Sales load (as a percentage of offering price)(1)	[--]
Offering Expenses Borne by Common Shareholders (as a percentage of offering price)(2)	[--]
Dividend Reinvestment Plan Fees(3)	None

(1)

In the event that the Common Shares to which this prospectus relates are sold to or

through underwriters or dealer managers, a corresponding prospectus supplement will

disclose the applicable sales load and/or commission.

(2)

The related prospectus supplement will disclose the estimated amount of offering

expenses, the offering price and the offering expenses borne by the Fund and indirectly

by all of its Common Shareholders as a percentage of the offering price.

(3)

You will pay brokerage charges if you direct your broker or the plan agent to sell your

Common Shares that you acquired pursuant to a dividend reinvestment plan. You may

also pay a pro rata share of brokerage commissions incurred in connection with

open-market purchases pursuant to the Plan. See “Dividend Reinvestment Plan”.

Sales Load [Percent]

^[1]

0.00%

Dividend Reinvestment and Cash Purchase Fees

^[2]

$ 0

Other Transaction Expenses [Abstract]

Other Transaction Expenses [Percent]

^[3]

0.00%

Annual Expenses [Table Text Block]

Annual Expenses

	Percentage of Net Assets Attributable to Common Shares (reflecting leverage attributable to reverse repurchase agreements)
Management Fees(1)	0.65%
Interest Payments on Borrowed Funds(2)	0.86%
Other Expenses(3)	0.01%
Total Annual Expenses(4)	1.52%

(1)

Management Fees include fees payable to the Investment Manager for advisory services and for supervisory, administrative and other services. The Fund pays for the advisory, supervisory and administrative services it requires under what is essentially an all-in fee structure (the “unified management fee”). Pursuant to an investment management agreement, PIMCO is paid a Management Fee of 0.65% of the Fund’s average daily net assets (including daily net assets attributable to any preferred shares of the Fund that may be outstanding). The Fund (and not PIMCO) will be responsible for certain fees and expenses, which are reflected in the table above, that are not covered by the unified management fee under the investment management agreement. Please see “Management of the Fund– Investment Management Agreement” for an explanation of the management fee and a definition of “daily net assets.”

(2)

Reflects the Fund’s use of leverage in the form of reverse repurchase agreements

averaged over the fiscal year ended June 30, 2026, which represented 17.62% of the

Fund's average total managed assets, including the assets attributable to leverage (or

21.39% of the Fund's average net assets attributable to Common Shares), as of that

date, at an annual interest rate cost to the Fund of 3.934%, which is the weighted

average interest rate cost during the fiscal year ended June 30, 2026. See “Use of

Leverage—Effects of Leverage”. The actual amount of interest expense borne by the

Fund will vary over time in accordance with the level of the Fund’s use of reverse

repurchase agreements, dollar rolls/buybacks and/or borrowings and variations in

market interest rates. Borrowing expense is required to be treated as an expense of the

Fund for accounting purposes. Any associated income or gains (or losses) realized from

leverage obtained through such instruments is not reflected in the Annual Expenses

table above, but would be reflected in the Fund’s performance results.

(3)

“Other Expenses” are estimated for the Fund’s fiscal year ending June 30, 2027.

(4)

“Interest Payments on Borrowed Funds” are borne by the Fund separately from the management fees paid to PIMCO. Excluding these expenses, Total Annual Expenses are

0.66%

Management Fees [Percent]

^[4]

0.65%

Interest Expenses on Borrowings [Percent]

^[5]

0.86%

Other Annual Expenses [Abstract]

Other Annual Expenses [Percent]

^[6]

0.01%

Total Annual Expenses [Percent]

^[7]

1.52%

Expense Example [Table Text Block]

Example

The following example illustrates the expenses that you would pay on a $1,000 investment in Common Shares of the Fund assuming (1) that the Fund’s net assets do not increase or decrease, (2) that the Fund incurs total annual expenses of 1.52% of net assets attributable to Common Shares in years 1 through 10 (assuming assets attributable to reverse repurchase agreements representing 17.62% of the Fund’s total managed assets) and (3) a 5% annual return(1):

	1 Year	3 Years	5 Years	10 Years
Total Expenses Incurred	$15	$48	$83	$182

(1)

The example above should not be considered a representation of future

expenses. Actual expenses may be higher or lower than those shown.

The

example assumes that the estimated Interest Payments on Borrowed Funds and Other

Expenses set forth in the Annual Expenses table are accurate, that the rate listed under

Total Annual Expenses remains the same each year and that all dividends and

distributions are reinvested at NAV. Actual expenses may be greater or less than those

assumed. Moreover, the Fund’s actual rate of return may be greater or less than the

hypothetical 5% annual return shown in the example. The example does not include

commissions or estimated offering expenses, which would cause the expenses shown

in the example to increase. In connection with an offering of Common Shares, the

prospectus supplement will set forth an example including sales load and estimated

offering costs.

Expense Example, Year 01

^[8]

$ 15

Expense Example, Years 1 to 3

^[8]

Expense Example, Years 1 to 5

^[8]

Expense Example, Years 1 to 10

^[8]

$ 182

Purpose of Fee Table , Note [Text Block]

The following table is intended to assist investors in understanding the fees and expenses (annualized) that an investor in Common Shares of the Fund would bear, directly or indirectly, as a result of an offering. The table reflects the use of leverage attributable to the Fund’s reverse repurchase agreements averaged over the fiscal year ended June 30, 2026 in an amount equal to 17.62% of the Fund's average total managed assets, including the assets attributable to such leverage (or 21.39% of the Fund's average total net assets attributable to Common Shares), and shows Fund expenses as a percentage of net assets attributable to Common Shares. The percentages above do not reflect the Fund’s use of other forms of economic leverage, such as credit default swaps or other derivative instruments. The table and example below are based on the Fund’s capital structure as of June 30, 2026. The extent of the Fund’s assets attributable to leverage following an offering, and the Fund’s associated expenses, are likely to vary (perhaps significantly) from these assumptions.

Basis of Transaction Fees, Note [Text Block]

as a percentage of offering price

Other Expenses, Note [Text Block]

“Other Expenses” are estimated for the Fund’s fiscal year ending June 30, 2027.

Management Fee not based on Net Assets, Note [Text Block]

General Description of Registrant [Abstract]

Investment Objectives and Practices [Text Block]

Investment Objective and Policies

The Fund’s investment objective is to seek maximum total return through a combination of current income and capital appreciation. The Fund seeks to achieve its investment objective by utilizing a dynamic asset allocation strategy among multiple fixed income sectors in the global credit markets, including corporate debt (including, among other things, fixed-, variable- and floating-rate bonds, loans (including, but not limited to, bank and/or other syndicated loans and non-syndicated (private direct) loans), convertible securities and stressed debt securities issued by U.S. or foreign (non-U.S.) corporations or other business entities, including emerging market issuers), mortgage-related and other asset-backed securities, government and sovereign debt, taxable municipal bonds and other fixed-, variable- and floating-rate income- producing securities of U.S. and foreign issuers, including emerging market issuers. The Fund may invest in investment grade debt securities and below investment grade debt securities (commonly referred to as “high yield” securities or “junk bonds”), including securities of stressed, distressed and/or defaulted issuers. The types of securities and instruments in which the Fund may invest are summarized under “Portfolio Contents” below. The Fund cannot assure you that it will achieve its investment objective or that the Fund's investment program will be successful, and you could lose all of your investment in the Fund.

The Fund cannot change its investment objective without the approval of the holders of a “majority of the outstanding” Common Shares and any preferred shares outstanding voting together as a single class, and

of the holders of a “majority of the outstanding” preferred shares voting

as a separate class. A “majority of the outstanding” shares (whether

voting together as a single class or voting as a separate class) means (i)

67% or more of such shares present at a meeting, if the holders of more

than 50% of those shares are present or represented by proxy, or (ii)

more than 50% of such shares, whichever is less. The Fund may not

change its 80% Policy unless it provides shareholders with at least

60 days' written notice of such change.

Portfolio Management Strategies

Dynamic Allocation Strategy.

In managing the Fund, PIMCO

employs an active approach to allocation among multiple fixed income

sectors based on, among other things, market conditions, valuation

assessments, economic outlook, credit market trends and other

economic factors. With PIMCO’s macroeconomic analysis as the basis

for top-down investment decisions, including geographic and credit

sector emphasis, PIMCO manages the Fund with a focus on seeking

income generating investment ideas across multiple fixed income

sectors, including seeking opportunities in developed and emerging

global credit markets. PIMCO may choose to focus on particular

countries/regions (e.g., U.S. vs. foreign), asset classes, industries and

sectors to the exclusion of others at any time and from time to time

based on market conditions and other factors. For example, subject to

the Fund’s investment policies and limitations, the Fund may invest a

substantial portion of its total assets in mortgage-related and other

asset backed securities, which investments PIMCO may choose to

increase or decrease, or eliminate entirely, over time and from time to

time. The relative value assessment within fixed income sectors draws

on PIMCO’s regional and sector specialist insights. The Fund will observe

various investment guidelines as summarized below.

Investment Selection Strategies.

Once the Fund’s top-down,

portfolio positioning decisions have been made as described above,

PIMCO selects particular investments for the Fund by employing a

bottom-up, disciplined credit approach which is driven by fundamental,

independent research within each sector/asset class represented in the

Fund, with a focus on identifying securities and other instruments with

solid and/or improving fundamentals.

PIMCO utilizes strategies that focus on credit quality analysis, duration

management and other risk management techniques. PIMCO attempts

to identify, through fundamental research driven by independent credit

analysis and proprietary analytical tools, debt obligations and other

income producing securities that provide current income and/or

opportunities for capital appreciation based on its analysis of the

issuer’s credit characteristics and the position of the security in the

issuer’s capital structure.

Consideration of yield is only one component of the portfolio managers’

approach in managing the Fund. PIMCO also attempts to identify

investments that may appreciate in value based on PIMCO’s assessment

of the issuer’s credit characteristics, forecast for interest rates and

outlook for particular countries/regions, currencies, industries, sectors

and the global economy and bond markets generally.

Credit Quality.

The Fund may invest in debt instruments that are, at

the time of purchase, rated below investment grade, or that are unrated

but determined to be of comparable quality. The Fund will not normally

invest more than 20% of its total assets in debt instruments, other than

mortgage-related and other asset-backed securities, that are, at the

time of purchase, rated CCC+ or lower by S&P and Fitch and Caa1 or

lower by Moody’s, or that are unrated but determined by PIMCO to be

of comparable quality. The Fund may invest without limit in

mortgage-related and other asset-backed securities regardless of rating

(i.e., of any credit quality). Subject to this 20% restriction, the Fund may

invest in issuers of any credit quality (including bonds in the lowest

ratings categories or that are unrated). For purposes of applying the

foregoing policies, in the case of securities with split ratings (i.e., a

security receiving two different ratings from two different rating

agencies), the Fund will apply the higher of the applicable ratings.

Subject to the aforementioned investment restrictions, the Fund may

invest in securities of stressed, distressed and/or defaulted issuers,

which include securities in default as to the repayment of principal

and/or interest at the time of acquisition by the Fund or that are rated in

the lower rating categories by one or more nationally recognized

statistical rating organizations (for example, Ca or lower by Moody’s or

CC or lower by S&P or Fitch) or, if unrated, are determined by PIMCO to

be of comparable quality. Debt instruments of below investment grade

quality, and in debtor-in-possession financings, are regarded as having

predominantly speculative characteristics with respect to capacity to pay

interest and to repay principal, and are commonly referred to as “high

yield” securities or “junk bonds.” Debt instruments in the lowest

investment grade category also may be considered to possess some

speculative characteristics. The Fund may, for hedging, investment or

leveraging purposes, make use of credit default swaps, which are

contracts whereby one party makes periodic payments to a counterparty

in exchange for the right to receive from the counterparty a payment

equal to the par (or other agreed-upon) value of a referenced debt

obligation in the event of a default or other credit event by the issuer of

the debt obligation.

Independent Credit Analysis.

PIMCO relies primarily on its own

analysis of the credit quality and risks associated with individual debt

instruments considered for the Fund, rather than relying exclusively on

rating agencies or third-party research. The Fund’s portfolio managers

utilize this information in an attempt to manage credit risk and/or to

identify issuers, industries or sectors that are undervalued and/or that

offer attractive yields relative to PIMCO’s assessment of their credit

characteristics. This aspect of PIMCO’s capabilities will be particularly

important to the extent that the Fund invests in high yield securities and

in securities of emerging market issuers.

Duration Management.

It is expected that the Fund normally will

have a short to intermediate average portfolio duration (i.e., within a

zero to eight (0-8) year range), as calculated by PIMCO, although it may

be shorter or longer at any time depending on market conditions and

other factors. While the Fund seeks to maintain a short to intermediate

average portfolio duration, there is no limit on the maturity or duration

of any individual security in which the Fund may invest. Duration is a

measure used to determine the sensitivity of a security’s price to

changes in interest rates. For example, if the Fund has an average

portfolio duration of eight years, a 1% increase in interest rates would

tend to correspond to an 8% decrease in the value of the Fund's debt

portfolio. The Fund’s duration strategy may entail maintaining a

negative average portfolio duration from time to time, meaning the

portfolio would tend to increase in value in response to an increase in

interest rates. For example, if the Fund has a negative average portfolio

duration, a 1% increase in interest rates would tend to correspond to a

1% increase in the value of the Fund's debt portfolio for every year of

negative duration. A negative average portfolio duration would

potentially benefit the portfolio in an environment of rising market

interest rates, but would generally adversely impact the Fund’s portfolio

in an environment of falling or neutral market interest rates. See

“Principal Risks of the Fund - Interest Rate Risk”. The Fund may use

various derivatives strategies to manage (increase or decrease) the

dollar-weighted average effective duration of the Fund's portfolio.

PIMCO may also utilize certain strategies, including without limitation

investments in structured notes or interest rate futures contracts or

swap, cap, floor or collar transactions, for the purpose of reducing the

interest rate sensitivity of the Fund’s portfolio, although there is no

assurance that it will do so or that such strategies will be successful. The

foregoing is a description of interest rate duration management only.

The credit spread duration of the Fund’s portfolio may vary, in some

cases significantly, from its interest rate duration.

Risk Factors [Table Text Block]

Principal Risks of the Fund

The Fund is subject to the principal risks noted below, whether through the Fund’s direct investments, investments by its subsidiaries, or derivatives positions.

Market Discount Risk

The price of the Fund’s Common Shares will fluctuate with market conditions and other factors. If you sell your Common Shares, the price received may be more or less than your original investment. The Common Shares are designed for long-term investors and should not be treated as trading vehicles. Shares of closed-end management investment companies frequently trade at a discount from their NAV. The Common Shares may trade at a price that is less than the offering price for Common Shares issued pursuant to an offering. This risk may be greater for investors who sell their Common Shares relatively shortly after completion of an offering. The sale of Common Shares by the Fund (or the perception that such sales may occur), particularly if sold at a discount to the then current market price of the Common Shares, may have an adverse effect on the market price of the Common Shares.

Market Risk

The market price of securities owned by the Fund may fluctuate, sometimes rapidly or unpredictably. Securities may decline in value due to a variety of factors affecting (or being perceived to affect) securities markets generally or particular industries, sectors or companies represented in the securities markets. The value of a security may decline due to general market conditions that are not specifically related to a particular company, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, levels of public debt and deficits, changes in inflation, interest or currency rates, financial system instability, adverse changes to credit markets or adverse investor sentiment generally. The value of a security may also decline due to factors that affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry. During a general downturn in the securities markets, multiple asset classes may decline in value simultaneously even if the performance of those asset classes is not otherwise historically correlated. Investments may also be negatively impacted by market disruptions and by attempts by other market participants to manipulate the prices of particular investments. Equity securities generally have greater price volatility than fixed income securities. Credit ratings downgrades may also negatively affect securities held by the Fund. Even when markets perform well, there is no assurance that the investments held by the Fund will increase in value along with the broader market.

In addition, market risk includes the risk that geopolitical and other events will disrupt the economy on a national or global level. For instance, actual or threatened war or military conflict, terrorism, social unrest, recessions, supply chain disruptions, market manipulation, government defaults, government shutdowns, political and regulatory changes, diplomatic developments or the imposition of sanctions and other similar measures, including the imposition of tariffs, or other U.S. economic policies and any related public health emergencies (such as the spread of infectious diseases, pandemics and epidemics), natural/environmental disasters or events, climate-change and climate related events can all negatively impact the securities markets, which could cause the Fund to lose value. This includes reliance on global supply chains that are susceptible to disruptions resulting from, among

other things, war and other armed conflicts, tariffs, extreme weather

events, and natural disasters. These events could reduce consumer

demand or economic output, result in market closures, changes in

interest rates, inflation/deflation, travel restrictions or quarantines, and

significantly adversely impact the economy.

As computing technology and data analytics continually advance there

has been an increasing trend towards machine driven and artificially

intelligent trading systems, particularly providing such systems with

increasing levels of autonomy in trading decisions. Regulators of

financial markets have become increasingly focused on the potential

impact of artificial intelligence on investment activities and may issue

regulations that are intended to affect the use of artificial technology in

trading activities. Any such regulations may not have the intended effect

on financial markets. Moreover, advancements in artificial intelligence

and other technologies may suffer from the introduction of errors,

defects or security vulnerabilities which can go undetected. Issues in the

construction and implementation of AI systems and models (including

software issues, issues related to the use of artificial intelligence and

machine learning (AI), and other technological issues) may adversely

impact the Fund. AI systems may contain design flaws or faulty

assumptions, rely on incomplete or inaccurate data inputs, and may be

difficult to interpret or audit.

The domestic political environment, as well as political and diplomatic

events within the United States and abroad, such as the U.S. budget and

deficit reduction plan and foreign policy tensions with foreign nations,

including embargoes, tariffs, sanctions, trade wars, and other similar

developments, has in the past resulted, and may in the future result, in a

government shutdown or otherwise adversely affect the U.S. regulatory

landscape, the general market environment and/or investor sentiment,

which could have an adverse impact on the Fund’s investments and

operations. Additional and/or prolonged U.S. federal government

shutdowns, U.S. foreign policy, the imposition of tariffs, or other

U.S. economic policies and any related domestic and/or geopolitical

tensions may affect investor and consumer confidence and may

adversely impact financial markets and the broader economy, perhaps

suddenly and to a significant degree. Governmental and

quasi-governmental authorities and regulators throughout the world

have previously responded to serious economic disruptions with a

variety of significant fiscal and monetary policy changes, including but

not limited to, direct capital infusions into companies, new monetary

programs and dramatically lower interest rates. An unexpected or

sudden reversal of these policies, or the ineffectiveness of these policies,

could increase volatility in securities markets, which could adversely

affect the Fund’s investments. Any market disruptions could also prevent

the Fund from executing advantageous investment decisions in a timely

manner. To the extent that the Fund has focused its investments in a

region enduring geopolitical market disruption, the Fund will face higher

risks of loss. Thus, investors should closely monitor current market

conditions to determine whether the Fund meets their individual

financial needs and tolerance for risk.

When inflationary price movements occur, fixed income securities

markets may experience heightened levels of interest rate, volatility and

liquidity risk. Interest rate increases in the future could cause the value

of a fund that invests in fixed income securities to decrease, which could

force the Fund to liquidate investments at disadvantageous times or

prices, therefore adversely affecting the Fund and its shareholders.

Higher interest rates generally lower the values of real estate-related

assets. When this does not occur as expected, it presents an increased

risk of a correction or severe downturn in real estate-related asset

prices, which could, by extension, adversely impact the value of other

investments (such as loans, securitized debt and other fixed income

securities). Such an impact could materialize in one real estate sector

and not another, or in a different manner in different real estate sectors.

Examples of the risks faced by real estate-related assets include: tenant

vacancy rates, increased tenant turnover and tenant concentration;

general real estate headwinds, including delinquencies and difficulties in

collecting rents and other payments (which increases the risk of owners

being unable to pay or otherwise defaulting on their own borrowings

and obligations); decreases in property values; increases in inflation,

upkeep costs and other expenses; fluctuations in rents; and increased

concentration in ownership of certain types of properties.

Exchanges and securities markets may close early, close late or issue

trading halts on specific securities, which may result in, among other

things, the Fund being unable to buy or sell certain securities or financial

instruments at an advantageous time or accurately price its portfolio

investments.

Asset Allocation Risk

The Fund’s investment performance depends upon how its assets are allocated and reallocated. A principal risk of investing in the Fund is that PIMCO may make less than optimal or poor asset allocation decisions, which could result in the Fund being underweight or overweight in sectors, asset classes, or geographies that perform differently than expected. PIMCO employs an active approach to allocation among multiple fixed income sectors, but there is no guarantee that such allocation techniques will produce the desired results. It is possible that PIMCO will focus on an investment that performs poorly or underperforms other investments under various market conditions. The Fund could experience losses as a result of these allocation decisions, which could result in the Fund being underweight or overweight in sectors, asset classes, or geographies that perform differently than expected.

Management Risk

The Fund is subject to management risk because it is an actively managed investment portfolio. PIMCO will apply investment techniques and risk analysis and may, in some cases, use proprietary models that are developed and maintained by PIMCO in making investment decisions for the Fund, or may determine that certain factors are more significant than others. There can be no guarantee that these decisions will produce the desired results or that the due diligence conducted by PIMCO will expose all material risks associated with an investment. Additionally, PIMCO may not be able to identify suitable investment

opportunities and may face competition from other investment

managers when identifying and consummating certain investments, or

may determine that certain factors are more significant than others.

Certain securities or other instruments in which the Fund seeks to invest

may not be available in the quantities desired, including in

circumstances where other funds for which PIMCO acts as investment

adviser, including funds with names, investment objectives and policies,

and/or portfolio management teams, similar to the Fund, are seeking to

invest in the same or similar securities or instruments. In addition,

regulatory restrictions, actual or perceived conflicts of interest or other

considerations may cause PIMCO to restrict or prohibit participation in

certain investments. In such circumstances, PIMCO may determine to

purchase other securities or instruments as substitutes. Such substitute

securities or instruments may not perform as intended, which could

result in losses to the Fund. To the extent the Fund employs strategies

targeting perceived pricing inefficiencies, arbitrage strategies or similar

strategies, it is subject to the risk that the pricing or valuation of the

securities and instruments involved in such strategies may change

unexpectedly, which may result in reduced returns or losses to the Fund.

Additionally, legislative, regulatory or tax developments may adversely

affect management of the Fund.

The Fund is also subject to the risk that deficiencies in the internal

systems or controls of PIMCO or another service provider will cause

losses for the Fund or hinder Fund operations. For example, trading

delays or errors (both human and systemic) could prevent the Fund from

purchasing a security expected to appreciate in value. Please refer to

“Portfolio Managers - Conflicts of Interest” in the SAI for further

information. Additionally, actual or perceived conflicts of interest may

affect the investment techniques available to PIMCO in connection with

managing the Fund, may cause PIMCO to restrict or prohibit

participation in certain investments and may also adversely affect the

ability of the Fund to achieve its investment objectives. There also can be

no assurance that all of the personnel of PIMCO will continue to be

associated with PIMCO for any length of time. The loss of the services of

one or more key employees of PIMCO could have an adverse impact on

the Fund’s ability to realize its investment objective.

In addition, the Fund may rely on various third-party sources to calculate

its NAV. As a result, the Fund is subject to certain operational risks

associated with reliance on service providers and service providers’ data

sources. In particular, errors or systems failures and other technological

issues may adversely impact the Fund’s calculations of its NAV, and NAV

calculation issues may result in inaccurately calculated NAVs, delays in

NAV calculation and/or the inability to calculate NAVs over extended

periods. The Fund may be unable to recover any losses associated with

such failures.

Issuer Risk

The value of a security may decline for a number of reasons that directly relate to the issuer, such as management performance, major litigation, investigations or other controversies, changes in the issuer’s financial condition or credit rating, changes in government regulations affecting the issuer or its competitive environment and strategic initiatives such as mergers, acquisitions or dispositions and the market response to any

such initiatives, financial leverage, reputation or reduced demand for the

issuer’s goods or services, as well as the historical and prospective

earnings of the issuer and the value of its assets. A change in the

financial condition of a single issuer may affect one or more other

issuers or securities markets as a whole. These risks can apply to the

Common Shares issued by the Fund and to the issuers of securities and

other instruments in which the Fund invests.

Interest Rate Risk

Interest rate risk is the risk that fixed income securities and other instruments in the Fund’s portfolio will fluctuate in value because of changes, or the anticipation of changes, in interest rates. Factors including central bank monetary policy, rising inflation rates, and changes in general economic conditions may cause interest rates to rise, which could cause the value of the Fund’s investments to decline. For example, as nominal interest rates rise, the value of certain securities held by the Fund is likely to decrease. Interest rate changes can be sudden and unpredictable, and the Fund may experience losses as a result of movements in interest rates. The Fund may not be able to hedge against changes in interest rates or may choose not to do so for cost or other reasons. In addition, any hedges may not work as intended.

Fixed income securities with longer durations tend to be more sensitive to changes in interest rates, usually making them more volatile than securities with shorter durations. The values of equity and other non-fixed income securities may also decline due to fluctuations. Duration is a measure used to determine the sensitivity of a security’s price to changes in interest rates that incorporates a security’s yield, coupon, final maturity and call features, among other characteristics.

Duration is useful primarily as a measure of the sensitivity of a fixed income security’s market price to interest rate (i.e., yield) movements. All other things remaining equal, for each one percentage point increase in interest rates, the value of a portfolio of fixed income investments would generally be expected to decline by one percent for every year of the portfolio’s average duration above zero. For example, the value of a portfolio of fixed income securities with an average duration of eight years would generally be expected to decline by approximately 8% if interest rates rose by one percentage point.

Dividend-paying equity securities, particularly those whose market price is closely related to their yield, may be more sensitive to changes in interest rates. During periods of rising interest rates, the values of such securities may decline and may result in losses to the Fund. Variable and floating rate securities generally are less sensitive to interest rate changes but may decline in value if their interest rates do not rise as much, or as quickly, as interest rates in general. Conversely, floating rate securities will not generally increase in value if interest rates decline.

Inverse floating rate securities may decrease in value if interest rates increase. Inverse floating rate securities may also exhibit greater price volatility than a fixed rate obligation with similar credit quality. When the Fund holds variable or floating rate securities, a decrease (or, in the

case of inverse floating rate securities, an increase) in market interest

rates will adversely affect the income received from such securities and

the NAV of the Fund’s shares.

A wide variety of factors can cause interest rates or yields of

U.S. Treasury securities (or yields of other types of bonds) to rise,

including but not limited to central bank monetary policies, changing

inflation or real growth rates, general economic conditions, increasing

bond issuances or reduced market demand for low yielding investments.

Risks associated with changes in interest rates may be heightened

under certain market conditions, such as during times when the Federal

Reserve raises interest rates or when such rates remain elevated

following a period of historically low levels. Additionally, the U.S. and

other governments have increased, and are likely to continue increasing,

their debt issuances, which may also heighten these risks. There is the

risk that the income generated by investments may not keep pace with

inflation. Actions by governments and central banking authorities can

result in increases or decreases in interest rates. Periods of higher

inflation could cause such authorities to raise interest rates, which may

adversely affect the Fund and its investments. In addition, changes in

monetary policy may exacerbate the risks associated with changing

interest rates. Further, in market environments where interest rates are

rising, issuers may be less willing or able to make principal and interest

payments on fixed-income investments when due.

During periods of very low or negative interest rates, the Fund may be

unable to maintain positive returns. Very low or negative interest rates

may magnify interest rate risk. Changing interest rates, including rates

that fall below zero, may have unpredictable effects on markets, may

result in heightened market volatility and may detract from Fund

performance to the extent the Fund is exposed to such interest rates.

Measures such as average duration may not accurately reflect the true

interest rate sensitivity of the Fund. This is especially the case if the Fund

consists of securities with widely varying durations. Therefore, if the

Fund has an average duration that suggests a certain level of interest

rate risk, the Fund may in fact be subject to greater interest rate risk

than the average would suggest. This risk is greater to the extent the

Fund uses leverage or derivatives in connection with the management

of the Fund, which would be magnified in the event that initial or

variation margin is not provided by the counterparty to such transaction

(or not provided below a certain threshold amount).

Convexity is an additional measure used to understand a security's or

Fund's interest rate sensitivity. Convexity measures the rate of change of

duration in response to changes in interest rates. With respect to a

security’s price, a larger convexity (positive or negative) may imply more

dramatic price changes in response to changing interest rates. Convexity

may be positive or negative. Negative convexity implies that interest

rate increases result in increased duration and vice versa, meaning

increased sensitivity in prices in response to changes in interest rates.

Thus, securities with negative convexity, which may include bonds with

traditional call features and certain mortgage-backed securities, may

experience greater losses in periods of rising interest rates. Accordingly,

if the Fund holds such securities, the Fund may be subject to a greater

risk of losses in periods of rising interest rates.

Credit Risk

The Fund could experience losses if the issuer or guarantor of a fixed income security (including a security purchased with securities lending collateral), the counterparty to a derivatives contract, or the issuer or guarantor of collateral, repurchase agreement or a loan of portfolio securities is unable or unwilling, or is perceived (whether by market participants, rating agencies, pricing services or otherwise) as unable or unwilling, to make timely principal and/or interest payments or to otherwise honor its financial obligations. The risk that such issuer, guarantor or counterparty is less willing or able to do so is heightened in market environments where interest rates are changing, notably when rates are rising. The downgrade of the credit rating of a security or of the issuer of a security held by the Fund may decrease its value. Measures such as average credit quality may not accurately reflect the true credit risk of the Fund. This is especially the case if the Fund consists of securities with widely varying credit ratings. Securities are subject to varying degrees of credit risk, which are often reflected in credit ratings. This risk is greater to the extent the Fund uses leverage or derivatives in connection with the management of the Fund, which would be magnified in the event that initial or variation margin is not provided by the counterparty to such transaction (or not provided below a certain threshold amount). Rising or high interest rates may deteriorate the credit quality of an issuer or counterparty, particularly if an issuer or counterparty faces challenges rolling or refinancing its obligations. The Fund’s investments may be adversely affected if any of the issuers it is invested in are subject to an actual or perceived (whether by market participants, rating agencies, pricing services or otherwise) deterioration to their credit quality.

Credit risk includes credit spread risk, which is the risk that credit spreads (i.e., the difference in yield between securities that is due to differences in their actual or perceived credit quality) may increase when the market believes that investments generally have a greater risk of default. Increasing credit spreads may reduce the market values of the Fund’s investments. Credit spreads often increase more for lower rated and unrated securities than for investment grade securities. In addition, when credit spreads increase, reductions in market value will generally be greater for longer-maturity securities. Further, credit spread duration (a measure of credit spread risk) can vary significantly from interest rate duration (e.g., for floating rate debt securities, credit spread duration typically will be higher than interest rate duration). The Fund may add credit spread duration to its portfolio, for example through the use of derivatives (e.g., credit default swaps), even while it has lower interest rate duration. The credit spread duration of the Fund’s portfolio may vary, in some cases significantly, from its interest rate duration. All descriptions of duration in this prospectus refer to interest rate duration unless otherwise noted.

Mortgage-Related and Other Asset-Backed Instruments Risk

The mortgage-related assets in which the Fund may invest include, but are not limited to, any security, instrument or other asset that is related to U.S. or non-U.S. mortgages, including those issued by private originators or issuers, or issued or guaranteed as to principal or interest by the U.S. government or its agencies or instrumentalities or by

non-U.S. governments or authorities, such as, without limitation, assets

representing interests in, collateralized or backed by, or whose values

are determined in whole or in part by reference to any number of

mortgages or pools of mortgages or the payment experience of such

mortgages or pools of mortgages, including REMICs, which could

include Re-REMICs, mortgage pass-through securities, inverse floaters,

CMOs, CLOs, multi-class pass-through securities, private mortgage

pass-through securities, stripped mortgage securities (generally

interest-only and principal-only securities), mortgage-related asset

backed securities and mortgage-related loans (including through

participations, assignments, originations and whole loans), including

commercial and residential mortgage loans. Exposures to

mortgage-related assets through derivatives or other financial

instruments will be considered investments in mortgage-related assets.

The Fund may also invest in other types of ABS, including CDOs, CBOs

and CLOs and other similarly structured securities.

Mortgage-related and other asset-backed instruments represent

interests in “pools” of mortgages or other assets such as consumer

loans or receivables held in trust and often involve risks that are

different from or possibly more acute than risks associated with other

types of debt instruments.

Generally, rising interest rates tend to extend the duration of fixed rate

mortgage-related assets, making them more sensitive to changes in

interest rates. Compared to other fixed income investments with similar

maturity and credit, mortgage-related securities may increase in value to

a lesser extent when interest rates decline and may decline in value to a

similar or greater extent when interest rates rise. As a result, in a period

of rising interest rates, the Fund may exhibit additional volatility since

individual mortgage holders are less likely to exercise prepayment

options, thereby putting additional downward pressure on the value of

these securities and potentially causing the Fund to experience losses.

This is known as extension risk. Mortgage-backed securities can be

highly sensitive to rising interest rates, such that even small movements

can cause the Fund to lose value. Mortgage-backed securities, and in

particular those not backed by a government guarantee, are subject to

credit risk. When interest rates decline, borrowers may pay off their

mortgages sooner than expected. This can reduce the returns of the

Fund because the Fund may have to reinvest that money at the lower

prevailing interest rates. In addition, the creditworthiness, servicing

practices, and financial viability of the servicers of the underlying

mortgage pools present significant risks. For instance, a servicer may be

required to make advances in respect of delinquent loans underlying the

mortgage-related securities; however, servicers experiencing financial

difficulties may not be able to perform these obligations. Additionally,

both mortgage-related securities and asset-backed securities are subject

to risks associated with fraud or negligence by, or defalcation of, their

servicers. These securities are also subject to the risks of the underlying

loans. In some circumstances, a servicer’s or originator’s mishandling of

documentation related to the underlying collateral (

e.g.

, failure to

properly document a security interest in the underlying collateral) may

affect the rights of security holders in and to the underlying collateral. In

addition, the underlying loans may have been extended pursuant to

inappropriate underwriting guidelines, to no underwriting guidelines at

all, or to fraudulent origination practices. The owner of a

mortgage-backed security’s ability to recover against the sponsor,

servicer or originator is uncertain and is often limited. The Fund’s

investments in other asset-backed instruments are subject to risks

similar to those associated with mortgage-related assets, as well as

additional risks associated with the nature of the assets and the

servicing of those assets. Payment of principal and interest on

asset-backed instruments may be largely dependent upon the cash

flows generated by the assets backing the instruments, and

asset-backed instruments may not have the benefit of any security

interest in the related assets.

Subordinate mortgage-backed or asset-backed instruments are paid

interest only to the extent that there are funds available to make

payments. To the extent the collateral pool includes a large percentage

of delinquent loans, there is a risk that interest payments on

subordinate mortgage-backed or asset-backed instruments will not be

fully paid.

There are multiple tranches of mortgage-backed and asset-backed

instruments, offering investors various maturity and credit risk

characteristics. For example, tranches may be categorized as senior,

mezzanine, and subordinated/equity or “first loss.” The most senior

tranche of a mortgage-backed or asset-backed instrument generally has

the greatest collateralization and generally pays the lowest interest rate.

If there are defaults or the collateral otherwise underperforms,

scheduled payments to senior tranches generally take precedence over

those of mezzanine tranches, and scheduled payments to mezzanine

tranches take precedence over those to subordinated/equity tranches.

Lower tranches represent lower degrees of credit quality and pay higher

interest rates intended to compensate for the attendant risks. The return

on the lower tranches is especially sensitive to the rate of defaults in the

collateral pool. The lowest tranche (

i.e.

, the ”equity“ or ”residual“

tranche) generally specifically receives the residual interest payments

(

i.e.

, money that is left over after the higher tranches have been paid

and expenses of the issuing entities have been paid) rather than a fixed

interest rate. The Fund may also invest in the residual or equity tranches

of mortgage-related and other asset-backed instruments, which may be

referred to as subordinate mortgage-backed or asset-backed

instruments and interest-only mortgage-backed or asset-backed

instruments. The Fund expects that investments in subordinate

mortgage-backed and other asset-backed instruments will be subject to

risks arising from delinquencies and foreclosures, thereby exposing its

investment portfolio to potential losses. Subordinate securities of

mortgage-backed and other asset-backed instruments are also subject

to greater credit risk than those mortgage-backed or other asset-backed

instruments that are more highly rated.

The mortgage markets in the United States and in various foreign

countries have experienced extreme difficulties in the past that

adversely affected the performance and market value of certain of the

Fund's mortgage-related investments. Delinquencies and losses on

residential and commercial mortgage loans (especially subprime and

second-lien mortgage loans) may increase, and a decline in or flattening

of housing and other real property values may exacerbate such

delinquencies and losses. In addition, reduced investor demand for

mortgage loans and mortgage-related securities and increased investor

yield requirements have caused limited liquidity in the secondary market

for mortgage-related securities, which can adversely affect the market

value of mortgage-related securities. It is possible that such limited

liquidity in such secondary markets could continue or worsen.

With respect to risk retention tranches (

i.e.

, eligible residual interests

initially held by the sponsors of CMBS and other eligible securitizations

pursuant to the U.S. Risk Retention Rules), a third-party purchaser, such

as the Fund, must hold its retained interest, unhedged, for at least five

years following the closing of the CMBS transaction, after which it is

entitled to transfer its interest in the securitization to another person

that meets the requirements for a third-party purchaser. Even after the

required holding period has expired, due to the generally illiquid nature

of such investments, no assurance can be given as to what, if any, exit

strategies will ultimately be available for any given position.

In addition, there is limited guidance on the application of the final

U.S. Risk Retention Rules to specific securitization structures. There can

be no assurance that the applicable federal agencies charged with the

implementation of the final U.S. Risk Retention Rules (

e.g.

, the FDIC, the

Comptroller of the Currency, the Federal Reserve Board, the SEC, the

Department of Housing and Urban Development, and the Federal

Housing Finance Agency) could not take positions in the future that

differ from the interpretation of such rules taken or embodied in such

securitizations, or that the final U.S. Risk Retention Rules will not

change.

Furthermore, in situations where the Fund invests in risk retention

tranches of securitizations structured by third parties, the Fund may be

required to execute one or more letters or other agreements, the exact

form and nature of which will vary (each, a “Risk Retention

Agreement”) under which it will make certain undertakings designed to

ensure such securitization complies with the U.S. Risk Retention Rules.

Such Risk Retention Agreements may include a variety of

representations, warranties, covenants and other indemnities, each of

which may run to various transaction parties. If the Fund breaches any

undertakings in any Risk Retention Agreement, it will be exposed to

claims by the other parties thereto, including for any losses incurred as a

result of such breach, which could be significant and exceed the value of

the Fund’s investments. Direct investments in mortgages and other

types of collateral are subject to risks similar (and in some cases to a

greater degree) to those described above.

Mortgage-Related Derivative Instruments Risk

The Fund may engage in derivative transactions related to mortgage-backed securities, including purchasing and selling exchange-listed and OTC put and call options, futures and forwards on mortgages and mortgage-backed securities. The Fund may also invest in mortgage-backed securities credit default swaps, which include swaps the reference obligation for which is a mortgage-backed security or related index, such as the CMBX Index (a tradeable index referencing a basket of commercial mortgage-backed securities) or the ABX (a

tradeable index referencing a basket of sub-prime mortgage-backed

securities). The Fund may invest in newly developed mortgage related

derivatives that may hereafter become available.

Derivative mortgage-backed securities (such as principal-only (“POs”),

interest-only (“IOs”) or inverse floating rate securities) are particularly

exposed to call and extension risks. Small changes in mortgage

prepayments can significantly impact the cash flows and the market

value of these derivative instruments. In general, the risk of faster than

anticipated prepayments adversely affects IOs, super floaters and

premium priced mortgage-backed securities. The risk of slower than

anticipated prepayments generally affects POs, floating-rate securities

subject to interest rate caps, support tranches and discount priced

mortgage-backed securities. In addition, particular derivative

instruments may be leveraged such that their exposure (i.e., price

sensitivity) to interest rate and/or prepayment risk is magnified.

Mortgage-related derivative instruments involve risks associated with

mortgage-related and other asset-backed instruments, privately-issued

mortgage-related securities, the mortgage market, the real estate

industry, derivatives and credit default swaps. See “Mortgage-Related

and Other Asset-Backed Instruments Risk,” “Privately-Issued

Mortgage-Related Securities Risk,” “Derivatives Risk,” and “Credit

Default Swaps Risk.”

Privately-Issued Mortgage-Related Securities Risk

There are no direct or indirect government or agency guarantees of payments in pools created by non-governmental issuers. Privately-issued mortgage-related securities are also not subject to the same underwriting requirements for the underlying mortgages that are applicable to those mortgage-related securities that have a government or government sponsored entity guarantee.

Privately-issued mortgage-related securities are not traded on an exchange and there may be a limited market for the securities, especially when there is a perceived weakness in the mortgage and real estate market sectors. Without an active trading market, mortgage-related securities held in the Fund’s portfolio may be particularly difficult to value because of the complexities involved in assessing the value of the underlying mortgage loans.

Additionally, privately-issued mortgage-related securities, such as privately-held or non-traded REITs, may bear higher fees than publicly-traded REITs. Privately-held REITs generally are exempt from registration under the Securities Act and, as such, are not subject to the same disclosure requirements as REITs registered under the Securities Act, which may make privately-held REITs more difficult to evaluate from an investment perspective.

High Yield Securities Risk

To the extent that the Fund invests in high yield securities and unrated securities of similar credit quality (commonly known as “high yield securities” or “junk bonds”), the Fund may be subject to greater levels of market risk, credit risk, call risk and liquidity risk than funds that do not invest in such securities, which could have a negative effect on the NAV and market price of the Fund’s Common Shares or Common Share

dividends. High yield securities may be issued by companies that are

restructuring, are smaller and less creditworthy or are more highly

leveraged or indebted than other companies, or are financially

distressed, and therefore they typically have more difficulty making

scheduled payments of principal and interest than issuers of higher

rated investments. These securities are considered predominantly

speculative by rating agencies with respect to an issuer’s continuing

ability to make principal and interest payments, and their value may be

more volatile than other types of securities. An economic downturn or

individual issuer developments could adversely affect the market for

these securities and reduce the Fund’s ability to sell these securities at

an advantageous time or price. An economic downturn could also lead

to a higher non-payment rate and, a high yield security may lose

significant market value before a default occurs. The Fund may purchase

distressed securities that are in default or the issuers of which are in

bankruptcy, which involve heightened risks.

High yield securities structured as zero-coupon bonds or pay-in-kind

securities tend to be especially volatile as they are particularly sensitive

to downward pricing pressures from rising interest rates or widening

spreads and may require the Fund to make taxable distributions of

imputed income without receiving the actual cash currency. Issuers of

high yield securities may have the right to “call” or redeem the issue

prior to maturity, which may result in the Fund having to reinvest the

proceeds in other high yield securities or similar instruments that may

pay lower interest rates. The Fund may also be subject to greater levels

of liquidity risk than funds that do not invest in high yield securities.

Consequently, transactions in high yield securities may involve greater

costs than transactions in more actively traded securities. A lack of

publicly-available information, irregular trading activity and wide

bid/ask spreads among other factors, may, in certain circumstances,

make high yield debt more difficult to sell at an advantageous time or

price than other types of securities or instruments. These factors may

result in the Fund being unable to realize full value for these securities

and/or may result in the Fund not receiving the proceeds from a sale of

a high yield security for an extended period after such sale, each of

which could result in losses to the Fund. Because of the risks involved in

investing in high yield securities, an investment in the Fund should be

considered speculative.

In general, lower rated debt securities carry a greater degree of risk that

the issuer will lose its ability to make interest and principal payments,

which could have a negative effect on the Fund. Securities of below

investment grade quality are regarded as having predominantly

speculative characteristics with respect to capacity to pay interest and

repay principal and are commonly referred to as “high yield” securities

or “junk bonds.” High yield securities involve a greater risk of default

and their prices are generally more volatile and sensitive to actual or

perceived negative developments. Debt securities in the lowest

investment grade category also may be considered to possess some

speculative characteristics by certain rating agencies. The Fund may

purchase stressed or distressed securities that are in default or the

issuers of which are in bankruptcy, which involve heightened risks.

An economic downturn could severely affect the ability of issuers

(particularly those that are highly leveraged) to service or repay their

debt obligations. Lower-rated securities are generally less liquid than

higher-rated securities, which may have an adverse effect on the Fund’s

ability to dispose of them. High yield securities are particularly sensitive

to adverse economic, market, industry or issuer-specific developments,

which may result in an increased incidence of default. During periods of

deteriorating economic conditions, such as recessions or periods of

rising unemployment, or changing interest rates (notably increases),

high yield securities are particularly susceptible to credit and default risk

as delinquencies and losses could increase, and such increases could be

sudden and significant. An economic downturn or individual issuer

developments could adversely affect the market for these investments

and reduce a Fund's ability to sell these investments at an

advantageous time or price. These types of developments could cause

high yield securities to lose significant market value, including before a

default occurs only at prices lower than if such securities were widely

traded. In the event of default, the Fund may incur additional expenses

to seek recovery or to negotiate new terms with a defaulting issuer. To

the extent the Fund focuses on below investment grade debt

obligations, PIMCO's capabilities in analyzing credit quality and

associated risks will be particularly important, and there can be no

assurance that PIMCO will be successful in this regard. Due to the risks

involved in investing in high yield securities, an investment in the Fund

should be considered speculative.

The Fund’s credit quality policies apply only at the time a security is

purchased, and the Fund is not required to dispose of a security in the

event that a rating agency or PIMCO downgrades its assessment of the

credit characteristics of a particular issue. In determining whether to

retain or sell such a security, PIMCO may consider factors including, but

not limited to, PIMCO's assessment of the credit quality of the issuer of

such security, the price at which such security could be sold and the

rating, if any, assigned to such security by other rating agencies. Analysis

of creditworthiness may be more complex for issuers of high yield

securities than for issuers of higher quality debt securities. See “The

Fund's Investment Objectives and Strategies-Portfolio Contents-High

Yield Securities” for additional information.

Municipal Bond Risk

Investing in the municipal bond market involves the risks of investing in debt securities generally and certain other risks. The amount of public information available about the municipal bonds in which the Fund may invest is generally less than that for corporate equities or bonds, and the investment performance of the Fund’s investment in municipal bonds may therefore be more dependent on the analytical abilities of PIMCO than its investments in taxable bonds. The secondary market for municipal bonds, particularly below investment grade bonds in which the Fund may invest, also tends to be less well developed or liquid than many other securities markets, which may adversely affect the Fund’s ability to sell municipal bonds at attractive prices or value municipal bonds.

The ability of municipal issuers to make timely payments of interest and

principal may be diminished during general economic downturns, by

litigation, legislation or political events, or by the bankruptcy of the

issuer. Budgetary constraints of local, state, and federal governments

upon which the issuers may be relying for funding may also impact

Municipal Bonds. Laws, referenda, ordinances or regulations enacted in

the future by Congress or state legislatures or the applicable

governmental entity could extend the time for payment of principal

and/or interest, or impose other constraints on enforcement of such

obligations, or on the ability of municipal issuers to levy taxes. Issuers of

municipal securities also might seek protection under the bankruptcy

laws. In the event of bankruptcy of such an issuer, the Fund could

experience delays in collecting principal and interest and the Fund may

not, in all circumstances, be able to collect all principal and interest to

which it is entitled. To enforce its rights in the event of a default in the

payment of interest or repayment of principal, or both, the Fund may

take possession of and manage the assets securing the issuer's

obligations on such securities, which may increase the Fund's operating

expenses. The differences in priorities, perspectives and economic

interests of bondholders and taxpayers or users of facilities financed by

municipal bonds may affect the remedies available to the Fund in the

event of a default. Adverse economic, business, legal or political

developments might affect all or a substantial portion of the Fund's

municipal bonds in the same manner. The Fund will be particularly

subject to these risks to the extent that it focuses its investments in

municipal bonds in a particular state or geographic region. Municipal

securities may also have exposure to potential risks resulting from

climate change and environmental events, including extreme weather,

flooding, fires and other natural disasters. Climate risks, if materialized,

can adversely impact a municipal issuer's financial plans in current or

future years or may impair a funding source for municipal issuer's

revenue bonds. As a result, the impact of climate risks could adversely

impact the value of the Fund's municipal securities investments.

The Fund may invest in trust certificates issued in tender option bond

programs. In these programs, a trust typically issues two classes of

certificates and uses the proceeds to purchase municipal securities

having relatively long maturities and bearing interest at a fixed interest

rate substantially higher than prevailing short-term tax-exempt rates.

There is a risk that the Fund will not be considered the owner of a

tender option bond for federal income tax purposes, and thus will not

be entitled to treat such interest as exempt from federal income tax.

Certain tender option bonds may be less liquid or may become less

liquid as a result of, among other things, a credit rating downgrade, a

payment default or a disqualification from tax-exempt status. The Fund’s

investment in the securities issued by a tender option bond trust may

involve greater risk and volatility than an investment in a fixed rate

bond, and the value of such securities may decrease significantly when

market interest rates increase. Tender option bond trusts could be

terminated due to market, credit or other events beyond the Fund’s

control, which could require the Fund to dispose of portfolio investments

at inopportune times and prices. The Fund may use a tender option

bond program as a way of achieving leverage in its portfolio, in which

case the Fund will be subject to leverage risk. The use of tender option

bonds will impact the Fund's duration and cause the Fund to be subject

to increased duration and interest rate risk.

The Fund may invest in revenue bonds, which are typically issued to

fund a wide variety of capital projects including electric, gas, water and

sewer systems; highways, bridges and tunnels; port and airport facilities;

colleges and universities; and hospitals. Because the principal security

for a revenue bond is generally the net revenues derived from a

particular facility or group of facilities or, in some cases, from the

proceeds of a special excise or other specific revenue source or annual

revenues, there is no guarantee that the particular project will generate

enough revenue to pay its obligations, in which case the Fund’s

performance may be adversely affected.

The Fund may invest in participations in lease obligations or installment

purchase contract obligations of municipal authorities or entities.

Although a municipal lease obligation does not constitute a general

obligation of the municipality for which the municipality's taxing power

is pledged, a municipal lease obligation is ordinarily backed by the

municipality's covenant to budget for, appropriate and make the

payments due under the municipal lease obligation. However, certain

municipal lease obligations contain “non-appropriation” clauses, which

provide that the municipality has no obligation to make lease or

installment purchase payments in future years unless money is

appropriated for such purpose on a yearly basis. In the case of a

“non-appropriation” lease, the Fund's ability to recover under the lease

in the event of non-appropriation or default will be limited solely to the

repossession of the leased property, without recourse to the general

credit of the lessee, and the disposition or re-leasing of the property

might prove difficult.

Municipal securities are also subject to interest rate, credit, and liquidity

risk.

Interest Rate Risk.

The value of municipal securities, similar to

other fixed income securities, will likely drop as interest rates rise in the

general market. Conversely, when rates decline, bond prices generally

rise.

Credit Risk.

The risk that a borrower may be unable to make interest

or principal payments when they are due. Funds that invest in municipal

securities rely on the ability of the issuer to service its debt. This subjects

the Fund to credit risk in that the municipal issuer may be fiscally

unstable or exposed to large liabilities that could impair its ability to

honor its financial obligations. Municipal issuers with significant debt

service requirements, in the near-to mid-term; unrated issuers and those

with less capital and liquidity to absorb additional expenses may be

most at risk. To the extent the Fund invests in lower quality or high yield

municipal securities, it may be more sensitive to the adverse credit

events in the municipal market. The treatment of municipalities in

bankruptcy is more uncertain, and potentially more adverse to debt

holders, than for corporate issues.

Liquidity Risk.

The risk that investors may have difficulty finding a

buyer when they seek to sell, and therefore, may be forced to sell at a

discount to the market value. Liquidity may sometimes be impaired in

the municipal market and because the Fund primarily invests in

municipal securities, it may find it difficult to purchase or sell such

securities at opportune times. The municipal securities market can be

susceptible to increases in volatility and decreases in liquidity. Liquidity

can decline unpredictably in response to a variety of factors, including

overall economic conditions or credit tightening. Increases in volatility

and decreases in liquidity also may be caused by a rise in interest rates

(or the expectation of a rise in interest rates). Liquidity can be impaired

due to interest rate concerns, credit events, or general supply and

demand imbalances. Depending on the particular issuer and current

economic conditions, municipal securities could be deemed more

volatile investments.

In addition to general municipal market risks, different municipal sectors

may face different risks. For instance, general obligation bonds are

secured by the full faith, credit, and taxing power of the municipality

issuing the obligation. As such, timely payment depends on the

municipality's ability to raise tax revenue and maintain a fiscally sound

budget. The timely payments may also be influenced by any unfunded

pension liabilities or other post-employee benefit plan liabilities.

Revenue bonds are secured by special tax revenues or other revenue

sources. If the specified revenues do not materialize, then the bonds

may not be repaid.

Private activity bonds are yet another type of municipal security.

Municipalities use private activity bonds to finance the development of

industrial facilities for use by private enterprise. Principal and interest

payments are to be made by the private enterprise benefiting from the

development, which means that the holder of the bond is exposed to

the risk that the private issuer may default on the bond.

Moral obligation bonds are usually issued by special purpose public

entities. If the public entity defaults, repayment becomes a “moral

obligation” instead of a legal one. The lack of a legally enforceable right

to payment in the event of default poses a special risk for a holder of

the bond because it has little or no ability to seek recourse in the event

of default.

In addition, a significant restructuring of federal income tax rates or

even serious discussion on the topic in Congress could cause municipal

bond prices to fall. The demand for municipal securities is strongly

influenced by the value of tax-exempt income to investors relative to

taxable income. Lower income tax rates potentially reduce the

advantage of owning municipal securities.

Similarly, changes to state or federal regulation tied to a specific sector,

such as the hospital sector, could have an impact on the revenue stream

for a given subset of the market.

Municipal notes are similar to general municipal debt obligations, but

they generally possess shorter terms. Municipal notes can be used to

provide interim financing and may not be repaid if anticipated revenues

are not realized.

Distressed and Defaulted Securities Risk

Investments in the securities of financially distressed issuers involve substantial risks, including the risk of default. Distressed securities generally trade significantly below “par” or full value because investments in such securities and debt of distressed issuers or issuers in default are considered speculative and involve substantial risks in addition to the risks of investing in high-yield bonds. Such investments may be in default at the time of investment. In addition, these securities may fluctuate more in price, and are typically less liquid. The Fund also will be subject to significant uncertainty as to when, and in what manner, and for what value obligations evidenced by securities of financially distressed issuers will eventually be satisfied. Defaulted obligations might be repaid only after lengthy workout or bankruptcy proceedings, during which the issuer might not make any interest or other payments. In any such proceeding relating to a defaulted obligation, the Fund may lose its entire investment or may be required to accept cash or securities with a value substantially less than its original investment. Moreover, any securities received by the Fund upon completion of a workout or bankruptcy proceeding may be less liquid, speculative or restricted as to resale. Similarly, if the Fund participates in negotiations with respect to any exchange offer or plan of reorganization with respect to the securities of a distressed issuer, the Fund may be restricted from disposing of such securities. To the extent that the Fund becomes involved in such proceedings, the Fund may have a more active participation in the affairs of the issuer than that assumed generally by an investor. The Fund may incur additional expenses to the extent it is required to seek recovery upon a default in the payment of principal or interest on its portfolio holdings.

Also among the risks inherent in investments in a troubled issuer is that it frequently may be difficult to obtain information as to the true financial condition of such issuer. PIMCO's judgments about the credit quality of a financially distressed issuer and the relative value of its securities may prove to be wrong.

Inflation-Indexed Security Risk

Inflation-indexed debt securities are subject to the effects of actual or anticipated changes in market interest rates caused by factors other than inflation (e.g., real interest rates). In general, the value of an inflation-indexed security, including Treasury Inflation-Protected Securities (“TIPS”), tends to decrease when real interest rates increase and can increase when real interest rates decrease. Thus generally, during periods of rising inflation, the value of inflation-indexed securities will tend to increase and during periods of deflation, their value will tend to decrease. Interest payments on inflation-indexed securities are unpredictable and will fluctuate as the principal and interest are adjusted for inflation. There can be no assurance that the inflation index used (i.e., the Consumer Price Index (“CPI”)), which is calculated and published by a third party, will accurately measure the real rate of inflation in the prices of goods and services. Increases in the principal value of TIPS due to inflation are considered taxable ordinary income for the amount of the increase in the calendar year. Any increase in the principal amount of an inflation-indexed debt security will be considered taxable ordinary income, even though the Fund will not

receive the principal until maturity. Additionally, a CPI swap can

potentially lose value if the realized rate of inflation over the life of the

swap is less than the fixed market implied inflation rate (fixed breakeven

rate) that the investor agrees to pay at the initiation of the swap. With

municipal inflation-indexed securities, the inflation adjustment is

integrated into the coupon payment, which is federally tax-exempt (and

may be state tax-exempt). For municipal inflation-indexed securities,

there is no adjustment to the principal value. Because municipal

inflation-indexed securities are a small component of the municipal

bond market, they may be less liquid than conventional municipal

bonds.

Debt Securities Risk

Debt securities are generally subject to the risks described below and further herein:

Issuer risk. The value of debt securities may decline for a number of reasons that directly relate to the issuer, such as management performance, financial leverage, reduced demand for the issuer’s goods and services, historical and prospective earnings of the issuer and the value of the assets of the issuer. A change in the financial condition of a single issuer may affect securities markets as a whole. These risks can apply to the Common Shares issued by the Fund and to the issuers of securities and other instruments in which the Fund invests.

Interest rate risk. The market value of debt securities can change in response to interest rate changes and other factors. Interest rate risk is the risk that prices of certain debt securities generally will increase as interest rates fall and decrease as interest rates rise, which would be reflected in the Fund’s NAV. The Fund may lose money if short-term or long-term interest rates rise sharply in a manner not anticipated by the Fund’s management. Moreover, because rates on certain floating rate debt securities typically reset only periodically, changes in prevailing interest rates (and particularly sudden and significant changes) can be expected to cause some fluctuations in the NAV of the Fund to the extent that it invests in floating rate debt securities.

Prepayment risk. During periods of declining interest rates, borrowers may prepay principal. This may force the Fund to reinvest in lower yielding securities, resulting in a possible decline in the Fund’s income and distributions.

Credit risk. Credit risk is the risk that one or more debt securities in the Fund’s portfolio will decline in price or fail to pay interest or principal when due because the issuer of the security experiences a decline in its financial status. Credit risk is increased when a portfolio security is downgraded or the perceived creditworthiness of the issuer deteriorates.

Reinvestment risk. Reinvestment risk is the risk that income from the Fund’s portfolio will decline if the Fund invests the proceeds from matured, traded or called fixed income securities at market interest rates that are below the portfolio’s current earnings rate.

Duration and maturity risk. The Fund may seek to adjust the duration or maturity of its investments in debt securities based on its

assessment of current and projected market conditions. The Fund may

incur costs in seeking to adjust the average duration or maturity of its

portfolio of debt securities. There can be no assurances that the Fund’s

assessment of current and projected market conditions will be correct or

that any strategy to adjust duration or maturity will be successful.

In addition, from time to time, uncertainty regarding the status of

negotiations in the U.S. government to increase the statutory debt

ceiling could impact the creditworthiness of the United States and could

impact the liquidity and value of U.S. Government and other securities

and ultimately the Fund.

Sovereign Debt Risk

In addition to the other risks applicable to debt investments, sovereign debt (debt issued by a foreign government) may decline in value as a result of default or other adverse credit event resulting from an issuer’s inability or unwillingness to make principal or interest payments in a timely fashion. A sovereign entity’s failure to make timely payments on its debt can result from many factors, including, without limitation, insufficient foreign (non-U.S.) currency reserves or an inability to sufficiently manage fluctuations in relative currency valuations, an inability or unwillingness to satisfy the demands of creditors and/or relevant supranational entities regarding debt service or economic reforms, the size of the debt burden relative to economic output and tax revenues, cash flow difficulties, and other political and social considerations. The risk of loss to the Fund in the event of a sovereign debt default or other adverse credit event is heightened by the unlikelihood of any formal recourse or means to enforce its rights as a holder of the sovereign debt. In addition, sovereign debt restructurings, which may be shaped by entities and factors beyond the Fund’s control, may result in a loss in value of the Fund’s sovereign debt holdings.

Senior Debt Risk

The Fund will be subject to greater levels of credit risk than funds that do not invest in below investment grade senior debt. The Fund may also be subject to greater levels of liquidity risk than funds that do not invest in senior debt. Restrictions on transfers in loan agreements, a lack of publicly available information and other factors may, in certain instances, make senior debt more difficult to sell at an advantageous time or price than other types of securities or instruments. Additionally, if the issuer of senior debt prepays, the Fund will have to consider reinvesting the proceeds in other senior debt or similar instruments that may pay lower interest rates.

Zero-Coupon Bonds, Step-Ups and Payment-In-Kind Securities Risk

The market prices of zero-coupon, step-ups and payment-in-kind securities are generally more volatile than the prices of securities that pay interest periodically and in cash, and are likely to respond to changes in interest rates to a greater degree than other types of debt securities with similar maturities and credit quality. Because zero-coupon securities bear no interest, their prices are especially volatile, and because zero-coupon bondholders do not receive interest payments, the prices of zero-coupon securities generally fall more

dramatically than those of bonds that pay interest on a current basis

when interest rates rise. The market for zero-coupon and

payment-in-kind securities may suffer decreased liquidity. In addition, as

these securities may not pay cash interest, the Fund’s investment

exposure to these securities and their risks, including credit risk, will

increase during the time these securities are held in the Fund’s portfolio.

Further, to maintain its qualification for treatment as a RIC and to avoid

Fund-level U.S. federal income and/or excise taxes, the Fund is required

to distribute to its shareholders any income it is deemed to have

received in respect of such investments, notwithstanding that cash has

not been received currently, and the value of paid-in-kind interest.

Consequently, the Fund may have to dispose of portfolio securities

under disadvantageous circumstances to generate the cash, or may

have to leverage itself by borrowing the cash to satisfy this distribution

requirement. The required distributions, if any, would result in an

increase in the Fund’s exposure to these securities. Zero coupon bonds,

step-ups and payment-in-kind securities allow an issuer to avoid or

delay the need to generate cash to meet current interest payments and,

as a result, may involve greater credit risk than bonds that pay interest

currently or in cash. The Fund would be required to distribute the

income on these instruments as it accrues, even though the Fund will

not receive the income on a current basis or in cash. Thus, the Fund may

sell other investments, including when it may not be advisable to do so,

to make income distributions to its shareholders.

Loans and Other Indebtedness; Loan Acquisitions, Participations and Assignments Risk

Loan interests may take the form of (i) direct interests acquired during a primary distribution or other purchase of a loan, (ii) loans originated by the Fund or (iii) assignments of, novations of or participations in all or a portion of a loan acquired in secondary markets. In addition to credit risk and interest rate risk, the Fund's exposure to loan interests may be subject to additional risks. For example, purchasers of loans and other forms of direct indebtedness depend primarily upon the creditworthiness of the borrower for payment of principal and interest. Loans are subject to the risk that scheduled interest or principal payments will not be made in a timely manner or at all, either of which may adversely affect the value of the loan. If the Fund does not receive scheduled interest or principal payments on such indebtedness, the Fund’s share price and yield could be adversely affected. Loans that are fully secured may offer the Fund more protection than an unsecured loan in the event of non-payment of scheduled interest or principal if the Fund is able to access and monetize the collateral. However, the collateral underlying a loan, if any, may be unavailable or insufficient to satisfy a borrower’s obligation. If the Fund becomes owner, whole or in part, of any collateral after a loan is foreclosed, the Fund may incur costs associated with owning and/or monetizing its ownership of the collateral.

During periods of deteriorating economic conditions, such as recessions or periods of rising unemployment, or changing interest rates (notably increases), delinquencies and losses generally increase, sometimes dramatically, with respect to obligations under such loans. An economic downturn or individual corporate developments could adversely affect

the market for these instruments and reduce the Fund’s ability to sell

these instruments at an advantageous time or price. An economic

downturn could also lead to a higher non-payment rate and, a loan may

lose significant market value before a default occurs.

Investments in loans through a purchase of a loan, loan origination or a

direct assignment of a financial institution’s interests with respect to a

loan may involve additional risks to the Fund. For example, if a loan is

foreclosed, the Fund could become owner, in whole or in part, of any

collateral, which could include, among other assets, real estate or other

real or personal property, and would bear the costs and liabilities

associated with owning and holding or disposing of the collateral.

Moreover, the purchaser of an assignment typically succeeds to all the

rights and obligations under the loan agreement with the same rights

and obligations as the assigning lender. Assignments may, however, be

arranged through private negotiations between potential assignees and

potential assignors, and the rights and obligations acquired by the

purchaser of an assignment may differ from, and be more limited than,

those held by the assigning lender. The Fund may also invest in loans

that are not secured by collateral which typically present greater risks

than collateralized loans.

In connection with purchasing loan participations, the Fund generally

will have no right to enforce compliance by the borrower with the terms

of the loan agreement relating to the loan, nor any rights

of set-off against the borrower, and the Fund may not directly benefit

from any collateral supporting the loan in which it has purchased the

loan participation. As a result, the Fund will be subject to the credit risk

of both the borrower and the lender that is selling the participation. In

the event of the insolvency of the lender selling a participation, the Fund

may be treated as a general creditor of the lender and may not benefit

from any set-off between the lender and the borrower. A bankruptcy

court may restructure the payment obligations under the loan so as to

reduce the amount to which the Fund would be entitled or extended the

time for payment. A court could subordinate the Fund's rights to the

rights of other creditors of the borrower under applicable law. Various

laws enacted for the protection of borrowers may apply to loans, and a

bankruptcy proceeding against a borrower could delay or limit the

ability of the Fund to collect principal and interest payments on such

loans. Certain loan participations may be structured in a manner

designed to prevent purchasers of participations from being subject to

the credit risk of the lender, but even under such a structure, in the event

of the lender’s insolvency, the lender’s servicing of the participation may

be delayed and the assignability of the participation impaired.

The Fund may have difficulty disposing of loans and loan participations.

Because there may not be a liquid market for many such investments,

the Fund anticipates that such investments could be sold only to a

limited number of institutional investors. The lack of a liquid secondary

market may have an adverse impact on the value of such investments

and the Fund’s ability to dispose of particular loans and loan

participations when that would be desirable, including in response to a

specific economic event such as a deterioration in the creditworthiness

of the borrower. The lack of a liquid secondary market for loans and loan

participations also may make it more difficult for the Fund to assign a

value to these securities for purposes of valuing the Fund’s portfolio.

Investments in loans may include participations in bridge loans, which

are loans taken out by borrowers for a short period (typically less than

one year) pending arrangement of more permanent financing through,

for example, the issuance of bonds, frequently high yield bonds issued

for the purpose of acquisitions.

Investments in loans may include acquisitions of, or participation in,

delayed draw and delayed funding loans and revolving credit facilities.

These commitments may have the effect of requiring the Fund to

increase its investment in a borrower at a time when it might not

otherwise decide to do so (including at a time when the company’s

financial condition makes it unlikely that such amounts will be repaid).

Delayed draw and delayed funding loans and revolving credit facilities

may be subject to restrictions on transfer, and only limited opportunities

may exist to resell such instruments. As a result, the Fund may be unable

to sell such investments at an opportune time or may have to resell

them at less than fair market value. Further, the Fund may need to hold

liquid assets in order to provide funding for these types of

commitments, meaning the Fund may not be able to invest in other

attractive investments, or the Fund may need to liquidate existing assets

in order to provide such funding. More generally, sales of the Fund's

portfolio holdings may result in short-term capital gains (which are

generally taxed to shareholders at ordinary income tax rates when

distributed net of short-term capital losses and net of long-term capital

losses), potentially subjecting shareholders of the Fund to adverse tax

consequences.

The Fund may invest in loans used to finance the cost of construction,

acquisition, development, and/ or rehabilitation of a property including,

but not limited to, development of single-family for-sale homes,

multi-family rentals and/or commercial facilities. Such construction

lending may expose the Fund to increased risk of non-payment and loss

because the loan is not backed by a finished project. Such risk may

depend on the nature of the construction and the relevant counterparty

or counterparties, which may include, but not be limited to,

homebuilders, private developers and/or entities with limited capital.

Repayment of these types of loans may depend on the borrower’s ability

to secure permanent “take-out” financing, which requires the successful

completion of the project, or operation of the property with an income

stream sufficient to meet operating and loan expenses. In addition,

these types of loans are subject to the risk of errors in estimations of the

property’s value at completion of construction and the estimated cost of

construction, as well as the risk that the projects may not be completed

and have limited liquidity.

To the extent the Fund invests in loans, including, but not limited to,

bank loans, non-syndicated loans, the residual or equity tranches of

mortgage-related and other asset-backed securities, which may be

referred to as subordinate mortgage-backed or asset-backed securities

and interest-only mortgage-backed or asset-backed securities, and other

investments, or originates loans, the Fund may be subject to greater

levels of credit risk, call risk, settlement risk, risk of subordination to

other creditors, insufficient or lack of protection under federal securities

laws and liquidity risk. These instruments are considered predominantly

speculative with respect to an issuer’s continuing ability to make

principal and interest payments and may be more volatile than other

types of securities. The Fund may also be subject to greater levels of

liquidity risk than funds that do not invest in loans. In addition, the loans

in which the Fund invests may not be listed on any exchange and a

secondary market for such loans may be comparatively illiquid relative

to markets for other more liquid fixed income securities. Consequently,

transactions in loans may involve greater costs than transactions in

more actively traded securities. In connection with certain loan

transactions, transaction costs that are borne by the Fund may include

the expenses of third parties that are retained to assist with reviewing

and conducting diligence, negotiating, structuring and servicing a loan

transaction, and/or providing other services in connection therewith.

Furthermore, the Fund may incur such costs in connection with loan

transactions that are pursued by the Fund but not ultimately

consummated (so-called “broken deal costs”).

Restrictions on transfers in loan agreements, a lack of publicly available

information, irregular trading activity and wide bid/ask spreads, among

other factors, may, in certain circumstances, make loans more difficult to

sell at an advantageous time or price than other types of securities or

instruments. These factors may result in the Fund being unable to realize

full value for the loans and/or may result in the Fund not receiving the

proceeds from a sale of a loan for an extended period after such sale,

each of which could result in losses to the Fund. Some loans may have

extended trade settlement periods, including settlement periods of

greater than seven days, which may result in cash not being

immediately available to the Fund. If an issuer of a loan prepays or

redeems the loan prior to maturity, the Fund may have to reinvest the

proceeds in other loans or similar instruments that may pay lower

interest rates. Because of such risks involved in investing in loans, an

investment in the Fund should be considered speculative.

The Fund’s investments in subordinated and unsecured loans generally

are subject to similar risks as those associated with investments in

secured loans. Subordinated or unsecured loans are lower in priority of

payment to secured loans and are subject to the additional risk that the

cash flow of the borrower and property securing the loan or debt, if any,

may be insufficient to meet scheduled payments after giving effect to

the senior secured obligations of the borrower. This risk is generally

higher for subordinated unsecured loans or debt, which are not backed

by a security interest in any specific collateral. Subordinated and

unsecured loans generally have greater price volatility than secured

loans and may be less liquid. There is also a possibility that originators

will not be able to sell participations in subordinated or unsecured

loans, which would create greater credit risk exposure for the holders of

such loans. Subordinate and unsecured loans share the same risks as

other below investment grade securities.

There may be less readily available information about most loans and

the underlying borrowers than is the case for many other types of

securities. Loans may be issued by borrowers that are not subject to SEC

reporting requirements and therefore may not be required to file reports

with the SEC or may file reports that are not required to comply with

SEC form requirements. In addition, such borrowers may be subject to a

less stringent liability disclosure regime than companies subject to SEC

reporting requirements. Loans may not be considered “securities,” and

purchasers, such as the Fund, therefore may not be entitled to rely on

the anti-fraud protections of the federal securities laws. Because there is

limited public information available regarding loan investments, the

Fund is particularly dependent on the analytical abilities of the Fund’s

portfolio managers.

Economic exposure to loan interests through the use of derivative

transactions may involve greater risks than if the Fund had invested in

the loan interest directly during a primary distribution, through direct

originations or through assignments of, novations of or participations in

a loan acquired in secondary markets since, in addition to the risks

described above, certain derivative transactions may be subject to

leverage risk and greater illiquidity risk, counterparty risk, valuation risk

and other risks.

Loan Origination Risk

The Fund may originate loans, including, without limitation, residential and/or commercial real estate or mortgage-related loans, consumer loans or other types of loans, which may be in the form of, and without limitation as to a loan’s level of seniority within a capital structure, whole loans, assignments, participations, secured and unsecured notes, senior and second lien loans, mezzanine loans, bridge loans or similar investments. The Fund may originate loans to corporations and/or other legal entities and individuals, including foreign (non-U.S.) and emerging market entities and individuals. Loans may carry significant credit risks (for example, a borrower may not have a credit rating or score or may have a rating or score that indicates significant credit risk). This may include loans to public or private firms or individuals, such as in connection with housing development projects. The loans the Fund invests in or originates may vary in maturity and/or duration. The Fund is not limited in the amount, size or type of loans it may invest in and/or originate, including with respect to a single borrower or with respect to borrowers that are determined to be below investment grade, other than pursuant to any applicable law. The Fund’s investment in or origination of loans may also be limited by the requirements the Fund intends to observe under Subchapter M of the Code in order to qualify as a RIC. The Fund may subsequently offer such investments for sale to third parties; provided, that there is no assurance that the Fund will complete the sale of such an investment. If the Fund is unable to sell, assign or successfully close transactions for the loans that it originates, the Fund will be forced to hold its interest in such loans for an indeterminate period of time. This could result in the Fund’s investments having high exposure to certain borrowers. The Fund will be responsible for the expenses associated with originating a loan (whether or not consummated). This may include significant legal and due diligence expenses, which will be indirectly borne by the Fund and Common Shareholders.

Bridge loans are generally made with the expectation that the borrower will be able to obtain permanent financing in the near future. Any delay in obtaining permanent financing subjects the bridge loan investor to

increased risk. A borrower’s use of bridge loans also involves the risk

that the borrower may be unable to locate permanent financing to

replace the bridge loan, which may impair the borrower’s perceived

creditworthiness.

Loan origination and servicing companies are routinely involved in legal

proceedings concerning matters that arise in the ordinary course of their

business. In addition, a number of participants in the loan origination

and servicing industry (including control persons of industry

participants) have been the subject of regulatory actions by state

regulators, including state attorneys general, and by the federal

government. Governmental investigations, examinations or regulatory

actions, or private lawsuits, including purported class action lawsuits,

may adversely affect such companies’ financial results. To the extent the

Fund engages in origination and/or servicing directly, or has a financial

interest in, or is otherwise affiliated with, an origination or servicing

company, the Fund will be subject to enhanced risks of litigation,

regulatory actions and other proceedings. As a result, the Fund may be

required to pay legal fees, settlement costs, damages, penalties or other

charges, any or all of which could materially adversely affect the Fund

and its holdings.

Foreign Loan Originations Risk

The Fund may originate loans to foreign entities and individuals, including foreign (non-U.S.) and emerging market entities and individuals. Such loans may involve risks not ordinarily associated with exposure to loans to United States entities and individuals. The foreign lending industry may be subject to less governmental supervision and regulation than exists in the United States; conversely, foreign regulatory regimes applicable to the lending industry may be more complex and more restrictive than those in the United States, resulting in higher costs associated with such investments, and such regulatory regimes may be subject to interpretation or change without prior notice to investors, such as the Fund. Foreign lending may not be subject to accounting, auditing, and financial reporting standards and practices comparable to those in the United States Due to differences in legal systems, there may be difficulty in obtaining or enforcing a court judgment outside the United States In addition, to the extent that investments are made in a limited number of countries, events in those countries will have a more significant impact on the Fund. The Fund’s loans to foreign entities and individuals may be subject to risks of increased transaction costs, potential delays in settlement or unfavorable differences between the U.S. economy and foreign economies.

The Fund’s exposure to loans to foreign entities and individuals may be subject to withholding and other foreign taxes, which may adversely affect the net return on such investments. In addition, fluctuations in foreign currency exchange rates and exchange controls may adversely affect the market value of the Fund’s exposure to loans to foreign entities and individuals. The Fund is unlikely to be able to pass through to its shareholders foreign income tax credits in respect of any foreign income taxes it pays.

“Covenant-lite” Obligations Risk

Covenant-lite obligations contain fewer maintenance covenants than other obligations, or no maintenance covenants, and may not include terms that allow the lender to monitor the performance of the borrower and declare a default if certain criteria are breached, which would allow the lender to restructure the loan or take other action intended to help mitigate losses. Covenant-lite loans carry a risk that the borrower could transfer or encumber its assets, which could reduce the amount of assets that can be used to satisfy debts and result in losses for debtholders. Covenant-lite loans may carry more risk than traditional loans as they allow individuals and corporations to engage in activities that would otherwise be difficult or impossible under a covenant-heavy loan agreement. In the event of default, covenant-lite loans may exhibit diminished recovery values as the lender may not have the opportunity to negotiate with the borrower prior to default.

Subprime Risk

Loans, and debt instruments collateralized by loans, acquired by the Fund may be subprime in quality, or may become subprime in quality. Although there is no specific legal or market definition of “subprime,” subprime loans are generally understood to refer to loans made to borrowers that display poor credit histories and other characteristics that correlate with a higher default risk. Accordingly, subprime loans, and debt instruments secured by such loans, have speculative characteristics and are subject to heightened risks, including the risk of nonpayment of interest or repayment of principal, and the risks associated with investments in high yield securities. In addition, these instruments could be subject to increased regulatory scrutiny. The Fund is not restricted by any particular borrower credit risk criteria and/or qualifications when acquiring loans or debt instruments collateralized by loans.

Reinvestment Risk

Income from the Fund’s portfolio will decline if and when the Fund invests the proceeds from matured, traded or called debt obligations at market interest rates that are below the portfolio’s current earnings rate. For instance, during periods of declining interest rates, an issuer of debt obligations may exercise an option to redeem securities prior to maturity, forcing the Fund to invest in lower-yielding securities. The Fund also may choose to sell higher yielding portfolio securities and to purchase lower yielding securities to achieve greater portfolio diversification, because the Investment Manager believes the current holdings are overvalued or for other investment-related reasons. A decline in income received by the Fund from its investments is likely to have a negative effect on dividend levels and the market price, NAV and/or overall return of the Common Shares.

Call Risk

Call risk refers to the possibility that an issuer may exercise its right to redeem a fixed income security earlier than expected (a call). Issuers may call outstanding securities prior to their maturity for a number of reasons (e.g., declining interest rates, changes in credit spreads and improvements in the issuer’s credit quality), and changes in the rate at

which prepayments or redemptions occur can affect the return on

investment of these securities. If an issuer calls a security in which the

Fund has invested, the Fund may not recoup the full amount of its initial

investment or may not realize the full anticipated earnings from the

investment and may be forced to reinvest in lower-yielding securities,

securities with greater credit risks or securities with other, less favorable

features.

Foreign (Non-U.S.) Investment Risk

Foreign (non-U.S.) securities may experience more rapid and extreme changes in value than securities of U.S. issuers or securities that trade exclusively in U.S. markets. The securities markets of many foreign countries are relatively small, with a limited number of companies representing a small number of industries. Additionally, issuers of foreign (non-U.S.) securities are usually not subject to the same degree of regulation as U.S. issuers. Financial reporting, legal, corporate governance, accounting, auditing and custody standards of foreign countries differ, in some cases significantly, from U.S. standards. Global economies and financial markets are becoming increasingly interconnected, and conditions and events in one country, region or financial market may adversely impact issuers in a different country, region or financial market. Foreign (non-U.S.) market trading hours, clearance and settlement procedures, and holiday schedules may limit the Fund's ability to buy and sell securities. Investments in foreign (non-U.S.) markets may also be adversely affected by governmental actions such as the imposition of capital controls, nationalization of companies or industries, expropriation of assets or the imposition of punitive taxes. The governments of certain countries may prohibit or impose substantial restrictions on foreign (non-U.S.) investing in their capital markets or in certain sectors or industries. In addition, a foreign (non-U.S.) government may limit or cause delay in the convertibility or repatriation of its currency which would adversely affect the U.S. dollar value and/or liquidity of investments denominated in that currency.

Certain foreign (non-U.S.) investments may become less liquid in response to market developments or adverse investor perceptions, or become illiquid after purchase by the Fund, particularly during periods of market turmoil. A reduction in trading in securities of issuers located in countries whose economies are heavily dependent upon trading with key partners may have an adverse impact on the Fund's investments.

Also, nationalization, expropriation or confiscatory taxation, unstable governments, decreased market liquidity, currency blockage, market disruptions, political changes, security suspensions or diplomatic developments, trade restrictions (including tariffs) or the imposition of sanctions or other similar measures could adversely affect the Fund’s investments in a foreign (non-U.S.) country and may render holdings in that foreign (non-U.S.) country illiquid or even worthless. In the event of nationalization, expropriation or other confiscation, the Fund could lose its entire investment in foreign (non-U.S.) securities. The type and severity of sanctions and other similar measures, including counter sanctions and other retaliatory actions, that may be imposed could vary broadly in scope, and their impact is difficult to ascertain. These types of measures may include, but are not limited to, banning a sanctioned country or certain persons or entities associated with such country from

global payment systems that facilitate cross-border payments, restricting

securities transactions, restricting dealings with entities that are critical

to the infrastructure of securities and related transactions in specific

jurisdictions, restricting transactions in specified sectors of certain

countries, and freezing the assets of particular countries, entities or

persons. The imposition of sanctions and other similar measures could,

among other things, result in a decline in the value and/or liquidity of

affected securities, downgrades in the credit ratings of affected or

related securities, currency devaluation or volatility, and increased

market volatility and disruption in the securities or sanctioned country

and throughout the world. Sanctions and other similar measures could

directly or indirectly limit or prevent the Fund from buying and selling

securities, receiving interest or principal payments due on the securities,

significantly delay or prevent securities transactions, and adversely

impact the Fund's liquidity and performance and/or prevent the

liquidation of a portfolio holding sanctioned securities. Adverse

conditions in a certain region can adversely affect securities of other

countries whose economies appear to be unrelated. To the extent that

the Fund invests a significant portion of its assets in a specific

geographic region or in securities denominated in a particular foreign

(non-U.S.) currency, the Fund will generally have more exposure to

regional economic risks, including weather emergencies and natural

disasters, associated with foreign (non-U.S.) investments. Additionally,

events and evolving conditions in certain markets or regions may alter

the risk profile of investments tied to those markets or regions. This may

cause investments tied to such markets or regions to become riskier or

more volatile, even when investments in such markets or regions were

perceived as comparatively stable historically. Foreign (non-U.S.)

securities may also be less liquid (particularly during market closures

due to local market holidays or other reasons) and more difficult to

value than securities of U.S. issuers.

Investments in Russia.

The Fund may invest in securities and

instruments that are economically tied to Russia. Investments in Russia

are subject to various risks such as, but not limited to political,

economic, legal, market and currency risks. The risks include uncertain

political and economic policies, short -term market volatility, poor

accounting standards, corruption and crime, an inadequate regulatory

system, regional armed conflict and unpredictable taxation. Investments

in Russia are particularly subject to the risk that further economic

sanctions, export and import controls, and other similar measures may

be imposed by the United States and/or other countries. Other similar

measures may include, but are not limited to, banning or expanding

bans on Russia or certain persons or entities associated with Russia

from global payment systems that facilitate cross-border payments,

restricting the settlement of securities transactions by certain investors,

and freezing Russian assets or those of particular countries, entities or

persons with ties to Russia (

e.g.

, Belarus). Such sanctions and other

similar measures - which may impact companies in many sectors,

including energy, financial services, technology, accounting, quantum

computing, shipping, aviation, metals and mining, defense, architecture,

engineering, construction, manufacturing and transportation, among

others - and Russia's countermeasures may negatively impact the

Fund's performance and/or ability to achieve its investment objectives.

For example, certain investments may be prohibited and/or existing

investments may become illiquid (

e.g.

, in the event that transacting in

certain existing investments is prohibited, securities markets close, or

market participants cease transacting in certain investments in light of

geopolitical events, sanctions or related considerations), which could

render any such securities held by the Fund unmarketable for an

indefinite period of time and/or cause the Fund to sell other portfolio

holdings at a disadvantageous time or price or to continue to hold

investments that the Fund no longer seeks to hold. In addition, such

sanctions or other similar measures, and the Russian government's

response, could result in a downgrade of Russia's credit rating or of

securities of issuers located in or economically tied to Russia,

devaluation of Russia's currency and/or increased volatility with respect

to Russian securities and the ruble. Moreover, disruptions caused by

Russian military action or other actions (including cyberattacks,

espionage or other asymmetric measures) or resulting actual or

threatened responses to such activity may impact Russia's economy and

Russian and other issuers of securities in which the Fund is invested.

Such resulting actual or threatened responses may include, but are not

limited to, purchasing and financing restrictions, withdrawal of financial

intermediaries, boycotts or changes in consumer or purchaser

preferences, sanctions, export and import controls, tariffs or cyberattacks

on the Russian government, Russian companies or Russian individuals,

including politicians. Any actions by Russia made in response to such

sanctions or retaliatory measures could further impair the value and

liquidity of Fund investments. Sanctions and other similar measures

have resulted in defaults on debt obligations by certain corporate

issuers and the Russian Federation that could lead to cross-defaults or

cross-accelerations on other obligations of these issuers. The Russian

securities market is characterized by limited volume of trading, resulting

in difficulty in obtaining accurate prices and trading. These issues can be

magnified as a result of sanctions and other similar measures that may

be imposed and the Russian government's response.

The Russian securities market, as compared to U.S. markets, has

significant price volatility, less liquidity, a smaller market capitalization

and a smaller number of traded securities. There may be little publicly

available information about issuers. Settlement, clearing and

registration of securities transactions are subject to risks. Prior to the

implementation of the National Settlement Depository (”NSD“), a

recognized central securities depository, there was no central

registration system for equity share registration in Russia, and

registration was carried out by either the issuers themselves or by

registrars located throughout Russia. Title to Russian equities held

through the NSD is now based on the records of the NSD and not the

registrars. Although the implementation of the NSD has enhanced the

efficiency and transparency of the Russian securities market, issues

resulting in loss can still occur. In addition, sanctions by the European

Union against the NSD, as well as the potential for sanctions by other

governments, could make it more difficult to conduct or confirm

transactions involving Russian securities. Ownership of securities issued

by Russian companies that are not held through depositories such as

the NSD may be recorded by companies themselves and by registrars.

Moreover, changes in Russian laws and regulations could require the

transfer of securities from the NSD to registrars or other parties outside

of standard custodial arrangements. In such cases, the risk is increased

that the Fund could lose ownership rights through fraud, negligence or

oversight. While applicable Russian regulations impose liability on

registrars for losses resulting from their errors, it may be difficult for the

Fund to enforce any rights it may have against the registrar or issuer of

the securities in the event of loss of share registration. In addition,

issuers and registrars are still prominent in the validation and approval

of documentation requirements for corporate action processing in

Russia. Because the documentation requirements and approval criteria

vary between registrars and issuers, there remain unclear and

inconsistent market standards in the Russian market with respect to the

completion and submission of corporate action elections. In addition,

sanctions or Russian countermeasures may prohibit or limit the Fund's

ability to participate in corporate actions, and therefore require the Fund

to forego voting on or receiving funds that would otherwise be

beneficial to the Fund. To the extent that the Fund suffers a loss relating

to title or corporate actions relating to its portfolio securities, it may be

difficult for the Fund to enforce its rights or otherwise remedy the loss.

Russian securities laws may not recognize foreign nominee accounts

held with a custodian bank, and therefore the custodian may be

considered the ultimate owner of securities they hold for their clients.

Adverse currency exchange rates are a risk and there may be a lack of

available currency hedging instruments. Investments in Russia may be

subject to the risk of nationalization or expropriation of assets. Oil,

natural gas, metals, minerals and timber account for a significant

portion of Russia's exports, leaving the country vulnerable to swings in

world prices and to sanctions or other actions that may be directed at

the Russian economy as a whole or at Russian oil, natural gas, metals,

minerals or timber industries.

Emerging Markets Risk

Foreign (non-U.S.) investment risk may be particularly high to the extent that the Fund invests in securities of issuers based in or doing business in emerging market countries or invests in securities denominated in the currencies of emerging market countries. Investing in securities of issuers based in or doing business in emerging markets entails all of the risks of investing in foreign securities noted above, but to a heightened degree.

Investments in emerging market countries pose a greater degree of systemic risk (i.e., the risk of a cascading collapse of multiple institutions within a country, and even multiple national economies). The inter-relatedness of economic and financial institutions within and among emerging market economies has deepened over the years, with the effect that institutional failures and/or economic difficulties that are of initially limited scope may spread throughout a country, a region or all or most emerging market countries. This may undermine any attempt by the Fund to reduce risk through geographic diversification of its portfolio.

There is a heightened possibility of imposition of withholding or other taxes on interest or dividend income or capital gains generated from emerging market securities. Governments of emerging market countries

may engage in confiscatory taxation or expropriation of income and/or

assets to raise revenues or to pursue a domestic political agenda. In the

past, emerging market countries have nationalized assets, companies

and even entire sectors, including the assets of foreign investors, with

inadequate or no compensation to the prior owners. There can be no

assurance that the Fund will not suffer a loss of any or all of its

investments, or interest or dividends thereon, due to adverse fiscal or

other policy changes in emerging market countries.

There is also a greater risk that an emerging market government may

take action that impedes or prevents the Fund from taking income

and/or capital gains earned in the local currency and converting into

U.S. dollars (

i.e.

, “repatriating” local currency investments or profits).

Certain emerging market countries have sought to maintain foreign

exchange reserves and/or address the economic volatility and

dislocations caused by the large international capital flows by

controlling or restricting the conversion of the local currency into other

currencies. This risk tends to become more acute when economic

conditions otherwise worsen. There can be no assurance that if the Fund

earns income or capital gains in an emerging market currency or PIMCO

otherwise seeks to withdraw the Fund’s investments from a given

emerging market country, capital controls imposed by such country will

not prevent, or cause significant expense, or delay in, doing so.

Bankruptcy law and creditor reorganization processes may differ

substantially from those in the United States, resulting in greater

uncertainty as to the rights of creditors, the enforceability of such rights,

reorganization timing and the classification, seniority and treatment of

claims. In certain emerging market countries, although bankruptcy laws

have been enacted, the process for reorganization remains highly

uncertain. In addition, it may be impossible to seek legal redress against

an issuer that is a sovereign state.

Emerging market countries typically have less established regulatory,

disclosure, legal, accounting, recordkeeping and financial reporting

systems than those in more developed markets, which may increase the

potential for market manipulation or reduce the scope or quality of

financial information available to investors. Governments in emerging

market countries are often less stable and more likely to take extra-legal

action with respect to companies, industries, assets, or foreign

ownership than those in more developed markets. Moreover, it can be

more difficult for investors to bring litigation or enforce judgments

against issuers in emerging markets or for U.S. regulators to bring

enforcement actions, or obtain information needed to pursue or enforce

such judgments, against such issuers. In addition, foreign companies

with securities listed on U.S. exchanges may be delisted if they do not

meet U.S. accounting standards and auditor oversight requirements,

which may decrease the liquidity and value of the securities. The Fund

may also be subject to emerging markets risk if it invests in derivatives

or other securities or instruments whose value or return are related to

the value or returns of emerging markets securities.

Other heightened risks associated with emerging markets investments

include without limitation, (i) risks due to less social, political and

economic stability; (ii) the smaller size of the market for such securities

and a lower volume of trading, resulting in a lack of liquidity and in

price volatility; (iii) certain national policies which may restrict the Fund’s

investment opportunities, including sanctions and restrictions on

investing in issuers or industries deemed sensitive to relevant national

interests and requirements that government approval be obtained prior

to investment by foreign persons; (iv) certain national policies that may

restrict the Fund’s repatriation of investment income, capital or the

proceeds of sales of securities, including temporary restrictions on

foreign capital remittances; (v) the lack of uniform accounting and

auditing standards and/or standards that may be significantly different

from the standards required in the United States; (vi) less publicly

available financial and other information regarding issuers; (vii)

potential difficulties in enforcing contractual obligations; and (viii)

higher rates of inflation, higher interest rates and other economic

concerns. Countries with emerging securities markets may additionally

experience problems with share registration, settlement and custody,

which may result in losses to the Fund. The Fund may invest to a

substantial extent in emerging market securities that are denominated

in local currencies, subjecting the Fund to a greater degree of foreign

currency risk. Also, investing in emerging market countries may entail

purchases of securities of issuers that are insolvent, bankrupt or

otherwise of questionable ability to satisfy their payment obligations as

they become due, subjecting the Fund to a greater amount of credit risk

and/or high yield risk. The economy of some emerging markets may be

particularly exposed to or affected by a certain industry or sector, and

therefore issuers and/or securities of such emerging markets may be

more affected by the performance of such industries or sectors.

Currency Risk

Investments denominated in foreign (non-U.S.) currencies or that trade in and receive revenues in, foreign (non-U.S.) currencies, derivatives or other instruments that provide exposure to foreign (non-U.S.) currencies, are subject to the risk that those currencies will decline in value relative to the U.S. dollar, or, in the case of hedging positions, that the U.S. dollar will decline in value relative to the currency being hedged.

Currency rates in foreign (non-U.S.) countries may fluctuate significantly over short periods of time for a number of reasons, including changes in interest or inflation rates, balance of payments and governmental surpluses or deficits, intervention (or the failure to intervene) by U.S. or foreign (non-U.S.) governments, central banks or supranational entities such as the International Monetary Fund, the imposition of currency controls or other political developments in the United States or abroad. As a result, the Fund’s investments in or exposure to foreign (non-U.S.) currencies and/or foreign (non-U.S.) currency-denominated securities may reduce the returns of the Fund. Devaluation of a currency by a country's government or banking authority can significantly impact the value of any investments denominated in that currency. These fluctuations may have a significant adverse impact on the value of the Fund’s portfolio and/or the level of Fund distributions made to Common Shareholders. There is no assurance that a hedging strategy, if used, will be successful. The Fund may also be adversely impacted by expenses incurred by converting between currencies to purchase and sell

securities not valued in the U.S. dollar, as well as by currency restrictions,

exchange control regulation, or governmental restrictions that limit or

otherwise delay the Fund’s ability to convert currencies.

Moreover, currency hedging techniques may be unavailable with respect

to emerging market currencies. As a result, the Fund’s investments in or

exposure to foreign (non-U.S.) currencies and/or foreign (non-U.S.)

currency-denominated, and especially emerging market-currency

denominated, securities may reduce the returns of the Fund.

Currency risk may be particularly high because the Fund may, at times

or in general, have substantial exposure to emerging market currencies,

and engage in foreign currency transactions that are economically tied

to emerging market countries. These currency transactions may present

market, credit, currency, liquidity, legal, political, headline, reputational

and other risks different from, or greater than, the risks of investing in

developed foreign (non-U.S.) currencies or engaging in foreign currency

transactions that are economically tied to developed foreign countries.

The local emerging market currencies in which the Fund may be

invested from time to time may experience substantially greater

volatility against the U.S. dollar than the major convertible currencies of

developed countries. Some of the local currencies in which the Fund

may invest are neither freely convertible into one of the major currencies

nor internationally traded. The local currencies may be convertible into

other currencies only inside the relevant emerging market where the

limited availability of such other currencies may tend to inflate their

values relative to the local currency in question. Such internal exchange

markets can therefore be said to be neither liquid nor competitive. In

addition, many of the currencies of emerging market countries in which

the Fund may invest have experienced steady devaluation relative to

freely convertible currencies.

Continuing uncertainty as to the status of the euro and the European

Monetary Union (“EMU”) has created significant volatility in currency

and financial markets generally. Any partial or complete dissolution of

the EMU could have significant adverse effects on currency and financial

markets, and on the values of the Fund’s portfolio investments. If one or

more EMU countries were to stop using the euro as its primary currency,

the Fund’s investments in such countries may be redenominated into a

different or newly adopted currency. As a result, the value of those

investments could decline significantly and unpredictably. In addition,

securities or other investments that are redenominated may be subject

to foreign currency risk, liquidity risk and valuation risk to a greater

extent than similar investments currently denominated in euros. To the

extent a currency used for redenomination purposes is not specified in

respect of certain EMU-related investments, or should the euro cease to

be used entirely, the currency in which such investments are

denominated may be unclear, making such investments particularly

difficult to value or dispose of. The Fund may incur additional expenses

to the extent it is required to seek judicial or other clarification of the

denomination or value of such securities.

There can be no assurance that if the Fund earns income or capital gains

in a non-U.S. country or PIMCO otherwise seeks to withdraw the Fund’s

investments from a given country, capital controls imposed by such

country will not prevent, or cause significant expense in, doing so.

U.S. Government Securities Risk

Certain U.S. government securities, such as U.S. Treasury bills, notes, bonds, and mortgage-related securities guaranteed by the Government National Mortgage Association (“GNMA”), are supported by the full faith and credit of the United States; others, such as those of the FHLBs or the FHLMC, are supported by the right of the issuer to borrow from the U.S. Treasury; others, such as those of the FNMA, are supported by the discretionary authority of the U.S. government to purchase the agency’s obligations; and still others are supported only by the credit of the agency, instrumentality or corporation. U.S. government securities are subject to market risk, interest rate risk and credit risk. Although legislation has been enacted to support certain government sponsored entities, including the FHLBs, FHLMC and FNMA, there is no assurance that the obligations of such entities will be satisfied in full, or that such obligations will not decrease in value or default. It is difficult, if not impossible, to predict the future political, regulatory or economic changes that could impact the government sponsored entities and the values of their related securities or obligations. In addition, certain governmental entities, including FNMA and FHLMC, have been subject to regulatory scrutiny regarding their accounting policies and practices and other concerns that may result in legislation, changes in regulatory oversight and/or other consequences that could adversely affect the credit quality, availability or investment character of securities issued by these entities. Yields available from U.S. government debt securities are generally lower than the yields available from such other securities. The values of U.S. government securities change as interest rates fluctuate.

Periodically, uncertainty regarding the status of negotiations in the U.S. government to increase the statutory debt ceiling could increase the risk that the U.S. government may default on payments on certain U.S. government securities, cause the credit rating of the U.S. government to be downgraded, increase volatility in the stock and bond markets, result in higher interest rates, reduce prices of U.S. Treasury and other securities, and/or increase the costs of various kinds of debt. If a government-sponsored entity is negatively impacted by legislative or regulatory action (or lack thereof), is unable to meet its obligations, or its creditworthiness declines, the performance of a fund that holds securities of the entity will be adversely impacted.

Convertible Securities Risk

Convertible securities are fixed income securities, preferred securities or other securities that are convertible into or exercisable for common stock of the issuer (or cash or securities of equivalent value) at either a stated price or a stated rate. Convertible debt securities pay interest and convertible preferred stocks pay dividends until they mature or are converted, exchanged or redeemed. The market values of convertible securities may decline as interest rates increase and, conversely, may increase as interest rates decline. A convertible security’s market value, however, tends to reflect the market price of the common stock of the issuing company when that stock price approaches or is greater than the convertible security’s “conversion price.” The conversion price is defined as the predetermined price at which the convertible security could be exchanged for the associated stock. Certain types of convertible securities may decline in value or lose their value entirely in

the event the issuer’s financial condition becomes significantly impaired.

As the market price of the underlying common stock declines, the price

of the convertible security tends to be influenced more by the yield of

the convertible security. Thus, it may not decline in price to the same

extent as the underlying common stock. In the event of a liquidation of

the issuing company, holders of convertible securities may be paid

before the company’s common stockholders but after holders of any

senior debt obligations of the company. Consequently, the issuer’s

convertible securities generally entail less risk than its common stock

but more risk than its other debt obligations. Convertible securities are

often rated below investment grade or not rated.

Synthetic Convertible Securities Risk

Synthetic convertible securities involve the combination of separate securities that possess the two principal characteristics of a traditional convertible security (i.e., an income-producing component and a right to acquire an equity security). Synthetic convertible securities are often achieved, in part, through investments in warrants or options to buy common stock (or options on a stock index), and therefore are subject to the risks associated with derivatives. The value of a synthetic convertible security will respond differently to market fluctuations than a traditional convertible security because a synthetic convertible is composed of two or more separate securities or instruments, each with its own market value. Because the convertible component is typically achieved by investing in warrants or options to buy common stock at a certain exercise price, or options on a stock index, synthetic convertible securities are subject to the risks associated with derivatives. In addition, if the value of the underlying common stock or the level of the index involved in the convertible component falls below the exercise price of the warrant or option, the warrant or option may lose all value.

Contingent Convertible Securities Risk

CoCos have no stated maturity, have fully discretionary coupons and are typically issued in the form of subordinated debt instruments. CoCos generally either convert into equity or have their principal written down (including potentially to zero) upon the occurrence of certain triggering events (“triggers”) linked to regulatory capital thresholds or regulatory actions relating to the issuer’s continued viability. As a result, an investment by the Fund in CoCos is subject to the risk that coupon (i.e., interest) payments may be cancelled by the issuer or a regulatory authority in order to help the issuer absorb losses and the risk of total loss. If such an event occurs, an investor may not have any rights to repayment of the principal amount of the securities. Additionally, an investor may not be able to collect interest payments or dividends on such securities. An investment by the Fund in CoCos is also subject to the risk that, in the event of the liquidation, dissolution or winding-up of an issuer prior to a trigger event, the Fund’s rights and claims will generally rank junior to the claims of holders of the issuer’s other debt obligations and CoCos may also be treated as junior to an issuer’s other obligations and securities. In addition, if CoCos held by the Fund are converted into the issuer’s underlying equity securities following a trigger event, the Fund’s holding may be further subordinated due to the conversion from a debt-to-equity instrument. Further, the value of an

investment in CoCos is unpredictable and will be influenced by many

factors and risks, including interest rate risk, credit risk, market risk and

liquidity risk. An investment by the Fund in CoCos may result in losses to

the Fund.

Valuation Risk

Certain securities in which the Fund invests may be less liquid and more difficult to value than other types of securities. Investments for which market quotations are not readily available are valued at fair value as determined in good faith pursuant to Rule 2a-5 under the 1940 Act. Fair value pricing may require subjective determinations about the value of a security or other asset. As a result, there can be no assurance that fair value pricing will result in adjustments to the prices of securities or other assets or that fair value pricing will reflect actual market value, and it is possible that the fair value determined for a security or other asset will be materially different from quoted or published prices, from the prices used by others for the same security or other asset and/or from the value that actually could be or is realized upon the sale of that security or other asset.

Real Estate Risk

To the extent that the Fund invests directly or indirectly in real estate investments, including investments in equity or debt securities issued by private and public REITs, real estate operating companies (“REOCs”), private or public real estate-related loans, and real estate-linked derivative instruments, it will be subject to the risks associated with owning real estate and with the real estate industry generally. These investments carry increased risks, which include, but are not limited to: the burdens of ownership of real property; general and local economic conditions (such as an oversupply of space or a reduction in demand for space); fluctuations in the supply and demand for properties (including competition based on rental rates); energy and supply shortages; fluctuations in average occupancy and room rates; the attractiveness, type and location of the properties and changes in the relative popularity of commercial properties as an investment; the financial condition and resources of tenants, buyers and sellers of properties; increased mortgage defaults; the quality of maintenance, insurance and management services; changes in the availability of debt financing which may render the sale or refinancing of properties difficult or impracticable; changes in building, environmental and other laws and/or regulations (including those governing usage and improvements), fiscal policies and zoning laws; changes in real property tax rates; changes in interest rates and the availability of mortgage funds which may render the sale or refinancing of properties difficult or impracticable; changes in operating costs and expenses; energy and supply shortages; uninsured losses or delays from casualties or condemnation; negative developments in the economy that depress travel or leasing activity; environmental liabilities; contingent liabilities on disposition of assets; uninsured or uninsurable casualties; acts of God, including earthquakes, hurricanes and other natural disasters; social unrest and civil disturbances, epidemics, pandemics or other public crises; terrorist attacks and war; risks and operating problems arising out of the presence of certain construction materials, structural

or property level latent defects, work stoppages, shortages of labor,

strikes, union relations and contracts, fluctuating prices and supply of

labor and/or other labor-related factors; and other factors which are

beyond the control of PIMCO and its affiliates.

In addition, the Fund’s investments will be subject to various risks which

could cause fluctuations in occupancy, rental rates, operating income

and expenses or which could render the sale or financing of its

properties difficult or unattractive. For example, following the

termination or expiration of a tenant’s lease, there may be a period of

time before receiving rental payments under a replacement lease.

During that period, the Fund would continue to bear fixed expenses

such as interest, real estate taxes, maintenance and other operating

expenses. In addition, declining economic conditions may impair the

ability to attract replacement tenants and achieve rental rates equal to

or greater than the rents paid under previous leases. Increased

competition for tenants may require capital improvements to properties

which would not have otherwise been planned.

Ultimately, to the extent it is not possible to renew leases or re-let space

as leases expire, decreased cash flow from tenants will result, which

could adversely impact the Fund’s operating results.

Real estate values have historically been cyclical. As the general

economy grows, demand for real estate increases and occupancies and

rents may increase. As occupancies and rents increase, property values

increase, and new development occurs. As development may occur,

occupancies, rents and property values may decline. Because leases are

usually entered into for long periods and development activities often

require extended times to complete, the real estate value cycle often

lags the general business cycle. Because of this cycle, real estate

companies may incur large swings in their profits and the prices of their

securities. Developments following the onset of COVID-19 have

adversely impacted certain commercial real estate markets, causing the

deferral of mortgage payments, renegotiated commercial mortgage

loans, commercial real estate vacancies or outright mortgage defaults.

These developments accelerated macro trends such as work from home

and online shopping which have negatively impacted (and may continue

to negatively impact) certain industries, such as brick-and-mortar retail.

The total returns available from investments in real estate generally

depend on the amount of income and capital appreciation generated by

the related properties. The performance of real estate, and thereby the

Fund, will be reduced by any related expenses, such as expenses paid

directly at the property level and other expenses that are capitalized or

otherwise embedded into the cost basis of the real estate.

Separately, certain service providers to the Fund and/or its subsidiaries,

as applicable, with respect to its real estate or real estate-related

investments may be owned by, employed by, or otherwise related to,

PIMCO, Allianz SE, their affiliates and/or their respective employees,

consultants and other personnel. PIMCO may, in its sole discretion,

determine to provide, or engage or recommend an affiliate of PIMCO to

provide, certain services to the Fund, instead of engaging or

recommending one or more third parties to provide such services.

Subject to the governance requirements of a particular fund and

applicable law, PIMCO or its affiliates, as applicable, will receive

compensation in connection with the provision of such services. As a

result, PIMCO faces a conflict of interest when selecting or

recommending service providers for the Fund. Fees paid to an affiliated

service provider will be determined in PIMCO’s commercially reasonable

discretion. Although PIMCO has adopted various policies and

procedures intended to mitigate or otherwise manage conflicts of

interest with respect to affiliated service providers, there can be no

guarantee that such policies and procedures (which may be modified or

terminated at any time in PIMCO’s sole discretion) will be successful.

The Fund’s investments in real estate will potentially be limited by the

Fund’s intention to qualify as a RIC and will potentially limit the Fund’s

ability to so qualify. Income and gains from direct investments in real

estate do not constitute qualifying income to a RIC for purposes of the

90% gross income test described below. If the Fund's income or gain

from a particular investment were determined to constitute

nonqualifying income, which in certain cases may be determined

retroactively, and the Fund’s nonqualifying income from all sources were

to exceed 10% of its gross income in any taxable year, or the Fund’s

nonqualifying income in any taxable year otherwise exceeded 10% of

its gross income, the Fund would fail to qualify as a RIC unless it were

eligible to and did pay a tax at the Fund level. See “Tax Risk” for

additional details.

Leverage Risk

The Fund’s use of leverage (as described under “Use of Leverage” in the body of this prospectus) creates the opportunity for increased Common Share net income, but also creates special risks for Common Shareholders (including an increased risk of loss). To the extent used, there is no assurance that the Fund’s leveraging strategies will be successful. Leverage is a speculative technique that may expose the Fund to greater risk and increased costs. The Fund’s assets attributable to leverage, if any, will be invested in accordance with the Fund’s investment objectives and policies, as described in this prospectus. Interest expense payable by the Fund with respect to derivatives and other forms of leverage, and dividends payable with respect to preferred shares outstanding, if any, will generally be based on shorter-term interest rates that would be periodically reset. So long as the Fund’s portfolio investments provide a higher rate of return (net of applicable Fund expenses) than the interest expenses and other costs to the Fund of such leverage, the investment of the proceeds thereof will generate more income than will be needed to pay the costs of the leverage. If so, and all other things being equal, the excess may be used to pay higher dividends to Common Shareholders than if the Fund were not so leveraged. There can be no assurance these circumstances will occur. If, however, shorter-term interest rates rise relative to the rate of return on the Fund’s portfolio, the interest and other costs to the Fund of leverage could exceed the rate of return on the debt obligations and other investments held by the Fund, thereby reducing return to Common Shareholders. When the Fund reduces or discontinues its use of leverage (“deleveraging”), it may be required to sell portfolio securities at inopportune times to repay leverage obligations, which could result in realized losses and a decrease in the Fund's net asset value. Deleveraging involves complex operational processes, including the

coordination of asset sales, repayment of debt, and potential

restructuring of the Fund's capital and may involve significant costs,

including transaction costs associated with the sale of portfolio

securities, prepayment penalties on borrowed funds, and, if applicable,

fees related to the redemption of preferred shares. Leveraging

transactions pursued by the Fund may increase its duration and

sensitivity to interest rate changes and other market risks. The Fund may

continue to use leverage even if available financing rates are higher

than anticipated returns, including, for example, in cases where

deleveraging, including any expenses related thereto, might be viewed

as detrimental to the Fund’s portfolio. In addition, fees and expenses of

any form of leverage used by the Fund will be borne entirely by the

Common Shareholders (and not by preferred shareholders, if any) and

will reduce the investment return of the Common Shares. Therefore,

there can be no assurance that the Fund’s use of leverage will result in a

higher yield on the Common Shares, and it may result in losses. In

addition, any preferred shares issued by the Fund are expected to pay

cumulative dividends, which may tend to increase leverage risk.

Leverage creates several major types of risks for Common Shareholders,

including:

■

the likelihood of greater volatility of NAV and market price of

Common Shares, and of the investment return to Common

Shareholders, than a comparable portfolio without leverage;

■

the possibility either that Common Share dividends will fall if the

interest and other costs of leverage rise, or that dividends paid on

Common Shares will fluctuate because such costs vary over time;

and

■

the effects of leverage in a declining market or a rising interest

rate environment, as leverage is likely to cause a greater decline in

the NAV of the Common Shares than if the Fund were not

leveraged.

In addition, the counterparties to the Fund’s leveraging transactions and

any preferred shareholders of the Fund will have complete priority of

payment over the Fund’s Common Shareholders.

Reverse repurchase agreements involve the risks that the interest

income earned on the investment of the proceeds will be less than the

interest expense and Fund expenses associated with the repurchase

agreement, that the market value of the securities sold by the Fund may

decline below the price at which the Fund is obligated to repurchase

such securities and that the securities may not be returned to the Fund.

There is no assurance that reverse repurchase agreements can be

successfully employed. Dollar roll/buyback transactions involve the risk

that the market value of the securities the Fund is required to purchase

may decline below the agreed upon purchase price of those securities.

Successful use of dollar rolls/buybacks may depend upon the Investment

Manager’s ability to correctly predict interest rates and prepayments.

There is no assurance that dollar rolls/buybacks can be successfully

employed. In connection with reverse repurchase agreements and dollar

rolls/buybacks, the Fund will also be subject to counterparty risk with

respect to the purchaser of the securities. If the broker/dealer to whom

the Fund sells securities becomes insolvent, the Fund’s right to purchase

or repurchase securities may be restricted.

The Fund may engage in total return swaps, reverse repurchases, loans

of portfolio securities, short sales and when-issued, delayed delivery and

forward commitment transactions, credit default swaps, basis swaps

and other swap agreements, purchases or sales of futures and forward

contracts (including foreign currency exchange contracts), call and put

options or other derivatives. The Fund’s use of such transactions gives

rise to associated leverage risks described above, and may adversely

affect the Fund’s income, distributions and total returns to Common

Shareholders. To the extent that any offsetting positions do not behave

in relation to one another as expected, the Fund may perform as if it is

leveraged through use of these derivative strategies. Any total return

swaps, reverse repurchases, loans of portfolio securities, short sales and

when-issued, delayed delivery and forward commitment transactions,

credit default swaps, basis swaps and other swap agreements,

purchases or sales of futures and forward contracts (including foreign

currency exchange contracts), call and put options or other derivatives

by the Fund or counterparties to the Fund’s other leveraging

transactions, if any, would have seniority over the Fund’s Common

Shares.

Because the fees received by the Investment Manager may increase

depending on the types of leverage utilized by the Fund, the Investment

Manager has a financial incentive for the Fund to use certain forms of

leverage, which may create a conflict of interest between the Investment

Manager, on the one hand, and the Common Shareholders, on the other

hand. To the extent any subsidiary of the Fund directly incurs leverage in

the form of debt or preferred shares, the amount of such leverage used

by the Fund and such subsidiaries will be consolidated and treated as

senior securities for purposes of complying with the 1940 Act’s

limitations on leverage by the Fund.

Smaller Company Risk

The general risks associated with debt instruments or equity securities are particularly pronounced for securities issued by companies with small market capitalizations. Small capitalization companies involve certain special risks. They are more likely than larger companies to have limited product lines, markets or financial resources, or to depend on a small, inexperienced management group. Securities of smaller companies may trade less frequently and in lesser volume than more widely held securities and their values may fluctuate more sharply than other securities. They may also have limited liquidity. These securities may therefore be more vulnerable to adverse developments than securities of larger companies, and the Fund may have difficulty purchasing or selling securities positions in smaller companies at prevailing market prices. Also, there may be less publicly available information about smaller companies or less market interest in their securities as compared to larger companies. Companies with medium-sized market capitalizations may have risks similar to those of smaller companies.

Derivatives Risk

The Fund may, but is not required to, utilize a variety of derivative instruments (both long and short positions) for investment or risk management purposes. Additionally, the Fund may invest in futures and

other derivatives that provide equity exposures, including for

equitization and hedging purposes, using derivatives that provide

exposure that is not identical to the instruments or markets in which the

Fund seeks to invest 80% of its assets. Derivatives or other similar

instruments (referred to collectively as “derivatives”) are financial

contracts whose value depends on, or is derived from, the value of an

underlying asset, reference rate or index. For example, the Fund may use

derivative instruments for purposes of increasing liquidity, providing

efficient portfolio management, broadening investment opportunities

(including taking short or negative positions), implementing a tax or

cash management strategy, gaining exposure to a particular security or

segment of the market, modifying the effective duration of the Fund's

portfolio investments and/or enhancing total return. Investments in

derivatives may take the form of buying and/or writing (selling)

derivatives, and/or the Fund may otherwise become an obligor under a

derivatives transaction. These transactions may produce short-term

capital gains in the form of premiums or other returns for the Fund

(which may support, constitute and/or increase the distributions paid by,

or the yield of, the Fund) but create the risk of losses that can

significantly exceed such current income or other returns. For example,

the premium received for writing a call option may be dwarfed by the

losses the Fund may incur if the call option is exercised, and derivative

transactions where the Fund is an obligor can produce an up-front

benefit, but the potential for leveraged losses. The distributions, or

distribution rates, paid by the Fund should not be viewed as the total

returns or overall performance of the Fund. These strategies may also

produce adverse tax consequences (for example, the Fund’s income and

gain-generating strategies may generate current income and gains,

including short-term capital gains, taxable as ordinary income) and limit

the Fund’s opportunity to profit or otherwise benefit from certain gains.

The Fund may enter into opposing derivative transactions, or otherwise

take opposing positions. Such transactions can generate distributable

gains (which, as noted elsewhere, may be taxed as ordinary income) and

create the risk of losses and NAV declines.

The Fund may engage in investment strategies, including the use of

derivatives, to, among other things, generate current, distributable

income, even if such strategies could potentially result in declines in the

Fund’s net asset value. The Fund’s income and gain-generating

strategies, including certain derivatives strategies, may generate current

income and gains, including short-term capital gains, taxable as

ordinary income sufficient to support distributions, even in situations

when the Fund has experienced a decline in net assets due to, for

example, adverse changes in the broad U.S. or non-U.S. securities

markets or the Fund’s portfolio of investments, or arising from its use of

derivatives. Consequently, Fund shareholders may receive distributions

subject to tax at ordinary income rates at a time when their investment

in the Fund has declined in value, which may be economically similar to

a taxable return of capital.

The use of derivatives involves risks different from, and possibly greater

than, the risks associated with investing directly in securities and other

traditional investments. Derivatives, which may increase market

exposure and are subject to a number of risks including leverage risk,

liquidity risk (which may be heightened for highly customized

derivatives), interest rate risk, market risk, counterparty (including credit)

risk, operational risk (such as documentation issues, settlement issues

and systems failures), legal risk (such as insufficient documentation,

insufficient capacity or authority of a counterparty, and issues with the

legality or enforceability of a contract), management risk, risks arising

from changes in applicable regulatory requirements, governmental risk,

sanctions risk, risks arising from margin requirements and risks arising

from mispricing or valuation complexity (including the risk of improper

valuation), as well as the risks associated with the underlying asset,

reference rate or index. They also involve the risk that changes in the

value of a derivative instrument may not correlate perfectly with the

underlying asset, rate or index. By investing in a derivative instrument,

the Fund could lose more than the initial amount invested, and

derivatives may increase the volatility of the Fund, especially in unusual

or extreme market conditions. In addition, the use of derivatives may

cause the Fund’s investment returns to be impacted by the performance

of assets the Fund does not own, potentially resulting in the Fund’s total

investment exposure exceeding the value of its portfolio. Certain

derivatives have the potential for unlimited loss, regardless of the size of

the initial investment. The Fund may utilize asset segregation and

posting of collateral for risk management or other purposes. The Fund

may be required to hold additional cash or sell other investments in

order to obtain cash to close out a position and changes in the value of

a derivative may also create margin delivery or settlement payment

obligations for the Fund. Also, suitable derivative transactions may not

be available in all circumstances and there can be no assurance that the

Fund will engage in these transactions to reduce exposure to other risks

when that would be beneficial or that, if used, such strategies will be

successful. The Fund's use of derivatives may increase or accelerate the

amount of taxes payable by Common Shareholders.

Non-centrally-cleared Over-the-counter (”OTC“) derivatives are also

subject to the risk that a counterparty to the transaction will not fulfill

its contractual obligations to the other party, as many of the protections

afforded to centrally cleared derivative transactions might not be

available for non-centrally-cleared OTC derivatives. The primary credit

risk on derivatives that are exchange-traded or traded through a central

clearing counterparty resides with the Fund's clearing broker, or the

clearinghouse.

Derivatives that are cleared by a central clearing organization can still

be subject to different risks, including the creditworthiness of the central

clearing organization and its members.

In addition, derivatives that are traded on an exchange are subject to

the risk that an exchange may limit the maximum daily price fluctuation

of a derivative contract and restrict or suspend trading of a contract that

has reached a limit. Such limit governs only price movements of a

contract during a particular trading day and therefore does not limit

potential losses because the limit may work to prevent the liquidation of

unfavorable positions. A daily limit may be reached for several

consecutive days with little or no trading.

Participation in the markets for derivative instruments involves

investment risks and transaction costs to which the Fund may not be

subject absent the use of these strategies. The skills needed to

successfully execute derivative strategies may be different from those

needed for other types of transactions. If the Fund incorrectly forecasts

the value and/or creditworthiness of securities, currencies, interest rates,

counterparties or other economic factors involved in a derivative

transaction, the Fund might have been in a better position if the Fund

had not entered into such derivative transaction. In evaluating the risks

and contractual obligations associated with particular derivative

instruments or other similar investments, it is important to consider that

certain derivative transactions, absent a default or termination event,

may only be modified or terminated by mutual consent of the Fund and

its counterparty.

Therefore, it may not be possible for the Fund to modify, terminate, or

offset the Fund's obligations or the Fund's exposure to the risks

associated with a derivative transaction prior to its scheduled

termination or maturity date, which may create a possibility of increased

volatility and/or decreased liquidity to the Fund. Hedges are sometimes

subject to imperfect matching between the derivative and the

underlying instrument, and there can be no assurance that the Fund's

hedging transactions will be effective. Derivatives used for hedging or

risk management may not operate as intended and may expose the

Fund to additional risks. In such case, the Fund may experience losses.

Because the markets for certain derivative instruments (including

markets located in foreign countries) are relatively new and still

developing, appropriate derivative transactions may not be available in

all circumstances for risk management or other purposes. Upon the

expiration of a particular contract, the Fund may wish to retain the

Fund’s position in the derivative instrument by entering into a similar

contract but may be unable to do so if the counterparty to the original

contract is unwilling to enter into the new contract and no other

appropriate counterparty can be found. When such markets are

unavailable, the Fund will be subject to increased liquidity and

investment risk.

The Fund may enter into opposite sides of interest rate swap and other

derivatives for the principal purpose of generating distributable gains on

the one side (characterized as ordinary income for tax purposes) that

are not part of the Fund’s duration or yield curve management

strategies (“paired swap transactions”), and with a substantial

possibility that the Fund will experience a corresponding capital loss

and decline in NAV with respect to the opposite side transaction (to the

extent it does not have corresponding offsetting capital gains).

Consequently, Common Shareholders may receive distributions and owe

tax on amounts that are effectively a taxable return of the shareholder’s

investment in the Fund, at a time when their investment in the Fund has

declined in value, which tax may be at ordinary income rates. In

addition, the Fund’s use of derivatives may cause the Fund to realize

higher amounts of short-term capital gains (generally taxed at ordinary

income tax rates), potentially subjecting shareholders of the Fund to

adverse tax consequences. The tax treatment of certain derivatives in

which the Fund invests may be unclear and thus subject to

recharacterization. Any recharacterization of payments made or received

by the Fund pursuant to derivatives potentially could affect the amount,

timing or character of Fund distributions. In addition, the tax treatment

of such investment strategies may be changed by regulation or

otherwise.

More generally, sales of the Fund’s portfolio holdings may result in

short-term capital gains (which are generally taxed to shareholders at

ordinary income tax rates when distributed net of short-term capital

losses and net of long-term capital losses), potentially subjecting

shareholders of the Fund to adverse tax consequences.

Although hedging can reduce or eliminate losses, it can also reduce or

eliminate gains. Hedges are sometimes subject to imperfect matching

between the derivative and the underlying instrument, and there can be

no assurance that the Fund's hedging transactions will be effective.

Derivatives used for hedging or risk management may not operate as

intended or may expose the Fund to additional risks. In addition,

derivatives used for hedging may partially protect the Fund from the

risks they were intended to hedge yet not fully mitigate the impact of

such risks. The regulation of the derivatives markets has increased over

time, and additional future regulation of the derivatives markets may

make derivatives more costly, may limit the availability or reduce the

liquidity of derivatives, or may otherwise adversely affect the value or

performance of derivatives. Any such adverse future developments could

impair the effectiveness or raise the costs of the Fund’s derivative

transactions, impede the employment of the Fund’s derivatives

strategies, or adversely affect the Fund’s performance and cause the

Fund to lose value.

Credit Default Swaps Risk

Credit default swap agreements may involve greater risks than if the Fund had invested in the reference obligation directly since, in addition to general market risks, credit default swaps are subject to leverage risk, illiquidity risk, counterparty risk and credit risk. A buyer generally also will lose its investment and recover nothing should no credit event occur and the swap is held to its termination date. If a credit event were to occur, the value of any deliverable obligation received by the seller (if any), coupled with the upfront or periodic payments previously received, may be less than the full notional value it pays to the buyer, resulting in a loss of value to the seller. When the Fund acts as a seller of a credit default swap, it is exposed to many of the same risks of leverage described herein. As the seller, the Fund would receive a stream of payments over the term of the swap agreement provided that no event of default has occurred with respect to the referenced debt obligation upon which the swap is based. The Fund would effectively add leverage to its portfolio because, if a default occurs, the stream of payments may stop and, in addition to its total net assets, the Fund would be subject to investment exposure on the notional amount of the swap.

Although the Fund may seek to realize gains by selling credit default swaps that increase in value, to realize gains on selling credit default swaps, an active secondary market for such instruments must exist or the Fund must otherwise be able to close out these transactions at advantageous times. In addition to the risk of losses described above, if

no such secondary market exists or the Fund is otherwise unable to

close out these transactions at advantageous times, selling credit

default swaps may not be profitable for the Fund.

The market for credit default swaps has become more volatile as the

creditworthiness of certain counterparties has been questioned and/or

downgraded. The Fund will be subject to credit risk with respect to the

counterparties to the credit default swap contract (whether a clearing

corporation or another third party). If a counterparty’s credit becomes

significantly impaired, multiple requests for collateral posting in a short

period of time could increase the risk that the Fund may not receive

adequate collateral. The Fund may exit its obligations under a credit

default swap only by terminating the contract and paying applicable

breakage fees, or by entering into an offsetting credit default swap

position, which may cause the Fund to incur more losses. The Fund may

obtain no or limited recovery in a bankruptcy or other reorganizational

proceedings, and any recovery may be significantly delayed.

Counterparty Risk

The Fund will be subject to credit risk with respect to the counterparties to the derivative contracts and other instruments entered into by the Fund or held by special purpose or structured vehicles in which the Fund invests. For example, if a bank at which the Fund or issuer has an account fails, any cash or other assets in bank or custody accounts, which may be substantial in size, could be temporarily inaccessible or permanently lost by the Fund or issuer. In the event that the Fund enters into a derivative transaction with a counterparty that subsequently becomes insolvent or becomes the subject of a bankruptcy case, the derivative transaction may be terminated in accordance with its terms and the Fund’s ability to realize its rights under the derivative instrument and its ability to distribute the proceeds could be adversely affected. If a counterparty becomes bankrupt or otherwise fails to perform its obligations under a derivative contract due to financial difficulties, the Fund may experience significant delays in obtaining any recovery (including recovery of any collateral it has provided to the counterparty) in a dissolution, assignment for the benefit of creditors, liquidation, winding-up, bankruptcy or other analogous proceeding. In addition, in the event of the insolvency of a counterparty to a derivative transaction, the derivative transaction would typically be terminated at its fair market value. If the Fund is owed this fair market value in the termination of the derivative transaction and its claim is unsecured, the Fund will be treated as a general creditor of such counterparty and will not have any claim with respect to any underlying security or asset. The Fund may obtain only a limited recovery or may obtain no recovery in such circumstances. Counterparty credit risk also includes the related risk of having concentrated exposure to a single counterparty, which may increase potential losses if the counterparty were to become insolvent. While the Fund may seek to manage its counterparty risk by transacting with a number of counterparties, concerns about the solvency of, or a default by, one large market participant could lead to significant impairment of liquidity and other adverse consequences for other counterparties.

Repurchase Agreements Risk

The Fund may enter into repurchase agreements, in which the Fund purchases a security from a bank or broker-dealer, which agrees to repurchase the security at the Fund’s cost plus interest within a specified time. Entering into repurchase agreements allows the Fund to earn a return on cash in the Fund's portfolio that would otherwise remain un-invested. Repurchase agreements may involve risks in the event of default or insolvency of the counterparty, including possible delays or restrictions upon the Fund's ability to sell the underlying securities and additional expenses in seeking to enforce the Fund's rights and recover any losses. Although the Fund seeks to limit the credit risk under a repurchase agreement by carefully selecting counterparties and accepting only high quality collateral, some credit risk remains. The counterparty could default which may make it necessary for the Fund to incur expenses to liquidate the collateral. The security subject to a repurchase agreement may be or become illiquid. These events could also trigger adverse tax consequences for the Fund.

In December 2023, the U.S. Securities and Exchange Commission adopted rule amendments that are expected to result in the Fund being required to clear all or substantially all of its repurchase agreements collateralized by U.S. Treasury securities as of June 30, 2027 where a direct participant in any covered clearing agency is the counterparty. The Fund may incur costs in connection with entering into new agreements (or amending existing agreements) with counterparties who are direct participants of a covered clearing agency and potentially other market participants and taking other actions to comply with the new requirements. In addition, upon the compliance date, the costs and benefits of entering into repurchase agreements collateralized by U.S. Treasury securities to the Fund may be impacted as compared to such repurchase agreements prior to the compliance date.

Collateralized Bond Obligations, Collateralized Loan Obligations and Collateralized Debt Obligations Risk

CBOs, CLOs and CDOs may charge management fees and administrative expenses. For CBOs, CLOs and CDOs, the cash flows from the trust are split into two or more portions, called tranches, varying in risk and yield. The riskiest portion is the equity tranche which generally bears losses in connection with the first defaults, if any, on the bonds or loans in the trust. A senior tranche from a CLO, CBO and CDO trust typically has higher credit ratings and lower yields than the underlying securities. CLO tranches, CBO, and CDO, even senior ones, can experience substantial losses due to actual defaults, increased sensitivity to defaults due to collateral default and disappearance of protecting tranches, market anticipation of defaults and aversion to CLO, CBO or other CDO securities. The risks of an investment in a CBO, CLO or other CDO vary depending on the type of collateral securities and the class of the instrument in which the Fund invests, among other factors.

Normally, CLOs, CBOs and other CDOs are privately offered and sold, and thus are not registered under the securities laws. Investments in CLOs, CBOs and CDOs may be or become illiquid. In addition to the normal risks associated with debt instruments (e.g., interest rate risk and credit risk), CLOs, CBOs and CDOs carry additional risks including,

but not limited to: (i) the possibility that distributions from the collateral

will not be adequate to make interest or other payments; (ii) the risk

that the quality of the collateral may decline in value or default; (iii) the

risk that the Fund may invest in CBOs, CLOs or other CDOs that are

subordinate to other classes; and (iv) the risk that the complex structure

of the security may not be fully understood at the time of investment

and may produce disputes with the issuer or others and may produce

unexpected investment results.

Equity Securities and Related Market Risk

The market price of common stocks and other equity securities may go up or down, sometimes rapidly or unpredictably. Equity securities may decline in value due to factors affecting equity securities markets generally, particular industries represented in those markets, or the issuer itself. The values of equity securities may decline due to real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates, adverse changes to credit markets or adverse investor sentiment generally. They may also decline due to labor shortages or increased production costs and competitive conditions within an industry. Equity securities generally have greater price volatility than bonds and other debt securities.

Different types of equity securities provide different voting and dividend rights and priority in the event of the bankruptcy and/or insolvency of the issuer. In addition to common stock, equity securities may include preferred securities, convertible securities and warrants. Equity securities other than common stock are subject to many of the same risks as common stock, although possibly to different degrees. The risks of equity securities are generally magnified in the case of equity investments in distressed companies.

Preferred Securities Risk

In addition to equity securities risk, credit risk and possibly high yield risk, investment in preferred securities involves certain other risks. Certain preferred securities contain provisions that allow an issuer under certain conditions to skip or defer distributions. If the Fund owns a preferred security that is deferring its distribution, the Fund may be required to include the amount of the deferred distribution in its taxable income for tax purposes although it does not currently receive such amount in cash. In order to receive the special treatment accorded to RICs and their shareholders under the Code and to avoid U.S. federal income and/or excise taxes at the Fund level, the Fund may be required to distribute this income to shareholders in the tax year in which the income is recognized (without a corresponding receipt of cash by the Fund). Therefore, the Fund may be required to pay out as an income distribution in any such tax year an amount greater than the total amount of cash income the Fund actually received and to sell portfolio securities, including at potentially disadvantageous times or prices, to obtain cash needed for these income distributions. Preferred securities often are subject to legal provisions that allow for redemption in the event of certain tax or legal changes or at the issuer’s call. In the event of redemption, the Fund may not be able to reinvest the proceeds at comparable rates of return. Preferred securities are subordinated to

bonds and other debt securities in an issuer’s capital structure in terms

of priority for corporate income and liquidation payments, and therefore

will be subject to greater credit risk than those debt securities. Preferred

securities may trade less frequently and in a more limited volume and

may be subject to more abrupt or erratic price movements than many

other securities.

Insurance-Linked and Other Instruments Risk

The Fund may invest in insurance-linked instruments and similar investments (which may include, for example, exposure to reinsurance contracts (through sidecars or otherwise), event-linked bonds, such as catastrophe and resilience bonds, and securities relating to life insurance policies, annuity contracts and premium finance loans). The Fund could lose a portion or all of the principal it has invested in these types of investments, and the right to additional interest and/or dividend payments with respect to the investments, upon the occurrence of one or more trigger events, as defined within the terms of an investment.

Trigger events may include natural or other perils of a specific size or magnitude that occur in a designated geographic region during a specified time period, and/or that involve losses or other metrics that exceed a specific amount. The Fund may also invest in insurance-linked instruments that are subject to “indemnity triggers.” An indemnity trigger is a mechanism where the payout to the investor is based on the actual losses incurred by the insurer and come into play when losses from a specified event exceed a designated level. Insurance-linked instruments subject to indemnity triggers are often regarded as being subject to potential moral hazard, since such insurance-linked investments are triggered by actual losses of the ceding sponsor and the ceding sponsor may have an incentive to take actions and/or risks that would have an adverse effect on the Fund. There is no way to accurately predict whether a trigger event will occur and, accordingly, insurance-linked instruments and similar investments carry significant risk. In addition to the specified trigger events, these types of investments may expose the Fund to other risks, including but not limited to issuer (credit) default, adverse regulatory or jurisdictional interpretations and adverse tax consequences.

The Fund may also gain exposure to reinsurance contracts (through insurance-linked securities, sidecars or otherwise). This exposure may include “excess of loss” contracts, wherein liability arises only if and when losses exceed a specified amount, and proportional reinsurance, wherein a pro rata portion of the premiums and liabilities of the cedant associated with a specified business or a portfolio if insurance contracts are linked to the investment. Investments linked to reinsurance transactions may involve significant insurance brokerage fees, fronting fees and other transaction costs.

A series of major triggering events could cause the failure of a reinsurer. Similarly, to the extent the Fund invests in reinsurance-related securities for which a triggering event occurs, losses associated with such event will result in losses to the Fund and a series of major triggering events affecting a large portion of the reinsurance-related securities held by the Fund may result in substantial losses to the Fund. In addition, unexpected events such as natural disasters or terrorist attacks could

lead to government intervention. Political, judicial and legal

developments affecting the reinsurance industry could also create new

and expanded theories of liability or regulatory or other requirements;

such changes could have a material adverse effect on the Fund. In

addition, the litigation environment in catastrophe-exposed states or

regions could impact the frequency and severity of insurance claims, and

litigation costs could decrease the value of the Fund's investment in

products linked to reinsurance contracts. In recent years, capital market

participants have been increasingly active in the reinsurance market and

markets for related risks. Increased competition could result in fewer

submissions, lower premium rates and less favorable policy terms and

conditions.

Certain insurance-linked instruments and similar investments may have

limited liquidity, or may be illiquid. The Fund has limited transparency

into the individual contracts underlying certain insurance-linked

instruments and similar investments, which may make the risk

assessment of them more difficult. These types of investments may be

difficult to value.

The aforementioned instruments may include longevity and mortality

investments, including indirect investment in pools of insurance-related

longevity and mortality investments, including life insurance policies,

annuity contracts and premium finance loans. Such investments are

subject to “longevity risk” and/or “mortality risk.” Longevity risk is the

risk that members of a reference population will live longer, on average,

than anticipated. Mortality risk is the risk that members of a reference

population will live shorter, on average, than anticipated. Changes in

these rates can significantly affect the liabilities and cash needs of life

insurers, annuity providers and pension funds. The terms of a longevity

bond typically provide that the investor in the bond will receive less than

the bond’s par amount at maturity if the actual average longevity (life

span) of a specified population of people observed over a specified

period of time (typically measured by a longevity index) is higher than a

specified level. If longevity is higher than expected, the bond will return

less than its par amount at maturity. A mortality bond, in contrast to a

longevity bond, typically provides that the investor in the bond will

receive less than the bond’s par amount at maturity if the mortality rate

of a specified population of people observed over a specified period of

time (typically measured by a mortality index) is higher than a specified

level.

During their term, both longevity bonds and mortality bonds typically

pay a floating rate of interest to investors. Longevity and mortality

investments purchased by the Fund involve the risk of incorrectly

predicting the actual level of longevity or mortality, as applicable, for the

reference population of people. With respect to mortality investments

held by the Fund, there is also the risk that an epidemic or other

catastrophic event could strike the reference population, resulting in

mortality rates exceeding expectations. The Fund may also gain this type

of exposure through event-linked derivative instruments, such as swaps,

that are contingent on or formulaically related to longevity or mortality

risk.

Private Placements and Restricted Securities Risk

A private placement involves the sale of securities that have not been registered under the Securities Act or relevant provisions of applicable non-U.S. law to certain institutional and qualified individual purchasers, such as the Fund. In addition to the general risks to which all securities are subject, securities received in a private placement generally are subject to strict restrictions on resale, and there may be no liquid secondary market or ready purchaser for such securities. See “Principal Risks of the Fund - Liquidity Risk.” Therefore, the Fund may be unable to dispose of such securities when it desires to do so, or at the most favorable time or price. Private placements may also raise valuation risks. See “Principal Risks of the Fund – Valuation Risk.”

The Fund may also have to bear the expense of registering the securities for resale and the risk of substantial delays in effecting the registration. Additionally, the purchase price and subsequent valuation of private placements typically reflect a discount, which may be significant, from the market price of comparable securities for which a more liquid market exists.

Securities Lending Risk

For the purpose of achieving income, the Fund may lend its portfolio securities to brokers, dealers, and other financial institutions provided a number of conditions are satisfied, including that the loan is fully collateralized. Please see “Investment Objective and Policies—Loans of Portfolio Securities” in the Statement of Additional Information for more details. When the Fund lends portfolio securities, its investment performance will continue to reflect changes in the value of the securities loaned, and the Fund will also receive a fee or interest on the collateral. Securities lending involves the risk of loss of rights in the collateral or delay in recovery of the collateral if the borrower fails to return the security loaned or becomes insolvent. The Fund may pay lending fees to a party arranging the loan. Cash collateral received by the Fund in securities lending transactions may be invested in short-term liquid fixed income instruments or in money market or short-term mutual funds, or similar investment vehicles, including affiliated money market or short-term mutual funds. The Fund bears the risk of such investments.

Inflation/Deflation Risk

Inflation risk is the risk that the value of assets or income from the Fund’s investments will be worth less in the future as inflation decreases the value of payments at future dates. As inflation increases, the real value of the Fund’s portfolio could decline. Inflation rates may change frequently and significantly as a result of various factors, including unexpected shifts in the domestic or global economy or changes in fiscal or monetary policies (or the expectation of such changes). Deflation risk is the risk that prices throughout the economy decline over time. Deflation may have an adverse effect on the creditworthiness of issuers and may make issuer default more likely, which may result in a decline in the value of the Fund’s portfolio and Common Shares.

Regulatory Changes Risk

Financial entities, such as investment companies and investment advisers, are generally subject to extensive government regulation and intervention. Government regulation and/or intervention may change the way the Fund is regulated, affect the expenses incurred directly by the Fund and the value of its investments, and limit and /or preclude the Fund’s ability to achieve its investment objectives. Government regulation may change frequently and may have significant adverse consequences. The Fund and the Investment Manager have historically been eligible for exemptions from certain regulations. However, there is no assurance that the Fund and the Investment Manager will continue to be eligible for such exemptions.

Moreover, government regulation may have unpredictable and unintended effects. Legislative or regulatory actions to address perceived liquidity or other issues in fixed income markets generally, or in particular markets such as the municipal securities market, may alter or impair the Fund’s ability to pursue its investment objectives or utilize certain investment strategies and techniques.

While there continues to be uncertainty about the full impact of these and other regulatory changes, it is the case that the Fund will be subject to a more complex regulatory framework, and may incur additional costs to comply with new requirements as well as to monitor for compliance in the future. Actions by governmental entities may also impact certain instruments in which the Fund invests and reduce market liquidity and resiliency.

Recent policy initiatives undertaken by the U.S. government have the potential to impact international relations, trade agreements, and the overall regulatory environment in ways that could create uncertainty and instability in domestic and global markets, and could adversely affect the investment performance of the Fund. In particular, actions taken by the U.S. government in respect of international trade relations could lead to trade wars, increased costs for imported goods, disruptions in supply chains, reduced foreign investment, and instability in regions where the Fund invests.

Regulatory Risk—Commodity Pool Operator

The CFTC has adopted regulations that subject registered investment companies and their investment advisers to regulation by the CFTC if the registered investment company invests more than a prescribed level of its liquidation value in futures, options on futures or commodities, swaps, or other financial instruments regulated under the CEA and the rules thereunder (“commodity interests”), or if the Fund markets itself as providing investment exposure to such instruments. The Investment Manager is registered with the CFTC as a “commodity pool operator” (“CPO”). However, with respect to the Fund, the Investment Manager has claimed an exclusion from registration as a CPO pursuant to CFTC Rule 4.5. For the Investment Manager to remain eligible for this exclusion, the Fund must comply with certain limitations, including limits on its ability to use any commodity interests and limits on the manner in which the Fund holds out its use of such commodity interests. These limitations may restrict the Fund’s ability to pursue its investment objectives and strategies, increase the costs of implementing its

strategies, result in higher expenses for the Fund, and/or adversely affect

the Fund’s total return. To the extent the Investment Manager becomes

ineligible for this exclusion from CFTC regulation, the Investment

Manager may consider steps in order to continue to qualify for

exemption from CFTC regulation, or may determine to operate the Fund

subject to CFTC regulation.

Liquidity Risk

Liquidity risk exists when particular investments are difficult to purchase or sell. Illiquid investments are investments that the Fund reasonably expects cannot be sold or disposed of in current market conditions in seven calendar days or less without the sale or disposition significantly changing the market value of the investment. Illiquid investments may become harder to value, especially in changing markets. The Fund’s investments in illiquid investments may reduce the returns of the Fund because it may be unable to sell the illiquid investments at an advantageous time or price or possibly require the Fund to dispose of other investments at unfavorable times or prices in order to satisfy its obligations, which could prevent the Fund from taking advantage of other investment opportunities. Illiquidity can be caused by, among other things, a drop in overall market trading volume, an inability to find a willing buyer, or legal restrictions on the securities’ resale, capital controls, delays or limits on repatriation of local currency, or insolvency of local governments. Additionally, the market for certain investments may become illiquid under adverse market or economic conditions independent of any specific adverse changes in the conditions of a particular issuer, such as during changes in interest rates, elevated volatility, market or geopolitical disruptions, economic uncertainty or public health crises. There can be no assurance that an investment that is deemed to be liquid when purchased will continue to be liquid while it is held by a fund and/or when a fund wishes to dispose of it. Bond markets have consistently grown over time while the capacity for traditional dealer counterparties to engage in fixed income trading has not kept pace with the growth of bond markets and may remain constrained. As a result, dealer inventories of corporate bonds, which provide a core indication of the ability of financial intermediaries to “make markets,” remain limited relative to the size of the market. Because market makers seek to provide stability to a market through their intermediary services, the significant reduction in dealer inventories could potentially lead to decreased liquidity and increased volatility in the fixed income markets, especially during periods of economic uncertainty or market stress. In such cases, the Fund, due to the difficulty in purchasing and selling such securities or instruments, may be unable to achieve its desired level of exposure to a certain sector. To the extent that the Fund’s principal investment strategies involve securities of companies with smaller market capitalizations, foreign (non-U.S.) securities, Rule 144A securities, illiquid sectors of fixed income securities, derivatives or securities with substantial market and/or credit risk, the Fund will tend to have the greatest exposure to liquidity risk.

Further fixed income securities with longer durations until maturity face heightened levels of liquidity risk as compared to fixed income securities with shorter durations until maturity. The risks associated with illiquid

instruments may be particularly acute in situations in which the Fund’s

operations require cash (such as in connection with repurchase offers)

and could result in the Fund borrowing to meet its short-term needs or

incurring losses on the sale of illiquid instruments. It may also be the

case that other market participants may be attempting to liquidate fixed

income holdings at the same time as the Fund, causing increased supply

in the market and contributing to liquidity risk and downward pricing

pressure.

Liquidity risk also refers to the risk that the Fund may be required to

hold additional cash or sell other investments in order to obtain cash to

close out derivatives or meet the liquidity demands that derivatives can

create to make payments of margin, collateral, or settlement payments

to counterparties. The Fund may have to sell a security at a

disadvantageous time or price to meet such obligations.

The actions of governments and regulators may have the effect of

reducing market liquidity, market resiliency and money supply.

Structured Investments Risk

Holders of structured products, including structured notes, credit-linked notes and other types of structured products, bear the risks of the underlying investments, index or reference obligation and are subject to counterparty risk. The Fund may have the right to receive payments only from the structured product, and generally does not have direct rights against the issuer or the entity that sold the assets to be securitized. While certain structured products enable the investor to acquire interests in a pool of securities without the brokerage and other expenses associated with directly holding the same securities, investors in structured products generally pay their share of the structured product’s administrative and other expenses. Although it is difficult to predict whether the prices of indexes and securities underlying structured products will rise or fall, these prices (and, therefore, the prices of structured products) are generally influenced by the same types of political and economic events that affect issuers of securities and capital markets generally. If the issuer of a structured product uses shorter term financing to purchase longer term securities, the issuer may be forced to sell its securities at below market prices if it experiences difficulty in obtaining such financing, which may adversely affect the value of the structured products owned by the Fund. Structured products generally entail risks associated with derivative instruments. See “Principal Risks of the Fund--Derivatives Risk.”

Tax Risk

The Fund has elected to be treated as a RIC under Subchapter M of the Code and intends each year to qualify and be eligible to be treated as such, so that it generally will not be subject to U.S. federal income tax on its net investment income or net short-term or long-term capital gains that are timely distributed (or deemed distributed, as described below) to shareholders. In order to qualify and be eligible for such treatment, the Fund must meet certain asset diversification tests, derive at least 90% of its gross income for such year from certain types of qualifying income, and distribute to its shareholders at least 90% of its “investment company taxable income” as that term is defined in the

Code (which includes, among other things, dividends, taxable interest

and the excess of any net short-term capital gains over net long-term

capital losses, as reduced by certain deductible expenses) and net

tax-exempt income, for such year.

The Fund’s investment strategy will potentially be limited by its intention

to continue qualifying for treatment as a RIC and can limit the Fund’s

ability to continue qualifying as such. The tax treatment of certain of the

Fund’s investments under one or more of the qualification or

distribution tests applicable to RICs is uncertain. An adverse

determination or future guidance by the IRS or a change in law might

affect the Fund’s ability to qualify or be eligible treatment as a RIC.

Income and gains from certain of the Fund’s activities may not

constitute qualifying income to a RIC for purposes of the 90% gross

income test. If the Fund’s income or gain from a particular investment or

activity were determined to constitute nonqualifying income, which in

certain cases may be determined retroactively, and the Fund's

nonqualifying income from all sources were to exceed 10% of its gross

income in any taxable year, the Fund would fail to qualify as a RIC

unless it were eligible to and did pay a tax at the Fund level. See

“Taxation” in the Statement of Additional Information for additional

details.

If, in any year, the Fund were to fail to qualify for treatment as a RIC

under the Code and were ineligible to or did not otherwise cure such

failure, the Fund would be subject to tax on its taxable income at

corporate rates and, when such income is distributed, shareholders

would be subject to further tax, on such distributions to the extent of

the Fund’s current or accumulated earnings and profits.

To the extent the Fund invests through one or more subsidiaries, the

Fund may be required to include in gross income for U.S. federal income

tax purposes all of the subsidiary’s income, whether or not such income

is distributed by the subsidiary, and the Fund may generally have to

treat such income as ordinary income, regardless of the character of the

subsidiary’s underlying income or gains. If a net loss is realized by a

subsidiary, such loss is not generally available to offset the income

earned by the Fund, and such loss cannot be carried forward to offset

taxable income of the Fund or the subsidiary in future periods.

Portfolio Turnover Risk

The Investment Manager manages the Fund without regard generally to restrictions on portfolio turnover. The use of futures contracts and other derivative instruments with relatively short maturities may tend to exaggerate the portfolio turnover rate for the Fund. Trading in fixed income securities does not generally involve the payment of brokerage commissions, but does involve indirect transaction costs. The use of futures contracts and other derivative instruments may involve the payment of commissions to futures commission merchants or other intermediaries. Higher portfolio turnover involves correspondingly greater expenses to the Fund, including brokerage commissions or dealer mark-ups and other transaction costs on the sale of securities and reinvestments in other securities. The higher the rate of portfolio turnover of the Fund, the higher these transaction costs borne by the Fund generally will be. Such sales may result in realization of taxable

capital gains (including short-term capital gains, which are generally

taxed to shareholders at ordinary income tax rates when distributed net

of short-term capital losses and net long-term capital losses), and may

adversely impact the Fund’s after-tax returns. The realization of

short-term capital gains may also cause adverse tax consequences for

the Fund’s shareholders. See “Tax Matters.”

Operational Risk

An investment in the Fund, like any fund, can involve operational and technology risks arising from factors such as processing errors, communication errors, human errors, inadequate or failed internal or external processes, failures in systems and technology, cybersecurity incidents, the potential use of artificial intelligence and machine learning (AI), changes in personnel and errors caused by third-party service providers. The occurrence of any of these failures, errors or breaches could result in a loss of information, regulatory scrutiny, reputational damage or other events, any of which could have a material adverse effect on the Fund. Operational and technology risks for the issuers could also result in material adverse consequences for such issuers and may cause the Fund's investments in such issuers to lose value. While the Fund seeks to minimize such events through controls and oversight, there may still be failures that could cause losses to the Fund.

Other Investment Companies Risk

When investing in an investment company, the Fund will generally bear its ratable share of that investment company's expenses, and would remain subject to payment of the Fund's investment management fees and other expenses with respect to assets so invested. Common Shareholders would therefore be subject to duplicative expenses to the extent the Fund invests in other investment companies. In addition, these other investment companies may utilize leverage, in which case an investment would subject the Fund to additional risks associated with leverage. Due to its own financial interest or other business considerations, the Investment Manager may choose to invest a portion of the Fund's assets in investment companies sponsored or managed by the Investment Manager or its related parties in lieu of investments by the Fund directly in portfolio securities, or may choose to invest in such investment companies over investment companies sponsored or managed by others. Participation in a cash sweep program where the Fund's uninvested cash balance is used to purchase shares of affiliated or unaffiliated money market funds or cash management pooled investment vehicles at the end of each day subjects the Fund to the risks associated with the underlying money market funds or cash management pooled investment vehicles, including liquidity risk. Applicable law may limit the Fund's ability to invest in other investment companies. See “Principal Risks of the Fund-Leverage Risk.”

Privacy and Data Security Risk

The Gramm-Leach-Bliley Act (“GLBA”) and other laws limit the disclosure of certain non-public personal information about a consumer to non-affiliated third parties and require financial institutions to disclose certain privacy policies and practices with respect to

information sharing with both affiliates and non-affiliated third parties.

Many states and a number of non-U.S. jurisdictions have enacted

privacy and data security laws requiring safeguards on the privacy and

security of consumers’ personally identifiable information. Other laws

deal with obligations to safeguard and dispose of private information in

a manner designed to avoid its dissemination. Privacy rules adopted by

the U.S. Federal Trade Commission and SEC implement the GLBA and

other requirements and govern the disclosure of consumer financial

information by certain financial institutions, ranging from banks to

private investment funds. U.S. platforms following certain models

generally are required to have privacy policies that conform to these

GLBA and other requirements. In addition, such platforms typically have

policies and procedures intended to maintain platform participants’

personal information securely and dispose of it properly.

The Fund generally does not intend to obtain or hold borrowers’

non-public personal information, and the Fund has implemented

procedures reasonably designed to prevent the disclosure of borrowers’

non-public personal information to the Fund. However, service providers

to the Fund or its subsidiaries, including their custodians and the

platforms acting as loan servicers for the Fund or its subsidiaries, may

obtain, hold or process such information. The Fund and entities that

interact with the Fund, including service providers, custodians and

platforms are susceptible to operational, information security and

related cybersecurity risks. The Fund cannot guarantee the security of

non-public personal information in the possession of such a service

provider and cannot guarantee that service providers have been

complying with and will continue to comply with the GLBA, other data

security and privacy laws and any other related regulatory requirements.

Violations of the GLBA and other laws could subject the Fund to

litigation and/or fines, penalties or other regulatory action, which,

individually or in the aggregate, could have an adverse effect on the

Fund. The Fund may also face regulations related to privacy and data

security in the other jurisdictions in which the Fund invests.

Confidential Information Access Risk

In managing the Fund (and other PIMCO clients), PIMCO may from time to time have the opportunity to receive material, non-public information (“Confidential Information”) about the issuers of certain investments, including, without limitation, senior floating rate loans, other loans and related investments being considered for acquisition by the Fund or held in the Fund’s portfolio. For example, an issuer of privately placed loans considered by the Fund may offer to provide PIMCO with financial information and related documentation regarding the issuer that is not publicly available. Pursuant to applicable policies and procedures, PIMCO may (but is not required to) seek to avoid receipt of Confidential Information about such issuers so as to avoid possible restrictions on its ability to purchase and sell investments on behalf of the Fund and other clients to which such Confidential Information relates. In such circumstances, the Fund (and other PIMCO clients) may be disadvantaged in comparison to other investors, including with respect to the price the Fund pays or receives when it buys or sells an investment. Further, PIMCO’s and the Fund’s abilities to assess the desirability of proposed consents, waivers or amendments with respect

to certain investments may be compromised if they are not privy to

available Confidential Information. PIMCO may also determine to

receive such Confidential Information in certain circumstances under its

applicable policies and procedures. If PIMCO intentionally or

unintentionally comes into possession of Confidential Information, it

may be unable, potentially for a substantial period of time, to purchase

or sell investments to which such Confidential Information relates.

Cyber Security Risk

As the use of technology, including cloud-based technology, has become more prevalent and interconnected in the course of business, the Fund is potentially more susceptible to operational and information security risks resulting from breaches in cyber security, including: processing and human errors, inadequate or failed internal or external processes, failures in system and technology, errors in algorithms used with respect to Fund operations and changes in personnel. A breach in cyber security refers to both intentional and unintentional cyber events from outside threat actors or internal resources that may, among other things, cause the Fund to lose proprietary information, suffer data corruption and/or destruction, lose operational capacity, result in the unauthorized release or other misuse of confidential information, or otherwise disrupt normal business operations. Geopolitical tensions can increase the scale and sophistication of deliberate cybersecurity attacks, particularly those from nation-states or from entities with nation-state backing, who may desire to use cybersecurity attacks to cause damage or create leverage against geopolitical rivals. Cyber security breaches may involve unauthorized access to the Fund’s digital information systems (e.g., through “hacking” or malicious software coding), and may come from multiple sources, including outside attacks such as denial-of-service attacks (i.e., efforts to make network services unavailable to intended users) or cyber extortion, including exfiltration of data held for ransom and/or “ransomware” attacks that renders systems inoperable until the ransom is paid, or insider actions (e.g., intentionally or unintentionally harmful acts of PIMCO personnel). In addition, cyber security breaches involving the Fund’s third party service providers (including but not limited to advisers, sub-advisers, administrators, transfer agents, custodians, vendors, suppliers, distributors and other third parties), trading counterparties or issuers in which the Fund invests can also subject the Fund to many of the same risks associated with direct cyber security breaches or extortion of company data. PIMCO’s use of cloud-based service providers could heighten or change these risks. In addition, work-from-home arrangements by the Fund, the Investment Manager or their service providers could increase all of the above risks, create additional data and information accessibility concerns, and make the Fund, the Investment Manager or their service providers susceptible to operational disruptions, any of which could adversely impact their operations.

Cyber security failures or breaches may result in financial losses to the Fund and its shareholders. For example, cyber security failures or breaches involving trading counterparties or issuers in which the Fund invests could adversely impact such counterparties or issuers and cause the Fund’s investment to lose value. These failures or breaches may also result in disruptions to business operations, potentially resulting in

financial losses; interference with the Fund’s ability to calculate its NAV,

process shareholder transactions or otherwise transact business with

shareholders; impediments to trading; violations of applicable privacy

and other laws; regulatory fines; penalties; third-party claims in

litigation; reputational damage; reimbursement or other compensation

costs; additional compliance and cyber security risk management costs

and other adverse consequences. In addition, substantial costs may be

incurred in order to prevent any cyber incidents in the future.

Like with operational risk in general, the Fund has established business

continuity plans and risk management systems designed to reduce the

risks associated with cyber security. However, there are inherent

limitations in these plans and systems, including that certain risks may

not have been identified, in large part because different or unknown

threats may emerge in the future. As such, there is no guarantee that

such efforts will succeed, especially because the Fund does not directly

control the cyber security systems of issuers in which the Fund may

invest, trading counterparties or third-party service providers to the

Fund. Such entities have experienced cyber attacks and other attempts

to gain unauthorized access to systems from time to time, and there is

no guarantee that efforts to prevent or mitigate the effects of such

attacks or other attempts to gain unauthorized access will be successful.

There is also a risk that cyber security breaches may not be detected. The

Fund and its shareholders may suffer losses as a result of a cyber

security breach related to the Fund, its service providers, trading

counterparties or the issuers in which the Fund invests.

Potential Conflicts of Interest Risk—Allocation of Investment Opportunities

The Investment Manager and its affiliates are involved worldwide with a broad spectrum of financial services and asset management activities and may engage in the ordinary course of business in activities in which their interests or the interests of their clients may conflict with those of the Fund. The Investment Manager may provide investment management services to other funds and discretionary managed accounts that follow an investment program similar to that of the Fund. Subject to the requirements of the 1940 Act, the Investment Manager intends to engage in such activities and may receive compensation from third parties for its services. The results of the Fund’s investment activities may differ from those of the Fund’s affiliates, or another account managed by the Investment Manager or its affiliates, and it is possible that the Fund could sustain losses during periods in which one or more of the Fund’s affiliates and/or other accounts managed by the Investment Manager or its affiliates, including proprietary accounts, achieve profits on their trading.

Market Disruptions Risk

The Fund is subject to investment and operational risks associated with financial, economic and other global market developments and disruptions, including those arising from war, military conflicts, geopolitical disputes, terrorism, social or political unrest, recessions, supply chain disruptions, tariffs and other restrictions on trade, sanctions, market manipulation, government interventions, defaults and shutdowns, political changes or diplomatic developments, public health

emergencies (such as the spread of infectious diseases, pandemics and

epidemics), bank failures, natural/environmental disasters, climate

change and climate related events, responses to government actions or

interventions (the threat or imposition of tariffs, trade restrictions,

currency restrictions, or similar actions) which can all negatively impact

the securities markets, interest rates, auctions, secondary trading,

ratings, credit risk, inflation, deflation and other factors relating to the

Fund’s investments or the Investment Manager’s operations and the

value of an investment in the Fund, its distributions and its returns.

These events can also impair the technology and other operational

systems upon which the Fund’s service providers, including PIMCO as

the Fund’s investment adviser, rely, and could otherwise disrupt the

Fund’s service providers’ ability to fulfill their obligations to the Fund.

Furthermore, events involving limited liquidity, defaults,

non-performance or other adverse developments that affect financial

institutions or the financial services industry generally, or concerns or

rumors about any events of these kinds or other similar risks, have in the

past and may in the future lead to market-wide liquidity problems.

Focused Investment Risk

To the extent that the Fund focuses its investments in a particular sector, it may be susceptible to loss due to adverse developments affecting that sector, including (but not limited to): governmental regulation; inflation; rising interest rates; cost increases in raw materials, fuel and other operating expenses; technological innovations that may render existing products and equipment obsolete; competition from new entrants; high research and development costs; increased costs associated with compliance with environmental or other governmental regulations; and other economic, business or political developments specific to that sector. Furthermore, the Fund may invest a substantial portion of its assets in companies in related sectors that may share common characteristics, are often subject to similar business risks and regulatory burdens, and whose securities may react similarly to the types of developments described above, which will subject the Fund to greater risk. The Fund also will be subject to focused investment risk to the extent that it invests a substantial portion of its assets in a particular issuer, market, asset class, country or geographic region.

Certain Affiliations

Certain broker-dealers may be considered to be affiliated persons of the Fund and/or the Investment Manager due to their possible affiliations with Allianz SE, the ultimate parent of the Investment Manager, or another Allianz entity. Allianz Asset Management of America LP merged with Allianz Asset Management of America LLC (“Allianz Asset Management”), with the latter being the surviving entity, effective January 1, 2023. Following the merger, Allianz Asset Management is PIMCO’s managing member and direct parent entity. Absent an exemption from the SEC or other regulatory relief, the Fund is generally precluded from effecting certain principal transactions with affiliated brokers, and its ability to purchase securities being underwritten by an affiliated broker or a syndicate including an affiliated broker, or to utilize

affiliated brokers for agency transactions, is subject to restrictions. This

could limit the Fund’s ability to engage in securities transactions and

take advantage of market opportunities.

The 1940 Act imposes significant limits on co-investment with affiliates

of the Fund. The Fund has received exemptive relief from the SEC that,

to the extent the Fund relies on such relief, permits it to (among other

things) co-invest alongside certain other persons in privately negotiated

investments, including certain affiliates of the Investment Manager and

certain public or private funds managed by the Investment Manager and

its affiliates, subject to certain terms and conditions. The exemptive relief

from the SEC with respect to co-investments imposes a number of

conditions on any co-investments made in reliance on such relief that

may limit or restrict the Fund’s ability to participate in an investment or

require it to participate in an investment to a lesser extent, which could

negatively impact the Fund’s ability to execute its desired investment

strategy and its returns. Subject to applicable law, the Fund may also

invest alongside other PIMCO managed funds and accounts, including

private funds and affiliates of the Investment Manager, without relying

on the exemptive relief. Pursuant to co-investment exemptive relief, to

the extent the Fund relies on such relief, the Fund will be able to invest

in opportunities in which PIMCO and/or its affiliates has an investment,

and PIMCO and/or its affiliates will be able to invest in opportunities in

which a fund has made an investment.

Anti-Takeover Provisions

The Fund’s Declaration and the Fund's Bylaws include provisions that could limit the ability of other entities or persons to acquire control of the Fund or to convert the Fund to open-end status. These provisions in the Declaration and the Fund's Bylaws could have the effect of depriving the Common Shareholders of opportunities to sell their Common Shares at a premium over the then-current market price of the Common Shares or at NAV.

Fund Distribution Rates

Although the Fund may seek to maintain level distributions, the Fund’s distribution rates may be affected by numerous factors, including but not limited to changes in realized and projected market returns, fluctuations in market interest rates, Fund performance, and other factors. The Fund’s distributions may be comprised of a return of capital. In general terms, a return of capital would occur where a Fund distribution (or portion thereof) represents a return of a portion of your investment, rather than net income or capital gains generated from your investment during a particular period. There can be no assurance that a change in market conditions or other factors will not result in a change in the Fund’s distribution rate or that the rate will be sustainable in the future.

For instance, during periods of low or declining interest rates, the Fund’s distributable income and dividend levels may decline for many reasons. For example, the Fund may have to deploy uninvested assets (whether from sales of Fund shares, proceeds from matured, traded or called debt obligations or other sources) in new, lower yielding instruments.

Additionally, payments from certain instruments that may be held by the

Fund (such as variable and floating rate securities) may be negatively

impacted by declining interest rates, which may also lead to a decline in

the Fund’s distributable income and dividend levels.

Effects of Leverage [Text Block]

Use of Leverage

The Fund currently utilizes leverage principally through reverse repurchase agreements and may also obtain additional leverage through dollar rolls/buybacks or borrowings, such as through bank loans, commercial paper, credit facilities and/or other transactions. The Fund may also determine to issue preferred shares or other types of senior securities to add leverage to its portfolio. By using leverage, the Fund will seek to obtain a higher return for holders of Common Shares than if the Fund did not use leverage. The Fund’s Board may authorize the issuance of preferred shares without the approval of Common Shareholders. If the Fund issues preferred shares in the future, all costs and expenses relating to the issuance and ongoing maintenance of the preferred shares will be borne by the Common Shareholders, and these costs and expenses may be significant. The amount of leverage the Fund utilizes may vary but total leverage resulting from the issuance of preferred shares and senior securities representing indebtedness of the Fund will not exceed 50% of the Fund’s total assets less all liabilities and indebtedness not represented by senior securities. Leveraging transactions pursued by the Fund may increase its duration and sensitivity to interest rate movements.

Depending upon market conditions and other factors, the Fund may or may not determine to add leverage following an offering to maintain or increase the total amount of leverage (as a percentage of the Fund’s total assets) that the Fund currently maintains, taking into account the additional assets raised through the issuance of Common Shares in such offering. The Fund may utilize leverage opportunistically and may choose to increase or decrease, or eliminate entirely, its use of such leverage over time and from time to time based on PIMCO’s assessment of the yield curve environment, interest rate trends, market conditions and other factors. If the Fund determines to add leverage following an offering, it is not possible to predict with accuracy the precise amount of leverage that would be added, in part because it is not possible to predict the number of Common Shares that ultimately will be sold in an offering or series of offerings. To the extent that the Fund does not add additional leverage following an offering, the Fund’s total amount of leverage as a percentage of its total assets will decrease, which could result in a reduction of investment income available for distribution to Common Shareholders.

The Fund is subject to the 1940 Act requirement that an investment company satisfy an asset coverage requirement of 300% of its indebtedness measured at the time the investment company incurs the indebtedness. This means that at any given time the value of the Fund's total indebtedness may not exceed one-third the value of its total assets (including assets attributable to such leverage). The interests of persons with whom the Fund enters into leverage arrangements will not

necessarily be aligned with the interests of the Fund's shareholders and

such persons will have claims on the Fund’s assets that are senior to

those of the Fund’s shareholders.

Under the 1940 Act, the Fund is currently not permitted to issue

preferred shares unless immediately after such issuance the value of the

Fund’s total net assets is at least 200% of the liquidation value of the

Fund’s preferred shares plus the aggregate amount of any senior

securities of the Fund representing indebtedness (i.e., such liquidation

value plus the aggregate amount of senior securities representing

indebtedness may not exceed 50% of the Fund’s total net assets). In

addition, for so long as the Fund has preferred shares outstanding, the

Fund will not be permitted to declare any cash dividend or other

distribution on its Common Shares unless, at the time of such

declaration, the value of the Fund’s total net assets, after giving effect to

such cash dividend or other distribution, satisfies the above-referenced

200% coverage requirement. The Fund may enter into derivatives or

other transactions that may provide leverage (other than through the

issuance of preferred shares or bank borrowing). Rule 18f-4 under the

1940 Act (the “Derivatives Rule”) regulates a registered investment

company's use of derivatives and certain other transactions that create

future payment and/or delivery obligations by the Fund. The Derivatives

Rule prescribes specific value-at risk (“VaR”) leverage limits that apply

to the Fund (although the Fund in the future could qualify as a limited

derivatives user (as defined in the Derivatives Rule) and would therefore

not be subject to all of the requirements of the Derivatives Rule). VaR is

an estimate of potential losses on an instrument or portfolio over a

specified time horizon and at a given confidence level. The Fund may

apply a relative VaR test or an absolute VaR test (if the Fund's

derivatives risk manager determines that a designated reference

portfolio would not provide an appropriate reference portfolio for

purposes of the relative VaR test). The limit under the relative VaR test

when a fund has no outstanding preferred shares is 200% (or 250%

when a fund has preferred shares outstanding) of the VaR of a

designated reference portfolio, which, very generally, may be a

designated unleveraged index or the fund's securities portfolio

excluding derivatives. If applicable, the limit under the absolute VaR test

when a fund has no outstanding preferred shares is 20% (or 25% when

a fund has preferred shares outstanding) of the value of a fund's net

assets. The Derivatives Rule also generally requires the Fund to appoint

a derivatives risk manager, maintain a derivatives risk management

program (“DRMP”) designed to identify, assess, and reasonably

manage the risks associated with transactions covered by the rule, and

abide by certain board and other reporting obligations and

recordkeeping requirements. With respect to reverse repurchase

agreements or other similar financing transactions in particular, the

Derivatives Rule permits a fund to enter into such transactions if the

fund either (i) complies with the asset coverage requirements of

Section 18 of the 1940 Act, and combines the aggregate amount of

indebtedness associated with all reverse repurchase agreements and

similar financing with the aggregate amount of any other senior

securities representing indebtedness when calculating the relevant asset

coverage ratio, or (ii) treats all reverse repurchase agreements and

similar financing transactions as derivatives transactions for all purposes

under the Derivatives Rule. The Fund has adopted procedures for

investing in derivatives and other transactions in compliance with the

Derivatives Rule. Compliance with the Derivatives Rule could adversely

affect the value or performance of the Fund. Limits or restrictions

applicable to the counterparties or issuers, as applicable, with which the

Fund may engage in derivative transactions could also limit or prevent

the Fund from using certain instruments.

Leveraging is a speculative technique and there are special risks and

costs involved. There is no assurance that the Fund will utilize reverse

repurchase agreements, credit default swaps, dollar rolls/buybacks or

borrowings, issue preferred shares or utilize any other forms of leverage

(such as the use of derivatives strategies). If used, there can be no

assurance that the Fund’s leveraging strategies will result in a higher

yield on your Common Shares. When leverage is used, the NAV and

market price of the Common Shares and the yield to Common

Shareholders will be more volatile. See “Principal Risks of the

Fund—Leverage Risk.” In addition, dividend, interest and other costs

and expenses borne by the Fund with respect to its use of reverse

repurchase agreements, credit default swaps, total return swaps, dollar

rolls/buybacks, borrowings, preferred shares or any other forms of

leverage are borne by the Common Shareholders and result in a

reduction of the NAV of the Common Shares. Because the fees received

by the Investment Manager may increase depending on the types of

leverage utilized by the Fund, the Investment Manager has a financial

incentive for the Fund to use certain forms of leverage, which may

create a conflict of interest between the Investment Manager, on the

one hand, and the Common Shareholders, on the other hand. Leverage

transactions pursued by the Fund may increase its duration and

sensitivity of the value of the Fund’s portfolio to interest rate

movements.

The Fund also may borrow money for temporary purposes, to add

leverage to the portfolio or for the settlement of securities transactions

which otherwise might require untimely dispositions of portfolio

securities held by the Fund.

Please see “Use of Leverage” and “Principal Risks of the Fund—

Leverage Risk” in the body of this prospectus for additional information

regarding leverage and related risks.

Effects of Leverage

The following table is furnished in response to requirements of the SEC. It is designed to illustrate the effects of leverage through the use of senior securities, as that term is defined under Section 18 of the 1940 Act, on Common Share total return, assuming investment portfolio total returns (consisting of income and changes in the value of investments held in the Fund’s portfolio) of -10%, -5%, 0%, 5% and 10%. Although the Fund does not currently have a class of senior securities outstanding, the table below reflects the Fund’s continued use of reverse repurchase agreements over the fiscal year ended June 30, 2026 representing approximately 17.62% of the Fund's average total managed assets (including assets attributable to reverse repurchase agreements) at an estimated annual effective interest expense rate of 3.93% payable by the Fund on such instruments (based on market

conditions averaged over the fiscal year ended June 30, 2026). Based

on such estimated annual effective interest expense rate, the annual

return that the Fund’s portfolio must experience (net of expenses) in

order to cover such costs of the reverse repurchase agreements is

0.69%. The information below does not reflect the Fund’s use of certain

other forms of economic leverage achieved through the use of other

instruments or transactions not considered to be senior securities under

the 1940 Act, such as credit default swaps or other derivative

instruments.

The assumed investment portfolio returns in the table below are

hypothetical figures and are not necessarily indicative of the investment

portfolio returns experienced or expected to be experienced by the

Fund. Your actual returns may be greater or less than those appearing

below. In addition, the actual borrowing expenses associated with

reverse repurchase agreements (or dollar rolls/buy backs or borrowings,

if any) used by the Fund may vary frequently and may be significantly

higher or lower than the rate used for the example below.

Assumed Return on Portfolio (Net of Expenses)	(10.00)%	(5.00)%	0.00%	5.00%	10.00%
Corresponding Return to Common Shareholders	(12.98)%	(6.91)%	(0.84)%	5.23%	11.30%

Common Share total return is composed of two elements — the

Common Share dividends paid by the Fund (the amount of which is

largely determined by the net investment income of the Fund after

paying dividends on any preferred shares issued by the Fund and

expenses on any forms of leverage outstanding) and gains or losses on

the value of the securities and other instruments the Fund owns. As

required by SEC rules, the table assumes that the Fund is more likely to

suffer capital losses than to enjoy capital appreciation. For example, to

assume a portfolio total return of 0%, the Fund must assume that the

income it receives on its investments is entirely offset by losses in the

value of those investments. This table reflects hypothetical performance

of the Fund’s portfolio and not the actual performance of the Fund’s

Common Shares, the value of which is determined by market forces and

other factors.

Should the Fund elect to add additional leverage to its portfolio

following an offering, any benefits of such additional leverage cannot

be fully achieved until the proceeds resulting from the use of such

leverage have been received by the Fund and invested in accordance

with the Fund’s investment objective and policies. As noted above, the

Fund’s willingness to use additional leverage, and the extent to which

leverage is used at any time, will depend on many factors, including,

among other things, PIMCO’s assessment of the yield curve

environment, interest rate trends, market conditions and other factors.

Effects of Leverage [Table Text Block]