii) that any inquiry was made of any lawyer (other than the lawyers
described above). In respect of our opinions set forth in paragraphs 5, 8, 10,
and 11 below, we have not searched the dockets of any court, administrative body
or other filing office in any jurisdiction.

Based upon and subject to the foregoing, we are of the opinion that:

         1. The Registration Statement and all post-effective amendments filed
with the Commission on or before the Closing Time, if any, are effective under
the Securities Act; the filing of the Prospectus pursuant to Rule 497 under the
Securities Act has been made in the manner and within the time period required
by Rule 497; and based upon oral inquiries to the Commission staff on the date
hereof, no stop order suspending the effectiveness of the Registration Statement
has been issued and no proceeding for any such purpose is pending or threatened
by the Commission.

         2. The Fund has been duly organized and is validly existing and in good
standing as an unincorporated voluntary association under and by virtue of the
laws of The Commonwealth of Massachusetts and has full power and authority to
own or lease its properties and to conduct its business as described in the
Registration Statement and the Prospectus. The Certificate of Designation
relating to the Fund's conduct of business in the State of New York is on file
with the Department of State of the State of New York, and the Fund is entitled
to transact intrastate business in the State of California.

         3. The Fund's authorized capitalization is as set forth in the
Registration Statement and the Prospectus. The AMPS conform in all material
respects as to legal matters to the description of them under the sections
entitled "Description of AMPS" and "Description of Capital Structure" in the
Prospectus. The AMPS have been duly authorized and, when issued and delivered to
the Underwriters against payment therefor in accordance with the terms of the
Purchase Agreement, will be validly issued, fully paid and, subject to the
penultimate paragraph of this opinion letter, non-assessable. Except as
contemplated by the Purchase Agreement, no person is entitled to any preemptive
or other similar rights with respect to the AMPS.

         4. The outstanding common shares of beneficial interest of the Fund,
par value $0.00001, have been duly authorized and are validly issued, fully paid
and, subject to the penultimate paragraph of this opinion letter,
non-assessable, and the common shares of beneficial interest issued to PAFM on ,
2003 have been issued in one or more transactions exempt from the registration
requirements of the Securities Act.

         5. The Fund was deemed to be registered under Section 8(a) of the
Investment Company Act upon receipt by the Commission of the Notification of
Registration. To our knowledge, the Commission has not issued to the Fund notice
of any hearing or other proceeding to consider suspension or revocation of any
such registration statement. All required action has been taken by the Fund
under the Securities Act, the Investment Company Act and the rules and
regulations thereunder in connection with the issuance and sale of the AMPS to
make the public offering and consummate the sale of the AMPS pursuant to the
Purchase Agreement.

                                       A-3

<PAGE>

         6. The Fund has, or at the relevant time had, full power and authority
to enter into each of the Fund Agreements and to perform all of the terms and
provisions thereof to be carried out by it. Each of the Fund Agreements has been
duly and validly authorized, executed and delivered by the Fund. Each of the
Fund Agreements, the Investment Management Agreement and the Portfolio
Management Agreement complies in all material respects with all applicable
provisions of the Investment Company Act and the Investment Advisers Act of
1940, as amended, as the case may be, and the rules and regulations thereunder
(except we express no opinion as to the reasonableness or fairness of
compensation payable under such agreements). Assuming due authorization,
execution and delivery by the other parties thereto, each Fund Agreement
constitutes the legal, valid and binding obligation of the Fund enforceable in
accordance with its terms, subject as to enforcement to bankruptcy, insolvency,
moratorium, reorganization and other laws of general applicability relating to
or affecting creditors' rights and to general equity principles (regardless of
whether enforceability is considered in a proceeding in equity or at law).

         7. The Fund has, or at relevant time had, full power and authority to
enter into each of the Investment Management Agreement and the Purchase
Agreement and to perform all of the terms and provisions thereof to be carried
out by it. The Investment Management Agreement and the Purchase Agreement have
been duly and validly authorized, executed and delivered by the Fund. Assuming
due authorization, execution and delivery by the other party thereto, the
Investment Management Agreement constitutes the legal, valid and binding
obligation of the Fund enforceable in accordance with its terms (except we
express no opinion as to the reasonableness or fairness of compensation payable
under such agreement), subject as to enforcement to bankruptcy, insolvency,
moratorium, reorganization and other laws of general applicability relating to
or affecting creditors' rights and to general equity principles (regardless of
whether enforceability is considered in a proceeding in equity or at law).

         8. None of (a) the execution and delivery by the Fund of the Investment
Management Agreement, the Purchase Agreement or any of the Fund Agreements, (b)
the issuance and sale by the Fund of the AMPS as contemplated by the Purchase
Agreement and (c) the performance by the Fund of its obligations under the
Investment Management Agreement, the Purchase Agreement or any of the Fund
Agreements or the consummation by the Fund of the other transactions
contemplated by the Investment Management Agreement, the Purchase Agreement or
any of the Fund Agreements, conflicts or will conflict with, or results or will
result in a breach of, or the creation or imposition of any lien, charge or
encumbrance upon any assets or property of the Fund pursuant to, the Declaration
of Trust or the Amended By-laws or, to our knowledge, any agreement or
instrument to which the Fund is a party or by which the Fund is bound or to
which its property is subject, or violates or will violate any federal or
Massachusetts statute, law or regulation or any judgment, injunction, order or
decree of any federal or Massachusetts governmental agency or body that is
applicable to the Fund and that is known to us, which violation would have a
material adverse effect on the condition or business of the Fund.

         9. To our knowledge, the Fund is not in breach of, or in default under,
its Declaration of Trust or Amended By-laws, or any material written agreement
or instrument to which it is a party or by which it or its property is bound or
affected.

         10. No consent, approval, authorization or order of or registration
with any court or governmental agency or body or securities exchange or
securities association is required by the Fund for the consummation by the Fund
of the transactions contemplated in the Investment Management Agreement, the
Purchase Agreement and the Fund Agreements, except such as (a) have been
obtained under the Securities Act or the Investment Company Act or the Exchange
Act and (b) may be required by the New York Stock Exchange or the National
Association of Securities Dealers, Inc. or under state

                                       A-4

<PAGE>

securities or Blue Sky laws in connection with the purchase and distribution of
the AMPS by the Underwriters pursuant to the Purchase Agreement.

         11. To our knowledge, there are no legal, governmental or court
proceedings pending or threatened against the Fund, or to which the Fund or any
of its properties is subject, that are required to be described in the
Registration Statement or the Prospectus but are not described therein as
required.

         12. To our knowledge, there are no agreements, contracts, indentures,
leases or other instruments that are required to be described in the
Registration Statement or the Prospectus or to be filed as an exhibit to the
Registration Statement which have not been so described or filed as an exhibit
or incorporated therein by reference.

         13. Each of the sections in the Prospectus entitled "Tax Matters," to
the extent that it states matters of United States law or legal conclusions with
respect thereto, presents a fair and accurate summary of the principal federal
income tax rules currently in effect applicable to the Fund and to the purchase,
ownership and disposition of the AMPS.

         14. The Registration Statement (except for the financial statements and
schedules, the notes thereto and any schedules and other financial data
contained or incorporated by reference therein or omitted therefrom, as to which
we express no opinion), at the effective time set forth above, and the
Prospectus (except as aforesaid), as of the date thereof, complied as to form in
all material respects with the applicable requirements of the Securities Act and
the Investment Company Act and the rules and regulations thereunder, and the
Notification of Registration, when filed with the Commission, complied as to
form in all material respects with the applicable requirements of the Investment
Company Act and the rules and regulations thereunder. We have not independently
verified the accuracy, completeness or fairness of the statements made or the
information contained in the Registration Statement or the Prospectus and,
except in the respects and to the extent set forth in paragraphs 3, 13 and 14
above, we are not passing upon and do not assume any responsibility therefor. In
the course of the preparation by the Fund of the Registration Statement and the
Prospectus, we have participated in discussions with your representatives and
employees and officers of the Fund, PAFM and the Portfolio Manager and in
discussions with the Fund's independent accountants, in which the business and
the affairs of the Fund, PAFM and the Portfolio Manager and the contents of the
Registration Statement and the Prospectus were discussed. There is no assurance
that all material facts as to the Fund, PAFM, the Portfolio Manager and their
affairs were disclosed to us or that our familiarity with the Fund and PAFM or
any familiarity with the Portfolio Manager is such that we would have
necessarily recognized the materiality of such facts as were disclosed to us,
and we have to a large extent relied upon statements of representatives of the
Fund, PAFM and the Portfolio Manager as to the materiality of the facts
disclosed to us. On the basis of information that we have gained in the course
of our representation of the Fund in connection with its preparation of the
Registration Statement and the Prospectus and our participation in the
discussions referred to above, no facts have come to our attention that would
lead us to believe that as of the effective date of the Registration Statement,
the Registration Statement contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary in
order to make the statements therein not misleading, or that as of the date of
the Prospectus and the date hereof the Prospectus contained an untrue statement
of material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein, in light, in each case, of
the circumstances under which they were made, not misleading (in each case,
other than the financial statements and schedules, the notes thereto and any
schedules and other financial data contained or incorporated by reference
therein or omitted therefrom, as to which we express no opinion).

                                       A-5

<PAGE>

Under Massachusetts law, shareholders could, under certain circumstances, be
held personally liable for the obligations of the Fund. However, the Fund's
Declaration of Trust disclaims shareholder liability for acts or obligations of
the Fund and requires that notice of such disclaimer be given in each agreement,
obligation, and instrument entered into or executed by the Fund or the Trustees.
The Declaration of Trust provides for indemnification out of the property of the
Fund for all loss and expense of any shareholder held personally liable solely
by reason of being or having been a shareholder of the Fund. Thus, the risk of a
shareholder's incurring financial loss on account of being a shareholder is
limited to circumstances in which the Fund itself would be unable to meet its
obligations.

This letter and the opinions expressed herein are furnished by us to you and are
solely for benefit of the Underwriters, except that Clifford Chance US LLP may
rely on this letter as to all matters governed by the laws of The Commonwealth
of Massachusetts in delivering its opinion to you on the date hereof.

                                Very truly yours,

                                Ropes & Gray LLP

                                       A-6

<PAGE>


                                     , 2003

Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
            Incorporated

As Representatives of the Several Underwriters listed on
  Schedule A to the Purchase Agreement
    c/o Merrill Lynch, Pierce, Fenner & Smith
                    Incorporated
    4 World Financial Center
New York, New York  10080

Ladies and Gentlemen:

         We have acted as counsel to PIMCO Floating Rate Income Fund (the
"Fund") in connection with the proposed issuance of 2,800 Auction Market
Preferred Shares, Series T, 2,800 Auction Market Preferred Shares, Series W and
2,800 Auction Market Preferred Shares, Series TH, (collectively, the "AMPS"). As
an accommodation to the Fund, we are also rendering this opinion on behalf of
PIMCO Advisors Fund Management LLC (the "Manager") solely with respect to the
regulatory matters referred to below. This opinion is furnished to you pursuant
to Section 5(b) of the Purchase Agreement dated as of         , 2003 (the
"Purchase Agreement") among the Fund, the Investment Manager Merrill Lynch &
Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated and each of the other
underwriters named in Schedule A to the Purchase Agreement (collectively, the
"Underwriters"). Capitalized terms used in this opinion, unless otherwise
defined, have the meanings specified in our opinion of even date rendered on
behalf of the Fund (the "Fund Opinion").

         Solely for purposes of this opinion, we have assumed that each of the
Investment Management Agreement and the Portfolio Management Agreement has been
duly authorized, executed and delivered and constitutes a legal, valid and
binding obligation of the parties thereto in accordance with its respective
terms, and that the descriptions of the Investment Management Agreement and the
Portfolio Management Agreement in the Registration Statement are accurate and
complete in all respects. We have also, with your permission and without
independent investigation of the matters set forth therein, relied on the
opinions of even date herewith of Newton B. Schott, Jr., Esq., Chief Legal
Officer of the Investment Manager.

         We express no opinion as to the laws of any jurisdiction other than the
United States of America.

         Based upon and subject to the foregoing, we are of the opinion that:

         1. Assuming the Investment Manager is duly registered as an investment
adviser under the Investment Advisers Act of 1940, as amended (the "Advisers
Act"), and is not prohibited by the Advisers Act or the Investment Company Act
of 1940, as amended (the "Investment Company Act"), from acting as investment
manager for the Fund as contemplated by the Investment Management Agreement, the
Registration Statement and the Prospectus, neither the execution and delivery of
the Purchase Agreement, the Investment Management Agreement or the Portfolio
Management Agreement by the Investment Manager, nor the consummation by the
Investment Manager of the transactions contemplated thereby, nor compliance by
the Investment Manager with any of the terms and provisions thereof will violate
the provisions of the Investment Company Act, the Advisers Act, or the rules and
regulations thereunder; provided, however, that the foregoing does not represent
an opinion as to (a) the reasonableness of the fees to be paid to the Investment
Manager under the Investment Management Agreement or (b) the compliance by the
Investment Manager with its indemnification and contribution obligations set
forth in the Purchase Agreement.

         2. Assuming the Portfolio Manager is duly registered as an investment
adviser under the Advisers Act, and is not prohibited by the Advisers Act or the
Investment Company Act from acting as portfolio manager for the Fund as
contemplated by the Portfolio Management Agreement, the

                                       A-7

<PAGE>

Registration Statement and the Prospectus, neither the execution and delivery of
the Portfolio Management Agreement by the Portfolio Manager, nor the
consummation by the Portfolio Manager of the transactions contemplated thereby,
nor compliance by the Portfolio Manager with any of the terms and provisions
thereof will violate the provisions of the Investment Company Act, the Advisers
Act or the rules and regulations thereunder; provided, however, that the
foregoing does not represent an opinion as to the reasonableness of the fees to
be paid to the Portfolio Manager under the Portfolio Management Agreement.

         This letter and the opinions expressed herein are furnished by us to
you and are solely for benefit of the Underwriters.

                                Very truly yours,

                                Ropes & Gray LLP

                                       A-8

<PAGE>

                                                                     Exhibit A-2

                          FORM OF OPINION OF MANAGER'S
                       COUNSEL TO BE DELIVERED PURSUANT TO
                                  SECTION 5(b)

                                    ___, 2003

Merrill Lynch & Co.

Merrill Lynch, Pierce, Fenner & Smith
            Incorporated
[other co-managers]
     c/o Merrill Lynch, Pierce, Fenner & Smith
                     Incorporated
     4 World Financial Center
     New York, New York 10080

     Re: PIMCO Advisors Fund Management LLC

Ladies and Gentlemen:

         I am the Chief Legal Officer of PIMCO Advisors Fund Management LLC, a
Delaware limited liability company ("PAFM"), and have counseled PAFM in such
capacity in connection with the sale to you by PIMCO Floating Rate Income Fund
(the "Fund"), a voluntary association with transferable shares organized and
existing under and by virtue of the laws of The Commonwealth of Massachusetts
(commonly referred to as a "Massachusetts business trust"), of 2,800 Auction
Market Preferred Shares, Series T , 2,800 Auction Market Preferred Shares,
Series W, and 2,800 Auction Market Preferred Shares, Series TH of the Fund
(collectively, the "AMPS"), pursuant to a registration statement on Form N-2
under the Securities Act of 1933, as amended (the "Securities Act") and the
Investment Company Act of 1940, as amended (the "Investment Company Act"), filed
with the Securities and Exchange Commission (the "Commission") on September 3,
2003 (Securities Act File No. 333-108475, and Investment Company Act File No.
811-21374), as amended by Pre-Effective Amendment No. 1 filed with the
Commission on October 24, 2003 and Pre-Effective Amendment No. 2 filed with the
Commission on __, 2003 (such filings collectively referred to herein as the
"Registration Statement"), and a purchase agreement dated ___, 2003 by and among
you, the Fund and PAFM (the "Purchase Agreement").

         This opinion is rendered to you pursuant to Section 5(b) of the
Purchase Agreement. Capitalized terms used herein without definition have the
meanings assigned to them in the Purchase Agreement.

         As such legal officer, I have examined such matters of fact and
questions of law as I have considered appropriate for purposes of rendering the
opinions expressed below, except where a statement is qualified as to knowledge
or awareness, in which case I have made no or limited inquiry as specified
below. I have examined, among other things, the following:

          (a) the Purchase Agreement;

          (b) that certain Investment Management Agreement by and between the
     Fund and PAFM, dated as of August 18 , 2003; and


                                       A-9

<PAGE>

          (c) that certain Portfolio Management Agreement by and between Pacific
     Investment Management Company LLC and PAFM, as accepted and agreed to by
     the Fund, dated as of August 18, 2003.

         The documents described in subsections (a)-(c) above are referred to
herein collectively as the "Transaction Documents."

         In my examination, I have assumed the genuineness of all signatures
(other than those of officers of PAFM on the Transaction Documents), the
authenticity of all documents submitted to me as originals, and the conformity
to authentic original documents of all documents submitted to me as copies.

         I have been furnished with, and with your consent have relied upon,
certificates of officers of PAFM with respect to certain factual matters. In
addition, I have obtained and relied upon such certificates and assurances from
public officials as I have deemed necessary.

         I am opining herein as to the effect of the federal laws of the United
States, the internal laws of the State of New York and the internal laws of the
State of Delaware, and I express no opinion with respect to the applicability
thereto, or the effect thereon, of the laws of any other jurisdiction or country
or as to any matters of municipal law or the laws of any other local agencies
within any state or country. My opinions set forth in paragraph 4 below are
based upon my consideration of only those statutes, rules and regulations which,
in my experience, are normally applicable to transactions similar to those
contemplated by the Transaction Documents generally.

         Whenever a statement herein is qualified by "to my knowledge" or a
similar phrase, it is intended to indicate that I do not have current actual
knowledge of the inaccuracy of such statement. However, except as otherwise
expressly indicated, I have not undertaken any independent investigation to
determine the accuracy of any such statement, and no inference that I have any
knowledge of any matters pertaining to such statement should be drawn from my
position as Chief Legal Officer of PAFM.

         Subject to the foregoing and the other matters set forth herein, it is
my opinion that, as of the date hereof:

         1. PAFM is a limited liability company and is validly existing and in
good standing under the Delaware Limited Liability Company Act (6 Del. C ss.
18-101, et seq.) with all necessary limited liability company power and
authority to enter into and deliver the Transaction Documents and perform its
obligations thereunder and to carry on its business as it is now being conducted
and as described in the Registration Statement. Based on certificates from
public officials, I confirm that PAFM is qualified to do business in the
following States: California, New York and Connecticut, such States being those
in which its ownership or leasing of property or its conducting of business may
require such qualification and where failure to so qualify would have a material
adverse effect on the ability of PAFM to perform its obligations under the
Investment Management Agreement and the Portfolio Management Agreement.

         2. The execution, delivery and performance of the Transaction Documents
by PAFM have been duly authorized by all necessary limited liability company
action of PAFM and no other actions on the part of PAFM or its unitholders or
any subsidiary of PAFM or its unitholders is necessary to authorize and
consummate the transactions contemplated thereby, and the Transaction Documents
have been duly executed and delivered by PAFM.

         3. Each of the Investment Management Agreement and the Portfolio
Management Agreement constitutes a legally valid and binding agreement of PAFM,
enforceable against PAFM in accordance with its terms.

                                      A-10

<PAGE>

         4. Neither the execution and delivery of the Transaction Documents by
PAFM, nor the consummation by PAFM of the transactions contemplated thereby, nor
compliance by PAFM with any of the terms and provisions thereof will:

                  (i) violate any provision of the Limited Liability Company
         Agreement of PAFM, effective May 23, 2000, as amended on July 1, 2001,
         December 12, 2001, and October 31, 2002, which is still in full force
         and effect and which has not been further amended or supplemented
         through the date hereof,

                  (ii) violate any federal, Delaware or New York statute, rule
         or regulation applicable to PAFM (other than federal and state
         securities or blue sky laws, the Investment Company Act and the
         Investment Advisers Act of 1940, as amended (the "Advisers Act"), as to
         which I express no opinion),

                  (iii) violate any agreement to which PAFM is a party or by
         which it is bound and which is material to PAFM's businesses taken as a
         whole (the "Material Agreements"),

                  (iv) violate any order, writ, injunction or decree, known to
         me and applicable to PAFM, or

                  (v) to the best of my knowledge, require any consents,
         approvals, authorizations, registrations, declarations or filings by
         PAFM under any federal or Delaware statute, rule or regulation
         applicable to PAFM, except as have been obtained under the Securities
         Act, the Investment Company Act or the Advisers Act.

                  No opinion is expressed in this paragraph 4 as to the
application of Section 548 of the federal Bankruptcy Code and comparable
provisions of state or foreign law or of any antifraud laws, antitrust or trade
regulation laws. No opinion is expressed in this paragraph 4 with respect to the
operating licenses necessary for PAFM's businesses.

         5. PAFM is duly registered as an investment adviser under the Advisers
Act and is not prohibited by the Advisers Act or the Investment Company Act from
acting as investment adviser for the Fund as contemplated by the Investment
Management Agreement, the Registration Statement and the Prospectus dated ___,
2003, relating to the AMPS (the "Prospectus").

         6. The description of PAFM and its business, and the statements
attributable to PAFM, set forth in the Registration Statement or the Prospectus
under the headings "Prospectus Summary--Investment Manager" and "Management of
the Fund--Investment Manager" do not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein (with respect to the
Prospectus, in light of the circumstances under which they were made) not
misleading

         7. There is no action, suit or proceeding before or by any court,
commission, regulatory body, administrative agency or other governmental agency
or body, foreign or domestic, now pending or, to my knowledge, threatened
against PAFM of a nature required to be disclosed in the Registration Statement
or Prospectus or that might reasonably result in any material adverse change in
the ability of PAFM to fulfill its obligations under any of the Transaction
Documents.

         The opinions expressed in paragraph 3 above are subject to the
following limitations, qualifications and exceptions:

                                      A-11

<PAGE>

                  (a) the effect of bankruptcy, insolvency, reorganization,
         moratorium or other similar laws now or hereafter in effect relating to
         or affecting the rights or remedies of creditors generally;

                  (b) the effect of general principles of equity, whether
         enforcement is considered in a proceeding in equity or at law, and the
         discretion of the court before which any proceeding therefor may be
         brought;

                  (c) the unenforceability under certain circumstances under law
         or court decisions of provisions providing for the indemnification of
         or contribution to a party with respect to a liability where such
         indemnification or contribution is contrary to public policy; and

                  (d) the unenforceability of any provision requiring the
         payment of attorney's fees, except to the extent that a court
         determines such fees to be reasonable.

         In rendering the opinions expressed in paragraph 4 insofar as they
require interpretation of the Material Agreements (i) I have assumed with your
permission that all courts of competent jurisdiction would enforce such
agreements as written but would apply the internal laws of the State of New York
without giving effect to any choice of law provisions contained therein or any
choice of law principles which would result in application of the internal laws
of any other state and (ii) to the extent that any questions of legality or
legal construction have arisen in connection with my review, I have applied the
laws of the State of New York in resolving such questions. I advise you that
certain of the Material Agreements may be governed by other laws, that such laws
may vary substantially from the law assumed to govern for purposes of this
opinion, and that this opinion may not be relied upon as to whether or not a
breach or default would occur under the law actually governing such Material
Agreements.

         To the extent that the obligations of PAFM may be dependent upon such
matters, I assume for purposes of this opinion that: (i) all parties to the
Transaction Documents other than PAFM are duly incorporated or organized,
validly existing and in good standing under the laws of their respective
jurisdictions of incorporation or organization; (ii) all parties to the
Transaction Documents other than PAFM have the requisite power and authority
and, in the case of natural persons, legal capacity to execute and deliver the
Transaction Documents and to perform their respective obligations under the
Transaction Documents to which they are a party; and (iii) the Transaction
Documents to which such parties other than PAFM are a party have been duly
authorized, executed and delivered by such parties and, other than PAFM,
constitute their legally valid and binding obligations, enforceable against them
in accordance with their terms. I express no opinion as to compliance by any
parties to the Transaction Documents with any state or federal laws or
regulations applicable to the subject transactions because of the nature of
their business, and I express no opinion as to compliance by any parties to the
Transaction Documents with any foreign laws or regulations applicable to the
transactions contemplated by the Transaction Documents or which may affect the
Transaction Documents' enforceability.

         This opinion is rendered only to you and is solely for your benefit in
connection with the transactions covered hereby. This opinion may not be relied
upon by you for any other purpose, or furnished to, quoted to or relied upon by
any other person, firm or corporation for any purpose, without my prior written
consent.

Very truly yours,

                                      A-12

<PAGE>

Merrill Lynch & Co.

Merrill Lynch, Pierce, Fenner & Smith
            Incorporated
As Representatives of the Several Underwriters listed on
  Schedule A to the Purchase Agreement
    c/o Merrill Lynch, Pierce, Fenner & Smith Incorporated
    4 World Financial Center
New York, New York  10080

          Re: Pacific Investment Management Company LLC

Ladies and Gentlemen:

         I am the Chief Legal Officer of PIMCO Advisors Fund Management LLC, a
Delaware limited liability company ("PAFM"). PAFM is an affiliate of and under
common control with Pacific Investment Management Company LLC, a Delaware
limited liability company ("PIMCO"). I have discussed the matters covered by
this opinion with internal counsel at PIMCO. In my capacity as Chief Legal
Officer of PAFM, I am rendering this opinion on behalf of PIMCO in connection
with the sale to you by PIMCO Floating Rate Income Fund, a voluntary association
with transferable shares organized and existing under and by virtue of the laws
of The Commonwealth of Massachusetts (commonly referred to as a Massachusetts
business trust) (the "Fund"), of 2,800 Auction Market Preferred Shares, Series
T, 2,800 Auction Market Preferred Shares, Series W and 2,800 Auction Market
Preferred Shares, Series TH, of the Fund, pursuant to a registration statement
on Form N-2 under the Securities Act of 1933, as amended (the "Act") and the
Investment Company Act of 1940, as amended (the "Investment Company Act"), filed
with the Securities and Exchange Commission (the "Commission") on September 3,
2003 (Act File No. 333-108475 and Investment Company Act File No. 811-21374), as
amended by Pre-Effective Amendment No. 1 filed with the Commission on October
24, 2003, and Pre-Effective Amendment No. 2 filed with the Commission on , 2003
(such registration statements collectively referred to herein as the
"Registration Statement"), and a purchase agreement dated , 2003 by and among
you, the Fund and PAFM (the "Purchase Agreement").

         This opinion is rendered to you pursuant to Section 5(b) of the
Purchase Agreement. Capitalized terms used herein without definition have the
meanings assigned to them in the Purchase Agreement.

         As Chief Legal Officer of PAFM, I have examined such matters of fact
and questions of law as I have considered appropriate for purposes of rendering
the opinions expressed below, except where a statement is qualified as to
knowledge or awareness, in which case I have made no or limited inquiry as
specified below. I have examined, among other things, that certain Portfolio
Management Agreement by and between PIMCO and PAFM, as accepted and agreed to by
the Fund, dated as of August 18, 2003 (the "Portfolio Management Agreement").

         In my examination, I have assumed the genuineness of all signatures
(other than those of officers of PIMCO on the Portfolio Management Agreement),
the authenticity of all documents submitted to me as originals, and the
conformity to authentic original documents of all documents submitted to me as
copies.

         I have been furnished with, and with your consent have relied upon,
certificates of officers of PIMCO with respect to certain factual matters. In
addition, I have obtained and relied upon such certificates and assurances from
public officials as I have deemed necessary.

         I am opining herein as to the effect of the federal laws of the United
States, the internal laws of the State of New York and the internal laws of the
State of Delaware, and I express no opinion with respect to the applicability
thereto, or the effect thereon, of the laws of any other jurisdiction or country
or as to any matters of municipal law or the laws of any other local agencies
within any state or country. My opinions set forth in paragraph 4 below are
based upon my consideration of only those statutes, rules and

                                      A-13

<PAGE>

regulations which, in my experience, are normally applicable to transactions
similar to those contemplated by the Portfolio Management Agreement, generally.

         Whenever a statement herein is qualified by "to my knowledge" or a
similar phrase, it is intended to indicate that I do not have current actual
knowledge of the inaccuracy of such statement. However, except as otherwise
expressly indicated, I have not undertaken any independent investigation to
determine the accuracy of any such statement, and no inference that I have any
knowledge of any matters pertaining to such statement should be drawn from my
position as Chief Legal Officer of PAFM.

         Subject to the foregoing and the other matters set forth herein, it is
my opinion that, as of the date hereof:

         1. PIMCO is a limited liability company and is validly existing and in
good standing under the Delaware Limited Liability Company Act (6 Del. C ss.
18-101, et seq.) with all necessary limited liability company power and
authority to enter into and deliver the Portfolio Management Agreement and
perform its obligations thereunder and to carry on its business as it is now
being conducted and as described in the Registration Statement. Based on
certificates from public officials, I confirm that PIMCO is qualified to do
business in the following States: California and New York, such States being
those in which its ownership or leasing of property or its conducting of
business may require such qualification and where failure to so qualify would
have a material adverse effect on the ability of PIMCO to perform its
obligations under the Portfolio Management Agreement.

         2. The execution, delivery and performance of the Portfolio Management
Agreement by PIMCO have been duly authorized by all necessary limited liability
company action of PIMCO and no other actions on the part of PIMCO or its
unitholders or any subsidiary of PIMCO or its unitholders is necessary to
authorize and consummate the transactions contemplated thereby, and the
Portfolio Management Agreement has been duly executed and delivered by PIMCO.

         3. The Portfolio Management Agreement constitutes a legally valid and
binding agreement of PIMCO, enforceable against PIMCO in accordance with its
terms.

         4. Neither the execution and delivery of the Portfolio Management
Agreement by PIMCO, nor the consummation by PIMCO of transactions contemplated
thereby, nor compliance by PIMCO with any of the terms and provisions thereof
will:

                  (i) violate any provision of the Limited Liability Company
Agreement of PIMCO, effective May 5, 2000,

                  (ii) violate any federal, Delaware or New York statute, rule
         or regulation applicable to PIMCO (other than federal and state
         securities or blue sky laws, the Investment Company Act and the
         Investment Advisers Act of 1940, as amended (the "Advisers Act"), as to
         which I express no opinion),

                  (iii) violate any agreement to which PIMCO is a party or by
         which it is bound and which is material to PIMCO's businesses taken as
         a whole (the "Material Agreements"),

                  (iv) violate any order, writ, injunction or decree, known to
         me and applicable to PIMCO, or

                  (v) to the best of my knowledge, require any consents,
         approvals, authorizations, registrations, declarations or filings by
         PIMCO under any federal statute, rule or regulation applicable to
         PIMCO, except as have been obtained under the Act, the Investment
         Company Act or the Advisers Act.

                                      A-14

<PAGE>

            No opinion is expressed in this paragraph 4 as to the application of
Section 548 of the federal Bankruptcy Code and comparable provisions of state or
foreign law or of any antifraud laws, antitrust or trade regulation laws. No
opinion is expressed in this paragraph 4 with respect to the operating licenses
necessary for PIMCO's businesses.

         5. PIMCO is duly registered as an investment adviser under the Advisers
Act and is not prohibited by the Advisers Act or the Investment Company Act from
acting as investment sub-adviser for the Fund as contemplated by the Portfolio
Management Agreement, the Registration Statement and the Prospectus.

         6. The description of PIMCO and its business, and the statements
attributable to PIMCO, set forth in the Registration Statement and the
Prospectus under the headings "Prospectus Summary--Portfolio Manager" and
"Management of the Fund" do not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary in
order to make the statements therein (with respect to the Prospectus, in light
of the circumstances under which they were made) not misleading.

         7. There is no action, suit or proceeding before or by any court,
commission, regulatory body, administrative agency or other governmental agency
or body, foreign or domestic, now pending or, to my knowledge, threatened
against PIMCO of a nature required to be disclosed in the Registration Statement
or Prospectus or that might reasonably result in any material adverse change in
the ability of PIMCO to fulfill its obligations under the Portfolio Management
Agreement.

         The opinions expressed in paragraph 3 above are subject to the
following limitations, qualifications and exceptions:

                  (a) the effect of bankruptcy, insolvency, reorganization,
         moratorium or other similar laws now or hereafter in effect relating to
         or affecting the rights or remedies of creditors generally;

                  (b) the effect of general principles of equity, whether
         enforcement is considered in a proceeding in equity or at law, and the
         discretion of the court before which any proceeding therefor may be
         brought;

                  (c) the unenforceability under certain circumstances under law
         or court decisions of provisions providing for the indemnification of
         or contribution to a party with respect to a liability where such
         indemnification or contribution is contrary to public policy; and

                  (d) the unenforceability of any provision requiring the
         payment of attorney's fees, except to the extent that a court
         determines such fees to be reasonable.

         In rendering the opinions expressed in paragraph 4 insofar as they
require interpretation of the Material Agreements (i) I have assumed with your
permission that all courts of competent jurisdiction would enforce such
agreements as written but would apply the internal laws of the State of New York
without giving effect to any choice of law provisions contained therein or any
choice of law principles which would result in application of the internal laws
of any other state and (ii) to the extent that any questions of legality or
legal construction have arisen in connection with my review, I have applied the
laws of the State of New York in resolving such questions. I advise you that
certain of the Material Agreements may be governed by other laws, that such laws
may vary substantially from the law assumed to govern for purposes of this
opinion, and that this opinion may not be relied upon as to whether or not a
breach or default would occur under the law actually governing such Material
Agreements.

         To the extent that the obligations of PIMCO may be dependent upon such
matters, I assume for purposes of this opinion that: (i) all parties to the
Portfolio Management Agreement other than PIMCO

                                      A-15

<PAGE>

are duly incorporated or organized, validly existing and in good standing under
the laws of their respective jurisdictions of incorporation or organization;
(ii) all parties to the Portfolio Management Agreement other than PIMCO have the
requisite power and authority and, in the case of natural persons, legal
capacity to execute and deliver the Portfolio Management Agreement and to
perform their respective obligations under the Portfolio Management Agreement;
and (iii) the Portfolio Management Agreement has been duly authorized, executed
and delivered by such parties other than PIMCO and, other than PIMCO,
constitutes their legally valid and binding obligations, enforceable against
them in accordance with their terms. I express no opinion as to compliance by
any parties to the Portfolio Management Agreement with any state or federal laws
or regulations applicable to the subject transactions because of the nature of
their business and I express no opinion as to compliance by any parties to the
Portfolio Management Agreement with any foreign laws or regulations applicable
to the transactions contemplated by the Portfolio Management Agreement or which
may affect the Portfolio Management Agreement's enforceability.

         This opinion is rendered only to you and is solely for your benefit in
connection with the transactions covered hereby. This opinion may not be relied
upon by you for any other purpose, or furnished to, quoted to or relied upon by
any other person, firm or corporation for any purpose, without my prior written
consent.

                                      A-16

</TEXT>
</DOCUMENT>
